76 / GLOBAL DREAMS pose iS tO provide 、、 a relaxing for large numbers Of people with disposable income during which they are exposed t0 the four- COlor fantasies Of the advertisers. TO intrigue enough people tO sell 30 000 pages of advertising a year is a creative challenge. Creative JLIices dO not flOW on command, nor can people WhO are employed for their intuitive gifts be heavily managed. For this reason "freedom,' "diversity,' "decentralization," and 'pluralism" are company buz- zwords, and the concept Of creative independence IS enshrined in the Bertelsmann constitution. Stern developed its readership and reputa- tion by twitting the German establishment even as it was S1gmng up some Of the country's leading advertisers. The strategy was surpris- ingly successful, despite boycotting by some leading banks and a few 4 manufacturers. But for a large company, especially one as closely identified with one man as BerteIsmann has been, the pressures tO restnct creative freedom are considerable. Reinhard Mohn's friends are bankers and industrialists whO consider S 〃 7 a scandal, and over the years they have let him know what they think. He has felt social pressure from fellow tycoons tO unload or discipline the magazine they consider a pest. S 川 has helped popularize previously far-out positions. ln the 1970S the magazine promoted WilIi Brandt's Os 中 0 渼 and abortion rights. ln 1989 it t00k a distinctly CO approach t0 reunification, a position that directly collided with that 0f both business and financial elites and mass opinion. A year later it revealed that Thyssen, now run by a Bertelsmann board member, was selling Saddam Hussein machinery tO make P01SOn gas. Some years ago MOhn acknowledged in an interview with Die Z ビ″ that the relationship between top management and Der Stern as well as with other Grüner & Jahr publications has been "fraught with conflicts" and he predicted that it would take "years, even decades" tO resolve them. Bertelsmann executives point out that S 〃 is bal- anced 0 仕 with two leading German business publications, Ca 々″ 4 / and ー川々 4 なら but S 川 is always held up as the symbol of Bertels- mann's commltment tO free expression. 、 10hn himself always made a point of distancing himself equally from Rupert Murdoch, who still uses hiS newspapers tO press hiS conservatlve V1ews, and from RObert Maxwell, who called himself a socialist and took a pro—Labor Party line in his British tabloids (even as he was speculating with the pen- sion funds of his workers). A large publishing house, M0hn insists, should not represent the views Of the owner. 、、 Diversity Of opinion

GLOBAL ENTERTAINMENT AND LOCAL TASTE / 159 that? TO prove the connection between what is watched on television or heard on tapes and CDs and what is gomg on inside a child's head impossible. True, you can find child psychologists wh0 say that healthy children in stable homes are no more likely to be harmed by TV and movre violence than their grandparents were by being read scary bed-time stories from G 川川 5 ' お 4 耘 ) Ta s. But it is precisely the growmg number 0f children without stable homes on whom the lmpact Of popular culture is most powerful and most negative. At best, the hours a child spends in front 0f the television or the boom box are hours devoid oflearning and loving relationships. BMG says that it is in the business of selling music. lt is the job of parents tO educate their children and tO instill the strength and dis- cipline they need tO grow up. Media companies are not nursemaids, and they should not try t0 play any such role. Bertelsmann obviously 0PP0ses censorship in all its forms. The industry has reluctantly agreed tO attach warning stickers tO music products destined for the U. S. market that alert parents tO lyrics the companies judge tO be sexually explicit, but company executives d0 not like it, although they think it undoubtedly increases sales. The result is that no one—least of all the "family values" preacher/ politicians—is taking responsibility for maJOr influences on children and young people in their formative years. Movies TV, pop and advertising, glven the doses now being administered tO young children around the world, do affect their ability to learn, to think, t0 imagme, and tO love, and the predictable consequences for their relationships tO their families, for their future jOb prospects, and for the SOCiety as a WhOle are not at all encouragmg. ln the United States glob 引 cultural products may outrage 10Ca1 sensibilities, but at least they are mostly made in the USA. ln Latin America and parts 0f Asia, American films and TV programs dom- lnate the airways. lt COStS next tO nothing tO air an Old Hollywood "B" 61m or a rerun of も 40 or Mr. Ed. Even less antique programs like Da 〃ぉ or L.A. La 曜 are much less expensive to run than a local program with c 引 talent, and the American product is likely t0 draw a bigger audience. Of the 4 , 000 films shown on Brazilian TV, according t0 the Brazilian 61m producer Luis Carlos Barret0, 99 percent are from the rich countries, mostly from H011ywood. Tele- VlSIOn iS the 1 れ OSt POM€℃ rful force for mass education ln most poor countries. Cultural nationalists in Latin America and in pockets Of ASia are enraged that the most influential teachers Of the next gen-

