Culled from the Financial Times Weekend April 20/ April 21 2002

The corporatist manifesto
By Steve Hilton




Global capitalism has a problem - a problem that the brutal efficiency for
which capitalism is routinely lambasted can reduce to just three words:
Seattle, dotcom, Enron.

The problem for capitalism is that many people - including many capitalists
- seem to have forgotten that it's the most powerful force for good the
world has seen.

People have forgotten that thanks to capitalism, life expectancy is up,
infant mortality is down, education is richer, horizons are broader,
environmental awareness is greater, global co-operation is possible and that
capitalism is the reason we can offer reliable social welfare provision on a
mass scale.

Why? Because it's the activities of those nefarious capitalists that
generate the money to pay for education, medical research and social
welfare, and the incentives for people to invent things to make our lives
better.

But it's in the worst possible taste to point these things out. For today,
there is an anti-capitalist orthodoxy that goes beyond a latent hostility to
big business. It's a well-organised and reasoned critique of capitalism,
starting with Seattle.

The argument goes that big global brands exploit people in the rich parts of
the world by creating a desire for junk with a logo, sold at extortionate
prices to feed the insatiable demands of shareholders for ever higher
profits. These brands use their economic muscle to elbow out of the way
wholesome institutions such as family, local community, religion and culture
and have turned us into miserable, craven, overworked, greedy consumption
addicts who've lost sight of the basic principles of humanity.

This line of thinking says brands have degraded all sense of public space by
smearing their marketing materials over every available surface, including
schools, and have turned cherished pastimes such as sport and music into
commercial transactions. Their expansionist mania forces smaller companies
out of business, wipes out craft skills and turns the countryside into a
playground for braying super-rich yuppies.

It's claimed this process has been aided and abetted by a ruling class of
unprincipled political cowards from all parties who, desperate for cash to
finance their campaigns, terrified of raising taxes and prepared to do
whatever it takes to encourage businesses to invest in their country, lie
prostrate at the feet of the corporations.

In the developing world, the anti-capitalists see people as being twice
enslaved - first to the decadent dream of the brands, so that indigenous
cultures are wiped out in favour of homogenised western pap; and second to
the factory owners who, on the corporations' behalf, snatch 12 year olds to
work unceasingly in dingy sweatshops.

Then there's the second staging post on capitalism's fall from grace:
dotcom. From cutting edge to laughing stock in just a couple of years,
dotcom mania saw corporations falling over themselves to pour shareholders'
money into fatuous ventures. This exposed the whole system, in some people's
eyes, as nothing more than a pernicious lottery dressed up in pinstripes and
hand-made shoes.

But faith in capitalism still had further to fall: Enron stands for
old-fashioned villainy. What a boon Enron has been for the anti-corporate
critics.

Now it's time for this nonsense to stop. The anti-capitalist mythology has
to be challenged.

Myth number one: globalisation is making the rich richer while the poor get
poorer. There is globalisation in the world, and there is poverty in the
world - so one must cause the other.

Indeed the rich have got richer - but so have the poor. Over the past 50
years, according to the United Nations Development Programme, world poverty
has fallen faster than in the previous 500 years. This is a direct result of
the expansion in global capitalism and trade, as more and more countries
enter the global trading system and earn money by making things that people
in other countries want to buy.

It's not even true that globalisation has led to increased inequality: since
1975, the share of the world's economy accounted for by the rich nations of
the OECD has fallen from 80 per cent to 70 per cent.

The anti-globalisation movement is entirely justified in pointing to the
severe problems in the developing world. But not one of those problems -
poverty, hunger, disease, illiteracy - can be tackled without more
globalisation and more capitalism. The world has tried everything else:
communism, protectionism, self-sufficiency. None of it worked.

It took the west hundreds of years to move from subsistence to affluence.
Today, thanks to technological innovation, to capitalism and to
globalisation, there's every chance that developing countries could now make
far more rapid progress. How sad and selfish it would be for us to slam on
the brakes.

The second big myth is that global capitalism is the enemy of human rights.
Look at what Shell did in Nigeria, for example. But again, the truth is the
opposite, because of the part that capitalism and globalisation play in
promoting democracy, which is itself the most powerful bulwark against human
rights abuse.

Similarly with myth number three - the view that the relocation of
manufacturing from the developed world to the third world is somehow a bad
thing, to be resisted.

Undoubtedly, there exist factories and workplaces where conditions are
appalling. That doesn't mean that all factories in the developing world are
like that, and the appropriate response is surely to ensure proper health
and safety practices are observed, not remove the factories (and the jobs
that go with them).

The indiscriminate use of the word sweatshop to describe just about any
workplace in a third world country obscures the reality that manufacturing
investment is precisely what's needed in order to raise incomes and improve
standards of living in those countries. A multinational corporation will
almost certainly provide better pay and conditions than any other type of
work that's available.

