State of Civil Society/ The search for an equitable economic order The great divide: rich have very different stakes and control of exercised on behalf of those with economic our political systems and the exercise of this power, who reward them in their own way.” exposing the power is seen most visibly in who benefits She goes onto argue that they are united by Davos class from the global economy. a programme “usually called ‘’, based on freedom for financial innovation, behind global The Davos Class no matter where it may lead, on privatization, deregulation, and unlimited growth; on the economic Davos, perhaps more than any other supposedly free, self-regulating market and free inequality gathering, epitomises the way political trade that gave birth to the casino economy.”3 Nick Buxton power and global governance have in recent Transnational Institute decades been entrenched into a small A 2014 report by Transnational Institute (TNI), corporate . This elite has succeeded entitled State of Power – Exposing the Davos not only in capturing our economy, but also Class, examined how successful neoliberalism Two years after Occupy gave voice to popular our politics – and increasingly our culture has been in enriching economically as well as anger at growing inequality worldwide, the and society, too. Davos is the networking amplifying the power of this small corporate issue of the 1% versus the 99% continues to conference par excellence, where economic, elite.4 It revealed how the world’s wealth is top the political agenda. At times, though, this political and cultural powerhouses are concentrated even more than is popularly takes a very incongruous form, and no more so encouraged to mingle on equal terms. Over understood, not in the 1% but the 0.001%: than in January 2014 when multi-millionaires cocktails and asparagus mousse, corporate 111,000 people control US$16.3 trillion, gathering at the luxurious ski resort of Davos, executives can hobnob with prime ministers, equivalent to a fifth of the world’s GDP. Even declared inequality their chief renowned academics and the occasional rock in the wake of the economic crisis, the world’s concern. The (WEF) star celebrity, and stitch the deals that will millionaires have thrived. In 2012, the wealth even seemed to welcome admonishment keep profits flowing. The most likely Davos of the world’s millionaires grew by 11% while from the Pope and Oxfam, with Klaus Schwab, status update, as Daniel Gross of the household income in the European Union and the executive chairman, agreeing that, “we Daily Beast accurately satirised, is: “About United States either stagnated or, in some have too large a disparity in the world.”1 to go into top-secret meeting with powerful cases, fell. person. Will tell u all about it when I’m back But there was one mea culpa that those at in ny/dc #wef.”2 This economic wealth is matched by growing the WEF were not willing to make: admit that dominance of transnational in the existence of exclusive meetings and the Political scientist Susan George has labelled the global economy. Today, 37 of the world’s agenda they coordinate – of the economically this elite the Davos Class, noting that they largest economies are corporations. Walmart, rich and politically powerful – is one of the are “nomadic, powerful and interchangeable. Shell, Volkswagen and others have become key reasons for this gross division of wealth. Some have economic power and usually a modern-day empires, bigger economically Economic inequality is fundamentally a considerable personal fortune. Others have than Denmark, or Singapore. A historic reflection of political inequality: the poor and administrative and political power, mostly study by mathematicians in the Zurich 145 State of Civil Society / The search for an equitable economic order

Polytechnic Institute revealed an even greater become a well-oiled one, with politicians and This corporate capture of politics and the social concentration of economic power when they businessmen changing places regularly. deprivation that often results is taking place in focused on ownership of these companies. nations worldwide. A study by the Bureau of In a study of 43,000 corporations, they found The infection has been so effective and thor- Investigative Journalism showed, for example, just 147 companies control 40 per cent of the ough that it is increasingly difficult to assess that the financial services sector in the United economic value of the entire sample. Most of who is a public official and who is a corporate Kingdom spent UK£93m on lobbying in 2011. these are banks, hedge funds or other financial leader, given the revolving door between these This money secured significant policy changes, services corporations. Even an advisor to positions. One example covered in TNI’s State including slashing UK tax, neuter- the Deutsche Bank, George Sugihara of the of Power report is the European Round Table ing a pension scheme supposed to benefit mil- Scripps Institution of Oceanography in La Jolla, of Industrialists (ERT), a network