Not everybody’s business

Corporate crowding into the tents of global governance
24 January 2014

As invitation-only Davos gets under way, our public space and politics shrink that little bit more across the globe. Rolling back state authority will turn today’s accountability gap into a yawning abyss.

Published at
Open Democracy

The annual gathering of “fat cats in the snow”, as one of those cats, U2’s frontman Bono, once named the World Economic Forum (WEF), continues to grab attention as a big platform for powerful people. More than two decades old, this schmooze fest will once again attract an estimated 2500 businessmen, politicians and some selected representatives of civil society’s polite camps.

There are few comparable events where your business card could end up in so many powerful people’s hands. But the media’s infatuation with the personalities neglects something bigger, namely how the private interests assembled at Davos have begun crowding in on public space in the rickety tents of international governance.

For a central argument made in Davos contends that when it comes to tackling global problems, nation-states and their public politics are not up to the job. They must therefore be replaced by a sleek new system in which ‘stakeholders’ –- that is transnational corporations, a few powerful governments, selected intellectuals and invited members of ‘civil society’ – will henceforth manage the world’s affairs together. Governments will become merely one actor among several running global affairs.

The working prototypes for such a scheme of governance are the invitation-only Davos gatherings themselves. The WEF proclaims that it represents the kind of global governance the world needs at a time where globalisation, as its founder Karl Schwab put it, has its “shining upside and the complex and unpredictable downside”.

In 2009, amidst the financial crisis, the WEF seized the opportunity to advance this vision of a corporate-led transnational governance through its Global Redesign Initiative (GRI). The aim was “to stimulate a strategic thought process among all stakeholders about ways in which international institutions and arrangements should be adapted to contemporary challenges.” Bankrolled from Qatar among others, the GRI enlisted some 1200 experts in thematic consultations. A year later it published a massive final report, Everybody’s Business: Strengthening International Cooperation in a More Interdependent World.

Ranging across issues as varied as chronic diseases, ocean governance and systemic financial risk, the GRI report argues that the way to manage just about every field of policy is through a stakeholder approach, claiming that “better coordination” between a self-select group of leaders is the best way to address complex problems. Intergovernmental agreements, international frameworks, enforceable hard law are out; voluntarism, codes of conduct and soft law are in. Corporations become part of global authority. However, and crucially, they are not expected to take on any mandatory obligations. Democracy is overlooked in favour of bringing the ‘right’ people together.

Meanwhile governments and democracies that up to now are seen as final policy authorities, are called upon to “re-invent” themselves “as a tool for the joint creation of public value.” The term “joint creation” refers to such things as public-private partnerships (PPPs). That of course ignores the usually less-than-mediocre experience of PPPs. As a British Parliamentary Committee recently verified, for example, PPPs largely burden public taxpayers with the costs, while enriching private financiers.

It is not hard to see the myriad dangers of this approach. Rolling back state authority while private bodies carry no real liabilities for consequences of their neglect or mismanagement will turn today’s accountability gap into a yawning abyss. Replacing democratic systems with stakeholder systems raises serious questions about representation and who is chosen to represent us. Substituting enforceable laws with voluntary codes of conduct introduces capricious ad-hoc ways of making rules and enforcing them. Given the public’s declining trust in today’s governance, already in thrall to private interests, WEF’s vision is hardly propitious for a stable public order that everyone, including business, needs.

The real danger of WEF’s proposal, though, is that its design has already passed from drawing boards to routine practices in many realms of our life, including health, nature conservation, trade, security, and digital rights. UN institutions have adopted corporations as leading partners, chiefly under terms of its UN Global Compact. It is seen in workings of the World Water Council or in Food-Water-Energy nexus summits where corporations are both the hosts and driving participants while governments and civil society take back seats. It is also evident in the many international boards and regulatory agencies that set standards and rules for specific industries which are either toothless or captured by the very corporations they seek to regulate.

The rise of ‘governance lite’ may have aided corporations, but it has proved of little use to people whose jobs, livelihoods and rights to public services have been hit by volatility, fraud and claims on public revenues stemming from the financial sector. People with obvious stakes in the workings and impacts of this kind of governance are consistently denied access to information and means to call the powerful to account.

More than 60 years ago, the UN affirmed sovereign nations and their peoples as the ultimate authority for international affairs. The UN Charter , after all, begins with “We the peoples” and affirms the “equal rights of men and women and of nations large and small”. While the practice of global management has fallen short of these ideals, no principles of governance enjoy wider endorsement around the world. A ‘global redesign’ is no doubt needed, but one that should genuinely reflect “everybody’s business” by preventing business interests from crowding the public out of the tent.