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Riots, bombs answer global capitalism
By ROSABETH MOSS KANTER First published: Tuesday, November 22, 2005
Seemingly unrelated events can turn out to have a lot in common.
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The riots in France revealed unrest in poor neighborhoods where young people of North African origin told reporters that they just want jobs and inclusion. At the Summit of the Americas in Argentina, mobs took to the streets to protest against President Bush, while Brazil, Argentina, Uruguay, Paraguay and Venezuela rejected the U.S.-desired Free Trade Area of the Americas. A few months earlier, rioters in Bolivia, demanding more power for Bolivia's poor and nationalization of the nation's oil and gas companies, brought down the government. In Jordan, bombings of three U.S.-based chain hotels -- Radisson, Days Inn and Grand Hyatt -- furthered the bloody pictures of 2005. The common thread: Radical extremists -- and not just radical Islamists -- are fanning the flames of discontent among poor people who feel left behind by global capitalism. We can write off each event as the actions of young hotheads or the violence of crackpots led by despots. But honestly, with the gap between rich and poor growing in many places, do sensible people really think that the poor and disfranchised will sit still and take it any longer? Of course, poverty doesn't cause crime. Of course, we should punish violent extremists to the max. But let's not give them excuses either, or help them find a willing pool of recruits who have nothing better to do. Take Latin America. The region has the world's largest disparities between rich and poor, between highly educated and barely literate. Youth unemployment in big cities hovers above 20 percent. Rio de Janiero is said to have the world's highest murder rate. On a recent trip to Sao Paulo to work with a large company, I was met by two security guards and helicoptered to the roof of downtown offices, where another large security contingent stuck by my side every minute. Affluent Latin Americans, like the well-to-do in Johannesburg, Paris or Miami, can barricade themselves in gated communities only so long before the violence hits home. If we don't care about helping the poor struggle out of poverty because it's the right thing to do or in the long-term interests of our nation, how about poverty reduction in the name of safety? For businesses, it's imperative to be seen as part of the solution, not part of the problem, or the backlash against free markets and trade will turn uglier. In 1995, when globalization was trumpeted in headlines declaring that "capitalism has won," I warned an audience of business leaders at the World Economic Forum in Davos, Switzerland, to be careful. If they didn't pay attention to social needs and help close the gap between top and bottom, the headlines a decade later could read "Socialism returns." It's 2005, and guess who's coming to dinner. Socialism is back in vogue in Latin America. Whatever one thinks about Venezuelan president Hugo Chavez's outrageous politics, he enjoys support from poor barrios because he has expanded access to educational and social services. Chavez called Mexican President Vincente Fox a "lapdog" of U.S. imperialism for backing Washington's trade policies at the summit. Perhaps Chavez's example reinforced Cuba's socialist stubbornness, as the government raided farmers' markets in what Reuters called an "anti-capitalist crackdown." Some large companies in the region are rising to the challenge of finding solutions to poverty. ABN AMRO Banco Real in Brazil is offering micro-finance to poor entrepreneurs in urban shanty-towns. Cemex in Mexico created an innovative program to finance housing materials in rural areas, bringing jobs as well as better housing to poor villages. Believers in a free-market economy (and I'm among them) had better be prepared to do even more to help lift the poor out of misery. Otherwise, markets will not be free enough or our cities safe enough, for any of us. For all the talk of a flat world with a level playing field, the world still seems pretty lumpy to me. When those at the bottom of the hill get tired of being trampled, they can easily erupt. Rosabeth Moss Kanter, a Harvard Business School professor and author of "Confidence," wrote this article for The Miami Herald. Her e-mail address is rkanter@hbs.edu.

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