of about 50 lions of low paid temporary workers and killing California, admitted that, “It’s disconcerting to of Europe’s largest corporations, which in the off a new corporate super-watchdog.8 There see how connected things really are.”5 early 1980s decided to work together to shape are, of course, no comparable lobbies for cit- EU policy and encourage the development of izens who have lost their houses or savings as Corporate capture a competitive (read: de-regulated or re-regu- a result of the financial sectors’ reckless deci- lated in their favour) ‘internal market’. sions that caused the global economic crisis. Corporations have been able to achieve this unprecedented power through a systematic By 1993, the group had been so successful Corporate-led governance takeover of the state, rather like a virus that one senior ERT official said their propos- infects a body. Driven by a profit-making als and the EU’s proposals were almost done The corporatocracy also increasingly seeks motive embedded in their genetic make-up, in “parallel… we saw their drafts and they saw to poke its nose into the realms of global corporations have sought at every stage to our drafts. And one of my friends, a very senior governance. One approach taken has been to remove any disadvantageous regulatory official in the Commission, he said to me, there promote ‘multi-stakeholderism’: the idea that barriers and facilitate their cancerous growth. is basically no difference between them.” More policy is best developed if you bring together A book published in 2014, A Quiet Word: recently, ERT’s demands for ‘fiscal consolida- different stakeholders – , Lobbying, Crony and Broken Politics tion’ – in other words, austerity for ordinary corporations, citizens. This has been widely in Britain, chronicles how corporations have people but not for publicly bailed out corpo- embraced by some civil society groups as an become adept at using an array of tactics, rations – have been wholeheartedly applied effective way of bringing decision-making from well-resourced media relations work by European governments and the European processes ‘closer to the citizen’ and therefore to funding think-tanks and fake grassroots Commission, with terrible social costs. After making them more democratic, legitimate groups, in order to push through several years of EU austerity packages, Greeks and accountable. This approach is usually policies beneficial to their bottom line.6 are now on average almost 40% poorer than combined with promotion of corporate Corporations are also staffing government, they were in 2008. There has been a drastic social responsibility (CSR), the idea that whether by providing contractors and running rise in those losing their homes, while one in corporations can be driven by factors other previously public services or by seconding three children (around 600,000) are now living than profit and can be social actors that take staff to ministries. The revolving door has below the poverty line.7 responsibility for their actions and impacts. 146 State of Civil Society/ The search for an equitable economic order

This approach has led to the emergence of world of democratic demands channelled case, civil society is constantly outgunned hundreds of multi-stakeholder corporate through states is replaced by a slicker, fast- by corporations in terms of resources, responsibility initiatives, such as the Forest moving, corporate-led governance. In fact, which means that effective monitoring and Stewardship Council and the Extractive GRI argues quite bluntly that “governing evaluation of corporate commitments is Industries Transparency Initiative, as well as today is no longer a matter for government hard to evaluate and control.11 policy forums such as the World Water Forum alone… governments’ basic ‘public functions’ and the Global Knowledge Partnership. have been redefined… hence the challenge It is worth heeding the warning of Marcos is how to re-invent government as a tool Colchester, reflecting on the history of the Davos has been a very keen advocate for for the joint creation of public value.” In Forestry Stewardship Council, which he multi-stakeholderism and corporate social other words, governments and citizens helped found and eventually resigned from responsibility. In 2009, taking become just actors amongst in frustration at its inability to affect high advantage of the global crisis, many, forced to acquiesce rates of deforestation: WEF launched the Global with a process driven by Redesign Initiative (GRI), profit-seeking.10 “I think there is a major problem with the aiming “to stimulate a model of self-regulation which gives no strategic thought pro- A flawed role to the State, to the rule of law, or even cess among all stake- record to leverage for reformed governance by holders about ways government itself. Instead, almost without in which interna- Advocates promote realizing it, conservationists have replaced tional institutions and multi-stakeholder the organs of democracy: we now have arrangements should be and CSR