OF THE MAKING OF BOOKS / 97 of it is in English, which is the accepted language 0f science and learning around the wor 旧 . ln the 1980S a major share 0f scientific publishing in the United States was taken over by foreign conglom- erates. Von Holzbrinck, a German publisher, bought 立 c A 川 - tca れ . Elsevier 0 、 Congressional lnformation Service and has recently acquired a number 0f other specialized publishers in the United States. This giant Dutch company, having acquired Pergamon press, which is the British company R0bert Maxwell used t0 build his fortune, specializes ln scientific and scholarly publications. lt pub- lishes technical bOOks and more than a thousand newsletters and journals for commumcating professional, academic, scientific, med- ical, and technical research developments around the world.Wolters Kluwer, another Dutch company, owns the venerable U. S. publisher Lippincott and has also picked up many other publishing ventures the United States. ln 1990 these two global publishing companies so 旧 more than $ 2.4 billion worth of books and journals across the planet, just about equaling the sales figures for that year 0f the two largest American publishers, Simon & Schuster and Time Warner. Foreign publishers had taken over a significant share Of the nation's scientific-informatlon industry, but this caused almost no stir. Hardly anyone outside the industry knew that it was happening. AS the publishing business became more international, more and more foreign media compames considered it essential tO acqmre ma- J0r publishing properties in the United States. lt is thelargest national book market in the world, college-educated, middle class, affluent, and itS literary products travel better than those Of any Other country. But the U. S. market has a built-in limitation. 、 lOSt Americans are not avid book readers. ln 1988 , according t0 Jason Epstein, editorial director of Random House, Americans spent about $ 3 billion on consumer" books—about as much as they spent that year tur- ” 10 keys and apples. According t0 the ECO 〃 0 川なな it was more like $ 6 billion, a discrepancy attributable to wildly different understandings Of what a general fiction and nonfiction bOOk" iS and tO the noto- 11 rrous state Of record-keeping in the industry. The Association Of American Publishers reports that only 13 percent 0f Americans buy 12 Just 14 percent of the population say that reading is their books. favorlte way tO spend an evening—down from 21 percent when the 13 same question was asked in 1938. However, what Americans read still sets fashions all over the wor 旧 . A book that is popular in the United States is likely to sell well in Europe and Japan. lt rarely works the other way around. The

288 / GLOBAL DREAMS from SOCletles Of hunters and gatherers tO pastoral societles and thence tO agricultural commumties, ascending finally tO the full stage Of development as commercial and manufacturing natl()ns. KarI Marx had a surprisingly similar notion about the stages of develop- ment from feudalism t0 capitalism, although he had other ideas about what constitutes the ideal SOCiety and hOW change takes place. After World War Ⅱ , faith in development dogma was at its height. AS an answer tO the communist credO Of development, Walt Rostow, an economic historian at Massachusetts lnstitute Of Technology, ar- ticulated an influential capitalist theory that set out five "stages Of growth. " He argued that poor nat10ns could direct investment intO 、、 leading sectors" Of their econonues and ascend tO each Of these higher stages, finally achieving a self-sustaining prosperity based on mass consumptlon. But, as it has turned out, Japan's ascendance as a glObal economic superpower and the success Of the newly indus- trializing economres Of ASia, no 、 viewed as models by dozens Of Other countries, stand out as puzzling exceptions tO what is a rather pessimistic glob 引 picture 0f stubborn poverty. A global brotherhood 0f development advisers, consultants, and experts has grown up in the last forty years; most Of them are em- ployed by universities, mimstries, banks, and international agencles. By and large, they are optimists S1nce they are in the business Of selling hope to investors, foundations, and governments. World Bank economist Bela Balassa, for example, has laid out a neat theory Of salvation for poor countries. He speculates that countries will de- velop in stages by playing a sort 0f economc musical chairs. Thus countrres at lower stages Of industrial development" will take over light manufacturing—textiles, clothing, shoes, toys, and the like—as the more successful countries, South Korea, for example, move up tO become global players in high technology. But it has not worked out quite this way. South Korea and Taiwan, for example, had no interest in giving up their hold on the textile and apparel industries merely because they had become successful producers Of computers, cars, and microchips, although their entrepreneurs relocated factories tO lower-wage countnes JllSt as the first-rung industrial nations did. As the growth 0f the world economy has slowed significantly in the last quarter century, it appears that most developing countries, as they are indiscriminately called, appear locked int0 place. If they are in- deed on any path at all, for most countries in Africa and many in Latin America it iS downhill.

