Harvard Book Store: Competitive Advantage Speakers: Joseph Stanislaw

Joseph Stanislaw is a leading adviser on international markets and politics. He is managing director of Cambridge Energy Research Associates, head of global research, and director of its European office in Paris. Dr. Stanislaw advises companies and countries on strategies in the newly evolving international marketplace. He holds a B.A. from Harvard University and a Ph.D. from Edinburgh University, and was a professor at Cambridge University. He was formerly senior economist at the OECD International Energy Agency in Paris and serves on the board of the Global Decisions Group and of the American University in Paris. With Daniel Yergin, he is co-author of The Commanding Heights.

Joe Stanislaw spoke at our Competitive Advantage Breakfast on February 18, 1998, taking the place of co-author Daniel Yergin, who was unable to be present.
Dr. Stanislaw began his talk by asking the audience to "imagine a world of unfettered trade," a dynamic, global economy in which technology plays a central role and money flows from rich to poor countries. In some ways, he said, we have already achieved this goal. He pointed out that one hundred years ago, we had already established such a global economy, dominated and assisted by new technologies such as the steam engine. In this era -- the late nineteenth century -- enhanced communications enabled global trade to an extent not possible before. Yet the advent of World War I ended our first attempt at a global economy, he said, and we were not able to begin rebuilding it until the fall of the Berlin Wall in 1989.
He went on to discuss what happens when government controls the marketplace -- the "commanding heights" of the economy. Lenin, in the Soviet Union, developed this philosophy of government regulation of economy, and it quickly spread to other totalitarian governments, as well. However, Stanislaw said, such government control will never satisfy consumers, because it leads to the production of low quality goods and offers the buyer no choice but to purchase such inferior items. Consumers -- and the marketplace -- must assert control of the economy and push government out of the commanding heights of business and industry.
Nowadays, Stanislaw said, the market reacts much more quickly to a government's actions, and this makes it more difficult for the government to get away with poor decisions that affect consumers. This also applies to the actions of businesses, he said -- they have to consistently support the market and their customers, or people will quickly lose faith in the market, as they did in the 1920s and '30s. Now, companies are prompted to change to keep up with consumer demands. Stanislaw gave the example of car companies changing their practices to make more environmentally friendly cars because that is what consumers want to buy -- under a government-controlled economy, consumers would have simply bought what the government wanted to produce, regardless of whether or not it reflected their values.
Stanislaw concluded his talk by proposing that the government should act as referee in the economy -- not taking any direct action itself, but ensuring that business and industry continues to support consumers and sustain the marketplace. He left us to consider who will act as referee in a Web-based economy, which transcends government boundaries and control, yet presents risks to both consumers and businesses.
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