WHAT IS POSSIBLE?
“Sustainable development is the peace policy.” That’s how the head of the UN Environment Program, Klaus Topfer, once Germany’s environment minister, has put it.
Acknowledging a certain lack of precision, many pro-global justice campaigners also use the term “sustainable development” in describing the alternative to the devastating model of development now unfolding. Spearheaded by environmentalists who see the resources of the planet depleting faster than they can be regenerated, the call for a “sustainable” model has come to embrace economic and social health and resilience as well. Many activists consider this triad—economic, ecological, and social sustainability—to be the foundation of the future, while another threesome—governments, the private sector, and civil society—form the pillars that must share the weight of its construction.
While many campaigns are necessarily based on responding to the multiple and complex crises facing people and the planet, there is a growing awareness of the need for practical proposals for achieving long-term sustainability. Gradually, an agenda for a peaceful, just, democratic, and sustainable reorganization of the global governance framework is taking shape. Here are some key elements of a growing consensus:
Market fundamentalism is not working. As deregulation of financial and trade markets increases, poverty, inequality, and incidences of violence increase as well. In 2001, then UN High Commissioner for Human Rights Mary Robinson called globalization in general, and the WTO in particular, “a nightmare for the poor, especially the developing countries in the South,” and pointed out “apparent conflicts” between the WTO’s approach to agriculture, intellectual property rights, and services on the one hand, and the UN human rights laws on the other.
Meeting the basic needs of humanity is a nonnegotiable demand. Those with the least resources and privilege are the greatest victims of the rapidly globalizing model of development. Within nations, too, the poorest are excluded from society’s decision-making processes. As the authors of “Reimagining the Future,” a brilliant report on global-governance reform sponsored by several Western Pacific groups, explain, “Given that inequalities of wealth and income lead to unequal access to knowledge and influence, democratizing governance both requires and promotes distributive justice.”
The public sphere must be protected, and within it human needs and human rights, labor rights, and cultural and ecological integrity. The exploitation of people and nature is rampant. The private sector has found clever mechanisms to privatize labor, genes, and water and is working on ways to buy and sell air and traditional knowledge. Yolanda Kakabadse, head of the International Union for the Conservation of Nature (IUCN) and former minister of the environment for Ecuador, put it this way: “Is the Earth a market? … Or a planet?”
Corporate and elite power must be regulated. The drive for profitability in the present system of corporate accounts overwhelms the moral drive of even the most sincere executive, while the privileges and temptations that come with great wealth build a slippery slope down which most slide pretty fast. Marjorie Kelly, publisher of the journal Business Ethics, compares corporate executives to the lords and dukes and viscounts of imperial aristocracies. Just as the nobility viewed all other humans as commoners to be ignored, today’s executives, she points out, see employees as “expenses to be cut … A primary bias built into financial statements is the notion that stockholders are to be paid as much as possible, whereas employees are to be paid as little as possible.” And the executive doing so the best gets to be king.
Democratic systems of justice must be accessible to everyone in global decision making. Better democratization of our national governments is essential but not enough. Even outside formal government structures, organized associations of individuals voicing their views and pursuing their interests within their communities and across national boundaries contribute substantially to the democratic formulation of decisions. Former UN Secretary-General Boutros Boutros-Ghali listed necessary components of meeting the challenge of “democracy beyond borders”: increased participation for regional organizations, more involvement for parliamentarians and local authorities, greater participation of civil society as well as business and industry, and a role for the media. In short, mechanisms of communication, representation, and accountability must reach back and forth from remote villages to those who will govern the corporate kings.
Attend any gathering of pro-global justice activists discussing the way forward and the above five elements of an emerging consensus will resonate loud and clear. Proposals abound, rich with detail. Equally rich debates can be heard, as civil society groups in every country consider their impacts locally and nationally, and articulate significantly nuanced approaches for implementation in their specific context. Organizing based on many of these proposals is also active and strengthening—within and across national borders.
Below I summarize just a few of the more prevalent ideas, according to the five elements described above—hopefully in a way that engages more of us in the work of constructing a more democratic approach to global governance.
Let’s start by digging out some fifty-year-old documents.
