I used to think that big companies are wonderful. After founding Saatchi and Saatchi with my brother in 1970, we became the biggest advertising agency in the world. But I’ve changed my mind. Big companies may be as bad as big government.
My startling revelation occurred when Mrs Thatcher came for lunch. After three consecutive General Election victories, she had just left office as Britain’s iconic Prime Minister.
Over the course of our conversation, I asked her if she knew the scale of the involvement of the top five banks in Britain in all financial transactions – loans, mortgages, insurance, credit cards, etc. She said she didn’t. I told her it was 80 per cent. She said, eyes blazing: “It’s impossible!”
She didn’t mean that it was not true. She meant that it was intolerable.
Until then, I had always liked the original version of the “free market” as a sort of perpetual referendum. Every day, hundreds of people cast their votes for the thousands of products and services on offer, and from the competition to win their votes better products and services arise.
When I was starting out in business, a new global order was emerging, and Procter & Gamble were leading the way in changing the world. They demonstrated how to go from a system of national managers to regional managers to global managers. I copied them and tried to be a good student: if a company works to sell soap powder in Beijing, then why not in Berlin? But people said that all my talk of globalisation was rubbish, a Saatchi business trick! I just thought it was commonsense.
But something has obviously gone wrong.
I had long been a firm advocate of the globalisation of companies – doing the same thing in the same way everywhere.
I thought (and still do) that the companies who followed the global route would literally pave over the local companies stuck in the old ways of doing things. I believed that globalisation was just sensible business: the economies of scale, etc.
I had learnt how to manage a global enterprise, Saatchi and Saatchi, in many countries with many executives but with one definite system: the global financial and brand management. Those on the inside would survive and prosper, whereas on the outside you could make a living in a niche but that would be about it.
I was one of the unfortunates who trusted most strongly in “free markets”. We struggled to understand how free market competition could possibly lead to a situation where the capitalist model would be discredited, not by its well-rehearsed moral consequences, greed and selfishness – which are part of the model – but by its unintended economic consequences: the creation of giant global cartels beyond the reach of national governments. Being too big to fail, perhaps they are also too big to care.
I had no idea that the unintended consequence of globalisation was a world with a huge imbalance of power between the individual customer and the giant corporation.
To confirm my horrible discovery, I recently called three of Britain’s biggest global companies. It took longer to get through to Vodafone than the White House. It took longer to speak to BT than the House of Lords. It took longer to reach UK Power Networks, the biggest provider of electricity in England, than to reach the Prime Minister at No 10 Downing Street.
I have suffered dismay and disappointment as capitalism’s story unfolded. I have felt a strange sense of disillusionment.
It was shocking to think that I had accidentally helped to create a world of staggering inequality, as in America where the average pay of a CEO is 440 times the average employee. A sense of powerlessness and unfairness results from a world of global corporations whose governance (and maybe taxes) are beyond public control.
Perhaps Marx was right after all: “After years of internecine conflict among capitalists, there will be fewer and fewer capitalists controlling vaster and vaster empires.”
At least with a powerful state you know who’s in charge. If you want to complain, you know the name and address. The Prime Minister. 10 Downing Street. But with these big companies you have no idea. With big government, you can change the leader every now and again. But with these big companies you wouldn’t know where to begin.
Can it be true that the end result of competition is the end of competition? That would be a terrible outcome. Because capitalism without competition is exploitation.
No wonder we feel confused. We suffer two forms of tyranny. First the tyranny of Big Government and second, the tyranny of Big Companies. We are not sure which is worse.
It may be unwise to ignore the challenge of this new stage of capitalism, to stubbornly insist that the existing version of free market capitalism is the only way forward. That would open the door to Chinese communism, accessing millions of people – especially young people – who dislike the status quo and want change.
Orgasm by Maurice Saatchi, a collection of essays challenging received wisdom, is out now (Eris Press, £80)
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