424 / GLOBAL DREAMS corporatlons, and they worry that expectations will pro- duce a backlash. But it is indeed true that governments in developing countries (and state governors in the United States) queurng up tO attract multinationals. " The jOb crisis and cash problems in poor countnes are SO severe that any number Of new jObS, any bOOSt in foreign exchange, is welcomed. Still' the courting 0f glob 引 corpora- t10ns has more tO dO with the absence Of alternatives than with enthusiasm for foreign firms. political leaders in populous developing countries are eager tO attract foreign capital since glObal companies Offer a small number Of skilled jobs with higher pay in many cases than the prevailing local rate, a larger number 0f semiskilled assembly j0bS' and a stilllarger number oflow-wage jobs for suppliers or contract labor. Debt-ridden countries need foreign exchange, and glObal corporations with 10C 引 export operations are sometimes the only available source. Develop- ing countries that sharply restricted foreign investment in the 1970S have now opened their doors tO such firms because they see no Other way to solve balance-of-payments problems. Other paths t0 devel- opment that they had hoped t0 take have turned out t0 be dead ends. When China, despite its huge resources, abandoned Maoist autarchy, politicalleaders in poor countries rethought the practicality 0f "self- sufficiency. " The collapse 0f socialism in Russia, the exposure 0f the corruption and bankruptcy Of so-called 、 countrles and the trend toward privatlzation" and 、 almost everywhere have altered the way foreign capital is perceived. The radical dreams Of the 1970s—massive government-to-government transfers, Marshall Plans for the Third World, a global North—South bargain, the New lnternational EconomiC massive South¯ south trade—have become casualties 0f the global shift in ideological fashion. A more sober and realistic understanding 0f the global power relations now rergns. For all these reasons, the bargarmng power Of governments VIS-a-vis foreign capital has declined. The critics are now confronted by the astonishing S1ze, pace, and diversity Of transnational economlC activity. The face Of the foreign company has become blurry. Corporations chartered in Delaware present themselves as American corporattons when it suits their in- terests and emphasize their when it does not. Alli- ances struck between competing firms mostly based in the three affluent regions of the industrialized world—North America, Europe, and East Asia complicate the meanings Of domest1C and foreign, friend and foe, us and them. Twenty years ago the words "foreign

MONEY WITHOUT A HOME / 399 pronounced impact on the financial-services industry than on any Other sector Of the world economy. lt is almost a cliché in the industry now tO say that informatlon about money is as important as money itself. 、、 From the first tele- graph links and telephone exchanges in the late mneteenth century t0 the development 0f fourth generatlon computer languages t0daY' Bernard Hoekman and sauve maJOr advance information-related technologies has tended tO find its first commer- cial application in the financial sector. " The informatlon revolution opened up the banking business tO all sorts Of newcomers and this explosion of competition changed what a bank 100ks like' indeed what it IS. On October 27 , 1986 , the "Big Bang," as the chairman 0f the London stock Exchange first called it' went 0 幵 in the CitY 0f Lon- don, ending 200 years 研 comfortabl% statelY' and expensive trading practices on the London stock Exchange. Overnight the market was deregulated and opened t0 foreign banks and securities firms 0f all sorts. An electromc marketing system modeled on the new American computer-age stock exchange' NASDAQ' was installed t0 take the place of old-fashioned floor trading. The London Stock Exchange was a centerpiece Of world capitalism years after the British Empire had faded, but it had been run much like a gentleman's club. The Exchange was ln a position tO exact high fees and charges for the privilege 0f trading on its f100G and t0 be extremely ch00SY about whom tO let in. By the 1980S , however, stuffiness and monopolistic practices could not withstand the onslaught Of telecommunications technology. Traders could now bypass London and deal directly with markets in New York and TOkyo at much less cost. Deregulation was a strategy for trying to get lost business back. As the New York Stock Exchange had done more than ten years earlier' the London Stock Exchange abolished fixed commissions for traders, and it now permitted firms to act as both wholesale dealers and brokers. SuddenlY' U. S. com- mercial banks that were barred from the securities business at home could plunge into this market in neatly jumping over the wall Of separation between lnvestment and commercial banking pro- vided under the Glass-Steagall Act 0f 1933 , the cornerstone 0f mod- ern U. S. banking regulation. (With the Great Crash and its consequences still fresh in the Act was intended tO forbid banks tO act as underwriters for corporate securities. )

