Sunday, 22 July 2012

World 3.0 by Pankaj Ghemawat

This book provides a look inside the global corporate mindset through the eyes of a leading business school academic and consultant. Ghemawat's World 3.0 is not seen as a living planet with human societies within its biosphere. Rather his World 3.0 is a view of jostling geopolitical actors: nation states ("developed" or "emerging markets") and global corporations as well as smaller businesses, set within markets from global to local and today's international economic infrastructure, including the IMF, World Bank, WTO, that emerged with this current system.

Ghemawat is essentially a humanitarian liberal reformer trying to temper the global competition between the dominant corporations for market share and penetration of developing countries for access to their resources. He counsels his corporate clients to show sensitivity to local cultures and politics – in their own enlightened self-interest so as to prevent "anti-globalists" and other political backlashes.

Ghemawat's view is also from inside the box of conventional economics and its predominant goal of GDP-measured economic growth, citing all the now-suspect macroeconomic statistics and indicators of inequality, unemployment, inflation, capital investment, etc. from IMF, World Bank, WTO, NBER and other government and academic sources. He does note the ideological components of these macroeconomic categories and the tug-of-war continuing between Harvard's worries about "externalities" and the Chicago School's free market fundamentalism and disdain for governments. These inside-the-economics-box wars between "saltwater v. freshwater," Keynes v. Hayek continuing today between Chicago versus the Roosevelt Institute and INET – are getting tiresome. This economic view and its litter of ideological and theoretical detritus has long been de-bunked by game theory, behavioral and brain scientists, endocrinologists, complexity, chaos and systems theorists ("Real Economies and the Illusions of Abstraction," Henderson).

Macroeconomic models have long held sway over policy and national debates, preventing for example the overhauling of GDP promised by 170 nations in 1992 at the UN Earth Summit in Article 40 of Agenda 21. Thus, the publics in 12 major countries see the need for including all the indicators of health, education, poverty gaps and environment into GDP and national accounts. This has been accomplished by accountants and micro-economists at the company level in ESG (environment, social, governance) "triple bottom line" accounting (GRI) used by 1600 corporations.

While Ghermawat share these social and ethical reformist goals, he does not cite such global standards, nor the 800 institutional investors who support such accounting reforms of the UN-PRI, the UN Global Compact, UNEP-FI, ILO or the UN's goals in its Green Economy Initiative. Neither does the author reference the TEEB models and the new "dashboard" approaches to measuring national progress Beyond GDP ( such as the Calvert-Henderson Quality of Life Indicators (, Hans Rosling's and Jochen Jesinghau's web-based information displays.

Nevertheless, World 3.0 is a very useful book, seeing inside the minds of global corporate executives and their enabling academic sycophants like the Harvard Business School. As the Oscar-winning movie Inside Job shows, these academic consultants have used their ideological influence and economic theories to manipulate politicians, media and public opinion with little accountability. One hopes that reforming business schools and their obsolete economic and financial models and curricula will further engage Ghemawat and his colleagues. Harvard produced Enron's Jeff Skilling and Kellogg produced Andy Fastow. These and other business schools spawned the financial engineers that gave us CDOs and CDSs and the resulting Wall Street collapse of 2007-2008 and the widespread suffering of innocent local businesses and citizens. As influential academic consultants like Ghemawat widen the scope of their research, they will be welcome in the ethical markets. We invite them to join the over 80 signers of our Transforming Finance statement. These reforms are driving the next wave of human innovation beyond the fossil-fueled Industrial Era: the Green Transition to the cleaner greener information-rich technologies of the Solar Age.

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