initiatives consumers instead of enfranchised citizens; adapted to contemporary saying they have we have NGOs in watchdog roles to replace challenges.” Its final report facilitated better the executive; we only have recourse to advocates a stakeholder and transparency and more the media – the 4th Estate – as a court of corporate responsibility approach consultation with affected appeal.”12 in every aspect of public policy.9 The theme groups, for example. However, in many of this year’s WEF, ‘The Reshaping of the cases, multi-stakeholder processes can also One could of course add that the media World’, clearly builds on this proposal. end up legitimising exploitation as they itself, dominated by corporations, is not stave off regulatory action that might halt always a great ally either. GRI’s vision rejects intergovernmental or prevent destructive activities in favour agreements, international frameworks of market-based solutions. They also tend Marcos’ personal experience of the failings and enforceable hard law that would to exclude conflictual civil society groups in of CSR is starting to be confirmed by data. constrain corporations, favouring instead favour of more consensual ones, which are In 2013, an exhaustive three-year study volunteerism, codes of conduct and soft often better funded, willing to make deals of more than 5,300 small and medium law. In the world of Davos, the tired old slow and accept ameliorative change. In either enterprises and more than 200 large firms 147 State of Civil Society / The search for an equitable economic order

based in Europe came to the conclusion own resources and development plans, it that CSR activities “have not made a Extending the also prevents any proper regulation of cor- significant contribution to the achievement porations who are allowed to act with impu- architecture of impunity of the broader policy goals of the European nity.”15 A report by TNI in 2014 unveiled Union.” The researchers argued that the how these trade and investment treaties study “raise[s] important challenges to long- Rather than curtailing or limiting their power, are wreaking havoc in Europe’s crisis coun- accepted beliefs and arguments in favour or forums like Davos are the hatching place for tries, where corporate speculators are using defense of the traditional approach to CSR.” new attempts to extend corporate power and investment agreements to sue Cyprus, Yet despite the EU funding the project with prevent increased state regulation. The idea Greece and Spain alone for at least €1.7 €2.7 million, it has been noticeably silent on for the North American Free Trade Agree- billion for policies the governments took the implications of the study’s conclusions ment (NAFTA) between Canada, Mexico and to deal with the crisis. Spain is, as a result, for European policy, which continues to the US germinated at Davos. Twenty years spending millions in 2013 on defending advocate for corporate-led governance and later, even its strongest advocates find it hard itself in lawsuits; at the same time, it cut against binding rules.13 to argue that there have been many bene- health expenditure by 22% and education fits. For Mexico, its legacy has included one spending by 18%.16 Neither CSR nor multi-stakeholder initiatives of the lowest economic growth rates on the can escape the reality that the political continent, severe environmental contam- One woman, when asked at the end of power that economic giants now have ination, devastation of the rural economy the WEF in 2014 what happened to the unbalances the playing field for any other and soaring levels of violence that have theme of inequality responded, “It kind of participants. This is very clearly on show at wracked the country. 14 disappeared.”17 For a small elite used to a Davos meetings, which Schwab likes to tout certain way of living, focusing on lives they as a theoretical working model for the global Unperturbed by the impact of their policies will never experience or never even see governance toward which Davos aspires. In on those they will never see, corporate and must be a strain. Relying on the Davos class 2014, while some 1,500 business delegates political were in Davos in 2014 push- and their models of governance is no answer attended, they were joined by only 37 civil ing for the conclusion of new trade deals, to the deepening divide between those with society organisation (CSO) leaders (mainly particularly the Transatlantic Trade and power and wealth and those without. A from large civil society organisations) and Investment Partnership (TTIP). Worldwide greater hope lies with civil society and social 10 labour leaders. Moreover, a look at the the surge of trade and investment agree- movements challenging corporate and elite prominent corporate members of Davos ments have created what TNI’s anti-cor- power and deepening democracy at local, quickly unveils a history of fraud, tax evasion, porate campaigner Brid Brennan calls an national and global levels. human rights abuses and environmental “architecture of impunity” for