Myth number four is cultural imperialism, the belief that the global advance
of western brands is a corrupting force, ruining local cultures by spreading
the polluting effects of consumer desire and turning the planet into a
homogenised, lowest common denominator replica of the Mall of America.

But is it really the case that the spread of global brands corrupts local
cultures? Japan has McDonald's, but is it any less Japanese? Local cultures
are strong and the idea that they can be undermined by a foreign product or
service - albeit one with a striking and omnipresent visual identity - is
far-fetched.

The fifth, and perhaps most pervasive, myth is the idea that profits are a
bad thing: that capitalists exploit the labour of decent working people, and
that profit is the yardstick by which to measure the degree of exploitation.

One of the chief evils of profit, in the eyes of its detractors, is the fact
that we don't all share in it - only shareholders do.

Well workers should share profits - and they do sometimes in straightforward
and direct ways, where workers are also shareholders, for example. But
mostly it's in less obvious ways. A large proportion of the shareholders who
"cream off" profits from the workers are pension funds and insurance
companies - so profits don't just disappear into the coffers of rich people,
they're recycled to provide people with an income in their retirement, or
compensation if they suffer loss.

There's another way in which profits are recycled on behalf of the many, not
the few: through the tax that companies pay on their profits, taxes which
contribute to the funding of public services, social welfare and so on.

And finally, without profits, how are corporations to invest in new products
and services, new technologies to protect the environment - all things we
say we want?

It's increasingly common to hear the argument made that companies should be
run in the interests of wider society, not just shareholders. But what does
this mean? Surely through their contribution to pensions, insurance and tax
revenues, companies are acting in the interests of wider society if they
maximise their profits?

And if companies don't make profits, they go out of business and people lose
their jobs.

The last of the big six myths is that corporations have turned into
all-conquering Leviathans: their power is beyond the reach of elected
governments. The favourite slogan used to justify this charge is the
observation that 51 of the world's largest 100 economies are corporations,
not countries.

But the state sector, relative to the size of the private sector, has grown
rapidly during the 20th century, and at about 50 per cent in most European
countries is at an all-time high. So it's just not true that companies in
general are taking over more and more of the economy.

Individual companies may be getting bigger, but this doesn't count for very
much when the biggest corporations' market share is getting smaller (as it
is), and when their share of employment is also shrinking (as it is).

And remember all the things that governments control: defence, foreign
policy, economic policy, constitutional arrangements, the electoral system
and voting rights, residence, citizenship, the legal system, cultural
concerns, education, public provision for health, pensions and welfare - the
list goes on.

In reality, corporations are far more powerful in a cultural sense, and in
their grassroots impact, than they are as big, anonymous institutions. But
most of this power is untapped: they don't actively use it for any social
ends, good or bad.

In this analysis, it's possible to imagine that corporations' cultural and
grassroots power is a good thing, because it can be used for positive social
ends while helping the corporations make greater profits - which is also
good and should be encouraged. And this is how capitalism can deal with the
problems thrown up by Seattle, dotcom and Enron.

Step one is to start standing up for capitalism, to expose the
anti-corporate myths for what they are. Step two is to embrace the trend
that's sweeping many boardrooms: corporate social responsibility, the idea
that companies should introduce processes explicitly to manage their social
and environmental impact.

But business needs to go further. Corporate social responsibility is
essentially a risk reduction strategy, designed to avoid the more glaring
gaffes that could lead to litigation or a damaged reputation.

In business, however, something will always go wrong. Hence the need for a
new way for companies to prepare for the worst while showing the world the
best aspects of business. It's called corporate social leadership, and it
involves companies using their cultural power, grassroots presence and
unique capabilities to go out of their way to help tackle social problems.

They do it not through philanthropy, corporate giving, employee volunteering
or community involvement, but through finding a dual purpose, social as well
as commercial, for every component of the corporate anatomy.

Some companies have started to travel down this road: Coca-Cola and its new
role in Africa, helping public health authorities to deal with the Aids
crisis; Britain's Sky TV using the youth appeal of its brand to inspire
teenagers about their future careers; DaimlerChrysler and Richemont using
sport to tackle social problems around the globe.

But there's so much more to be done, and so much business benefit to be
gained.

If global capitalism responds to its problems with sufficient imagination,
creativity and ambition, it could soon be seen as the hero and not the
villain. So it's time for the capitalists and anti-capitalists to make
common cause; it's time that campaigners for social justice and
environmental protection saw business as their ally, not their enemy. If you
want to change the world, then do it through business. And if you want to
help your business, then help change the world.

Good Business by Steve Hilton and Giles Gibbons is published in the UK by
Texere on May 1, £17.99.




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