GE, Communism and the recession

Business Weekly talks to Jeff Immelt of GE on the challenge of leading one of the world's biggest firms during the recession.

Plus how are the old communist countries faring during this meltdown?

Vladimir Ilyich Lenin got much wrong but one thing right. He wondered what good communists should do in a storm on a mountain as they struggled for the summit. His advice: "descend, seek another path, longer, perhaps, but one that will enable them to reach the summit".

Clearly, the chief executive of GE, on one measure the world's biggest company, has been reading his Lenin. Jeff Immelt took the top job, following Jack Welch who was widely thought to be the world's most impressive business leader at the time. If ever there were a tough act to follow it was that.

And then came the great skid which affected GE in lots of ways because of its sheer size and diversity - it owns television channels, not least NBC, but also a big finance company. It manufactures everything from medical machines to locomotives to aero-engines.

But big picture first, Jeff Immelt gave the BBC's Business Editor, Robert Peston, his broad impression of what had gone wrong.

Twenty years ago, the Berlin Wall came down and soon after the German Democratic Republic, the old East Germany, was dead and largely un-mourned.

But now its capitalist successor, the eastern part of the unified Germany, undergoes the ructions of recession.

In the long-standing capitalist countries, crises come and crises go. They bring pain, sometimes more sometimes less, but they don't bring widespread questioning about the whole system,or they haven't since the 1930s.

But what about the old Communist world where memories remain of communism, perhaps sepia tinged memories as time alters realities.

Lesley Curwen has been to one small town in East Germany that's a microcosm of the old German Democratic Republic.

Russia, at the heart of the old system, is expected to see its economy shrink this year by an astounding 8%.

Steve Evans asked Gabriel Stein, the chief international economist for Lombard Street Research in London, what he thought the current diminishing economy would mean for ordinary Russians.

Finally, does microlending really work? Every year billions of dollars are ploughed into this sort of lending, and part of that is supplied through aid money, from donor governments. But is it money well spent?

Dean Karlan, professor of economics at Yale University, has studied how it works - and made the study rigorous by comparing groups with a control group in the Philippines.

A control group is a group identical to the one being observed except that it doesn't have what is being tested for.

As Professor Karlan told Lesley Curwen, the results raised serious questions about the effectiveness of microcredit in reducing poverty.

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28 minutes

Last on

Sun 2 Aug 2009 17:32 GMT