corporations degradation, none of which, it seems, who use these agreements to sue any gov- Fortunately, calls for binding obligations on disqualifies them from having open access ernment for measures that affect their prof- transnational corporations and a rejection to Davos and governments worldwide. its. Brennan argues, “This not only under- of a corporate-led international governance mines government capacity to control their are being heard ever more loudly within 148 State of Civil Society/ The search for an equitable economic order civil society. Nationally, campaigns are 1Global elites finally admit income inequality is a problem, Multi-Stakeholder Governance Forums: The Crisis of the Forest Salon.com, 29 January 2014, available at: http://www.salon. Stewardship Council, 2012, available at: https://www.academia. challenging corporate capture of government com/2014/01/29/the_super_rich_from_their_alpine_resort_ edu/2602980/The_Limits_of_Multi-Stakeholder_Governance_Fo- with ever more vigour, for example in the US inequality_is_a_serious_issue_parnter/. rums_The_Crisis_of_the_Forest_Stewardship_Council_FSC_. by challenging corporate rights under the 2D Gross, tweet, available at: https://twitter.com/grossdm/ 13Impact Project: Executive Summary, CSR Impact, September constitution. Worldwide, a rapidly growing status/162443049279029248. 2013, available at: http://csr-impact.eu/documents/documents- detail.html?documentid=22. movement, Stop Corporate Impunity, has won 3S George, Whose Crisis, Whose Future? (Cambridge: Polity Press the support of more than 100 international and John Wiley & Sons, 2010), available at: http://www.tni.org/ 14M Weisbrot, 20 years of regret for Mexico after NAFTA, Guardian, tnibook/whose-crisis-whose-future 4 January 2014, available at: http://www.theguardian.com/ organisations and is advocating for a Peoples’ commentisfree/2014/jan/04/nafta-20-years-mexico-regret. Treaty to regulate and restrict the power of 4N Buxton (ed.), State of Power – Exposing the Davos Class, Transnational Institute, 2014, available at: http://www.tni.org/ 15Personal communication with author, 12 March 2014. corporations. In September 2013, Ecuador briefing/state-power-2014. 16 backed by the African Group and a number of Above fn 7. 5A Coghlan and D MacKenzie, Revealed – the capitalist network other countries echoed this civil society call, that runs the world, New Scientist, 24 January 2011, available at: 17Income Inequality was quickly forgotten at Davos, Daily Beast, http://www.newscientist.com/article/mg21228354.500-revealed- 26 January 2014, available at: http://www.thedailybeast.com/ at the UN, saying: -the-capitalist-network-that-runs-the-world.html. articles/2014/01/26/income-inequality-was-quickly-forgotten-at- davos.html. 6T Cave and A Rowell, A Quiet Word: Lobbying, “An international legally binding instru- and Broken Politics in Britain, (London: Vintage, 2014). 18For more information, please see: http://www.business- ment...would clarify the obligations of trans- humanrights.org/Links/Repository/1022442. 7P Eberhardt and C Olivet, Profiting from Crisis – How corporations national corporations in the field of human and lawyers are scavenging profits from Europe’s crisis countries rights, as well as of corporations in relation (Transnational Institute/Corporate European Observatory, 2014), available at: http://www.tni.org/profiting-crisis. to States, and provide for the establishment of effective remedies for victims in cases 8Revealed: The £93 million city lobby machine, Bureau of Investigative Journalism, 9 July 2012, available at: http://www. where domestic jurisdiction is clearly unable thebureauinvestigates.com/2012/07/09/revealed-the-93m-city- to prosecute effectively those companies.”18 lobby-machine/. 9R Samans, K Schwab and M Malloch-Brown (eds), Global Redesign - Strengthening International Cooperation in a At meetings of the UN Human Rights More Interdependent World, World Economic Forum, 2010, Commission in March 2014, the backlash to available at: http://www3.weforum.org/docs/WEF_GRI_ this had begun, with states including the UK StrengtheningInternationalCooperation_Book_2010.pdf. and US adamantly defending the status quo. 10D Sogge, Not everybody’s business: corporate crowding into the tents of global governance, openDemocracy, 23 January 2014, The battle against unprecedented corporate available at: http://www.opendemocracy.net/david-sogge/not- and elite power is on, but its success will everybody%E2%80%99s-business-corporate-crowding-into-tents- of-global-governance. depend on our movements realising our own power in numbers and turning public 11C Fauset, What’s wrong with Corporate Social Responsibility? Corporate Watch UK, 2006, available at: http://www. awareness and anger into political and policy corporatewatch.org.uk/?lid=2670. change. Power to the 99.9% remains a slogan 12Speech at the IUCN World Conservation Congress in Durban as relevant as ever. in 2004, quoted in S Moog, S Böhm and A Spicer, The Limits of

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