Politics Isn't Working - the End of Politics

With the general election looming, academic and writer Noreena Hertz argues that the electorate is disillusioned and traditional government is moribund. Hertz is a young socio-economist who normally delivers her contemporary and disquieting thesis in lectures to Cambridge students. But in contemporary Britain, where many are not using their vote, her ideas will resonate with a broad audience. In The End Of Politics she argues that corporations are actually starting to take the place of elected governments, shopping is becoming more effective than voting, and none of this is any good for democracy. To illustrate her argument she has met the richest and the poorest in the new world economy - from tragically anonymous factory girls in Honduras, via protestors at the World Economic Forum in Davos, to powerful politicians and businessmen, including Shimon Peres and Ted Turner.

Hertz starts from the point that corporations are increasingly defining the public agenda. For example, many businesses are playing an important role in conflict negotiations around the world. "It was working in the Middle East in 1997 where I started to develop my ideas," she says. "I witnessed the privatisation of diplomacy - with businessmen rather than governments turning the rhetoric of the peace process into reality." She returns to the Middle East to meet 33-year-old businessman Omar Salah, whose factory makes clothes from Egyptian cotton, dyed in Israel and assembled in Jordan. Arabs and Israelis work side by side - a small but significant example of how the pursuit of profit could be providing a path towards peace.

But the encroachment of corporate power has a downside. Unregulated by governments, corporations set the terms of engagement themselves. Hence the "race to the bottom": Multinationals pitting developing countries against each other to provide the most flexible conditions for investment. No regulation, no red tape, no unions. It's good for profit, but bad for workers paid a pittance in appalling conditions. Hertz witnesses the result in Honduras when she meets very young women working in clothes factories supplying U.S. outlets.

Hertz argues that in the face of government impotence, we are witnessing a rise in individual action. Shopping is replacing voting. Consumer pressure has led many major corporations like Gap and Nike to change their employment practices in the developing world. But it's not just shopping. Shareholder action is also a powerful force for change. Sister Patricia Marshall is no ordinary nun. She is part of The Interfaith Centre for Corporate Responsibility. It invests $110 billion in company stocks and shares, giving them considerable power at shareholder meetings to check corporate behaviour.

But does this mean the death of democracy and the end of politics? Shopping is not democratic. Consumer and shareholder activism gives greater voice to those with money in their pockets. Pressure groups play to the media agenda, championing only popular causes.

Despite this, when Hertz looks to the future she sees small signs of optimism. For example, New Zealand embraced freemarket fundamentalism enthusiastically in the 80s, but now they are considering some renationalisation and have introduced a state run bank. World leaders such as Jacques Chirac and Shimon Peres are actively considering the notion of world governance - global scale co-operation to match the power of the multinationals. But for now she believes people are scorning democracy. "Until the state reclaims the people, the people will not reclaim the state," she says.

Noreena Hertz lives in London. She graduated from University College London at the age of 19 and went on to complete an MBA in the US and a doctorate from Cambridge. She has worked in Russia and the Middle East and is currently Associate Director of the Centre for International Business and Management at Cambridge University.

Her forthcoming book The Silent Takeover will be published by William Heinemann on March 29, 2001.