BANKERS 1N A WORLD OF DEBT / 383 dividend almost by half, and over the next year and a half he replaced five of his six top executives and cut 11 , 000 jobs. BY the end 0f 1992 Citi had recovered enough tO convince investors tO pay $ 30 for the stock. Reed's j0b (and his $ 2.2- mi Ⅲ on annual compensation pack- age) seemed safe. lronically, the U. S. bank that had done more than any other t0 escape federal regulators had been saved bY Uncle Sam. VI. As Citibank officials bet the future of the bank more and more on the financing Of consumption rather than on the financing Of production' they are countrng on governments everywhere tO abandon their Old- fashioned Benjamin Franklin outlook on the world and give a green light to heavy consumer debt. The success 0f the G10bal Shopping 、 la Ⅱ depends upon the expanslon Of consumer credit across the world. The goods on display, the physical appearance 0f the shops where they are sold, and the ways they are advertised and promoted from Taiwan tO Santiago are more and more clones Of American onginals. The missing ingredient for replicating the American boom ln consumer spending in Other places lS easy credit. But iS the glObal consumer-credit system a house Of cards? There are built-in limits, cultural and に g 引 , that could dash Citi's hopes. ln ChiIe, for example, people use personalchecks t0 pay bills instead 0f credit cards since they are almost univerSally accepted. (Writers Of bad checks are hauled 0 幵 t0 jail.) Germans refrain from running up large credit-card balances because the culture historically frowns on debt. (The German word for debt and guilt are the same. Citibank avoids thiS unfortunate assoclation by a COined expresslon ” 47 R ″黻て 4 - Ⅳ 4 , which roughly means "credit that empowers. ) ln ASia the governments Of Malaysia and Singapore' worried about poor people hurt by a spending-on-credit binge' have stepped in t0 raise the mimmum-lncome and thiS limits market to well under 10 percent 0f the population. The fundamental limitation on the Ob 引 consumer-credit market is demographics. J0hn Reed points out' "There are 5 billion people living on earth. probably 800 million 0f them live within societies that are 'bankable' and probably 4.2 billion are living within soci- eties that in some very fundamental way are not bankable. I think it's a great danger as we ー 00k out between now and the turn Of the

18 / GLOBAL DREAMS the window through which t0 explore the r 叩 idly changing world 0f finance not only because Citi is a venerable institution that keeps reinventing itself as the glObal economy changes, but because it has been an lnnovator in overcoming the barriers tO glObal banking. We explore the political and social implications 0f globalization 0f 6- nancial markets and the fierce competition among U. S. banks and their much larger competitors based in Japan and Europe. Viewed together, these four webs Offer a picture very different from that of a global village. The G10bal Cultural Bazaar is reaching the maJority of households with its global dreams. Much smaller numbers are playing any role at all in the three networks that pro- duce, market, and finance the goods and services. ln the new world economy, there is a huge gulf between the b neficiaries and the excluded and, as world population grows, it is wldening. III. have made a point Of picking innovative companies that are leaders in their industries.With the conspicuous exception Of Philip Morris's cigarette business, which the company promotes with a disregard for health and truth, these compames are a positive SOCial force in many ways. They make things millions 0f people want. They are more envlronmentally conSCIOtlS than many, although by virtue Of the scale Of their operations they are significant polluters and gobblers 0f natural resources. They treat their employees decently and pay well in most cases. ln intervlews with top executlves at Bertelsmann, Sony, and Ford—Philip Morris and Citicorp declined t0 cooperate in the project—、 encountered exeCUtlVes Of broad ViSion and understanding 0f glob 引 issues that affect their markets. Their capacity for global thinking struck us as far more developed than that exhibited by most officials 0f national governments. But they d0 not appear tO dwell much on the long-term social or political con- sequences Of what their companies make or what they dO. The com- bined negative impact Of corporate activities on the jOb market or the environment or educatlon or family life is regarded as beyond their power tO address and therefore not within their province. b()()k iS not an exposé Of rapaclous corporatlons, corporate greed, or corporate corruption. Had this been our alm, we would have picked any number 0f 0ther companies t0 study. Rather, our

