February 6, 2002

THE TALIBAN OF MODERN MARKET CAPITALISM

By Tom Plate

Fear the accountants as much as the terrorists

(C) 2002 Asia Pacific Media Network

NEW YORK CITY --- The grandest international thinkathon of them all -- now into its fourth decade -- was to convene in Davos as always. But then the ghost of 911 created the haunting specter of an abandoned metropolis, struggling to rise from the ashes of terrorism, while the oblivious elite of the World Economic Forum's heads of state, CEOs, Nobel Prize winners and so on would meet, fete and frolic in the pristine setting of the Swiss Alps.

Not to happen: The WEF inner cabal that runs this most glamorous of annual policy-wonk retreats is anything but stupid. So it yanked the annual meeting out of the remote skiing village of Davos and set it down in the gargantuan but elegant Waldorf-Astoria hotel -- not too far from Ground Zero in Manhattan, in fact.

That's not all that has changed with WEF. In fact, the annual movers, shakers and thinkers' retreat -- known worldwide as, simply, Davos -- originated 31 years ago as little more than a tony businessman's sojourn in Europe. But the mystique about the meeting site and its famous and sometimes infamous invitees eventually led to broadened participation outside the corporate suite.

This year, while the retreat is co-sponsored by none other than Time Magazine's Man of the Year Rudolph Giuliani and garnished with the usual sprinkling of prime ministers, presidents, industry lions and media leaders, the feeling is different. Now labor, nonprofit, religious and even non-governmental organizations are increasingly represented. And no longer are the seminar and general-session topics replays of graduate business school days. Instead, members are diving into ever-deeper waters. With memories of the 1997 Asian financial crisis still fresh, one panel is tackling the currency volatility issue.

The agenda is certainly less Eurocentric than before. Thanks in part to the persistent prodding of Asian WEF board members, including Hong Kong-based real estate-and-development billionaire Ronnie Chan, more and more invitations are extended to Asian leaders; more workshops focus on topics related to the Asian-Pacific. It's a good thing that outspoken critic of Western values, Mahathir Mohamed, the Malaysian prime minister, is here doing his thing.

The content of the conference is determinedly contemporary, if only up to a point. For, while the conference is cosmopolitan in outlook, it is not profoundly introspective. It is more focused on currency exchanges and international marketing than what's happening in the heart and soul of the corporate suites and retreats.

Yes, market capitalism has created wealth beyond imagination -- better than any other system. But it has also created great income disparities, intolerant market fundamentalism (where the putative Taliban determinant of social good is the stock market) and triggered a feeling of powerlessness and the overall devaluation of the human being.

No doubt the Enron/Andersen scandal provides fuel for that anger. Whether it was management incompetence or outright fraud, many human beings who bought into the market-capital system have had their financial future put unnecessarily at risk. Yet there has been comparatively little focus here on the simple but essential issue of internal corporate ethics, at least not for the West. The WEF is launching a "Corporate Governance Initiative" that encourages firms to commit themselves to an explicit code of conduct. It's for Russia.

But ethics history, even for the West, keeps on happening: Indeed, for many of the CEOs and corporate executives here, it's more the ghost of Enron and its sacked see-no-evil accounting firm, Arthur Andersen, that's hanging over these proceedings than 911. Consider the joke here about China's commitment to cracking down on corruption. Beijing says many officials will be audited when they leave their positions; not to worry, whispers one Chinese party insider: We've retained Arthur Andersen for the job.

Is the Enron/Andersen scandal merely a minor crack in the great wall of capitalism? Or does it suggest the potential magnitude of capitalism's San Andreas fault line? The widespread nervousness here suggests the latter. For the new menacing enemy outside the corporate suites (terrorism) may in the end prove less threatening to capitalism than the enemy within -- corruption -- whether it be found in Russia, China or America.

Previous Columns:

The Canary in the Asian Coal Mine (January 30, 2002)

Crony Capitalism, American Style (January 23, 2002)

The Medium is the Message (January 16, 2002)

The Importance of Being Optimistic (January 9, 2002)

(C) 2002 Asia Pacific Media Network