168 / GLOBAL DREAMS unprecedented numbers Of customers intO the malls, where they parted with astonishing numbers 0f dollars. Japanese assembly-line workers and hard 、 vorking salarymen began consummg more as the government in T0kY0, battered by its angry trading partners, let it be known that saving could be overdone and that it was no longer always unpatriotic t0 buy things made by foreigners. Year after year affluent Germans managed tO save more and tO spend more at the same tlme. AS glObal competition intensified, marketing became the preoccupa- tion Of the great corporations. At the end Of the decade, forty-seven chairmen of global companies, including the heads 0f IBM and AT&T, were polled about the future of their companies, and most of them said that they expected tO recruit their successors and Other top 10 executives from their marketing divisions. Heineken, the DutCh brewer, proudly called itself a 、、 marketing company with a produc- ” 11 tion facility. ln the early 1970S Lee S. Bickmore, then chairman of Nabisco, mused about his plans for a global TV ad that would project a box of Ritz crackers on screens around the globe and reach 2 billion potential munchers. lt was a tlme Of lyrical celebration Of the multi- national corporation, but the age Of globalization had not yet come. Nabisco's global commercial never appeared. The cookie company, having been swallowed up by a tobacco company, became the target of the largest and most famous leveraged buyout of the 1980S. But in the 1980S the age of the global ad finally arrived. The best-known advocate of global marketing was Theodore Levitt, a professor at Harvard Business Sch001. Arguing that 、 'the products and methods of the industrialized world play a single tune for all the ” 12 world and 引 1 the world eagerly dances to it, he insisted that companies should start thinking 0f themselves as global rather than multinational. 、、 The multinational operates in a number Of countnes, and adjusts its practices in each—at high relative costs. " The global corporation "sells the same things in the same way everywhere. " lt is no longer necessary, he argued, t0 be so "respectful" 0 日 ocal differ- ences, tastes, quirks, and religions. Push your products in the right way, and the 10C 引 customs will 信Ⅱ away. Surely Hindus and Mus- lims both need to brush their teeth.

150 / GLOBAL DREAMS ln Tanzania the government records 10C 引 music and plays it over the state-controlled radi0. A few years ago the Ministry of Housing em- ployed a Tanzanian-style jazz band to record a song to popularize a 19 new way to build huts. Musicians, SOCial crit1CS, and politicians ln countries Of Asia, Africa, and Latin America worry that the massive penetration of transnational sound marketed by the Big Six will not only foreclose employment opportunities for ー OC 引 artists but will doom the tradi- tional music Of their ー OC 引 culture. 、、 My fear is that in another 10 or 15 years' time what with all the cassettes that find their way into !he remotest village, and with none Of their own musrc available, people will get conditioned to this cheap kind of music. " This remark by a Sri Lankan musician typifies the anxleties throughout the nonindus- trialized world that industrial musical products will sweep away hun- dreds, perhaps thousands Of years Of traditional music. 、、 However small a natl()n Ⅵ℃ are, Ⅵ℃ StiII have our way Of accom- panymg, intonating, making movements and SO on. we can make a small but distinctive contribution tO world culture. But we could lose ” 20 ln the 1980S the enuronmental movement began to popularize the important idea that biological diversity is a precious glOb 引 resource, that the disappearance of snail darters, gorgeous tropical birds, and African beetles impoverishes the earth and possibly threatens the survival Of the human species. The cultural-envlronment movement has no powerful organizatlons promoting its message, but it has a large, unorganized global constituency. The feeling that world cul- ture will be degraded if diversity is lost is widely shared among artlStS, cultural conservatlves, and nationalists. Yet these concerns are overwhelmed by the sheer power of glob 引 popular culture, which threatens local cultural traditions and the traditional communities from which they spring. Bertelsmann and its competitors are acutely consclous Of these feelings, and that is one reason why they go out Of their way tO promote and market local artists. The other reason IS thatlocal muSIC can be a profitable market. ln the early 1980S Roger Wallis of the Swedish Broadcasting Cor- poration and KriSter Malm, the director Of the MusiC Museum ln Stockholm, conducted a four-year study of what was happening to local musrc in twelve countrres around the world as a result of the rise of the glob 引 music industry. The arrival of the Beatles and Rolling Stones in Sweden in the 1960S stimulated more than a thou- sand Swedish pop groups who sang in EngIish, but most of them