The Havana Charter of 1948 laid out plans for an “International Trade Organization”—one that would have been very different than the WTO we know today. This ITO was designed to achieve full employment, rising incomes, and improved standards of living throughout the world. It even recognized the ILO formed in 1919. The Havana Charter set out clear policies for the ITO to administer: supporting industrial stability and fair labor standards as essential to trade expansion; defending protectionism to promote economic development; limiting subsidies so as to fairly allocate world markets; managing supplies as well as prices through negotiated commodity agreements; and prohibiting monopolies or cartels, whether public or private. Indeed, these provisions are consistent with many of today’s proposals to reform the WTO!
Some of the provisions of the original GATT deserve implementation today too. Article VI of the GATT, for example, defines and condemns “dumping”—that is, the export of goods at prices below the cost of production. Article XI permits governments to adopt domestic supply management, even allowing restrictions on imports that might favor domestic producers, in order to control production levels, avoid the temptation to dump surpluses, and to relieve food insecurity. These old rules ought to be enforced, and officially reaffirmed if necessary, especially in relation to agriculture.
Alongside managing production and trade in foodstuffs and other essential goods, the global exchange of money needs active management to meet public goals. Like the original ITO and the ILO, the original purposes of the IMF—monetary stabilization through short-term lending and a universal currency—are as valid as ever, as are those of the World Bank in providing low-cost loans to finance development projects where private investors won’t go. Some of John Maynard Keynes’s proposals that were not accepted back then deserve reconsideration today—including the creation of a universal clearinghouse with a global currency in reserve that has the capacity to simultaneously clear the monetary deficits and surpluses of each country and enhance global stability. Some thinkers have proposed greater diversification of the currencies held in national reserves, perhaps with the strongest currency in each region (and certainly with euros), so there is less dependence on the dollar. But why not adopt those obscure “special drawing rights” of the IMF as a universal “hard” currency for use between all the national banks?
Balancing supply and demand is the most effective way to stabilize prices, manage inflation, and smooth out the economy—whether we’re talking about dollars and pesos and yen, oil and gas, tin and tungsten, coffee and cotton, or corn and rice and wheat. The key mechanism is a system of reserves that can be released in times of market shortages and stored up in times of surplus. But under trade and financial deregulation, national governments have been forced to give up their rights to manage supply and demand and other aspects of their economies. National controls should be reinstated, linked by regional systems of local reserves coordinated to ensure global stability. Furthermore, the link between real commodity values and real currency values needs to be reestablished. Perhaps a currency exchange rate pegged to each country’s or each region’s reserve of staple food—is that not the most reliable source of real value to a society?
Other essentials, especially water, similarly deserve public management. Consistent with the recent decision of the UN Committee on Economic, Social, and Cultural Rights declaring the human right to water, public authorities bear the responsibility to ensure supplies and fair distribution to meet demand. Some even argue that larger-scale uses should be considered “abuse,” charged prohibitively expensive rates, or even deemed illegal backed with criminal sanctions. Certain nonessential goods, diamonds and weapons, for example, might also deserve to be severely regulated. Taxes may be one way of doing so.
Maybe it is time to set up a global taxing authority based on the principles of taxing “public bads” and “tax broadly, spend closely.” In other words, a globally coordinated supply of tax revenues levied on the wealthiest private traders and distributed via regional networks of local authorities could prioritize the neediest for the most urgent public investment. The Tobin Tax, for example, named after the winner of the 1981 Nobel Prize for economics, Sir James Tobin, is a popular proposal nowadays that would levy a tiny tariff on every transaction in the currency exchange markets. Not only would such a tax inhibit the flow of hot money, it would also generate billions of dollars for whatever purposes our global taxing authority might designate. Other possible sources of justly derived international tax revenues include airline tickets, commodity grains, oil, and scarce minerals.
A few other prominent proposals to reregulate trade and financial flows worth mentioning include:
eliminating all investors’ rights schemes returning the authority to our national governments;
rescinding the “trade-related” agreements on intellectual property and investment measures, restoring flexibility in the use of these tools for national development;
creating stringent accounting and auditing standards applicable everywhere and enforceable through criminal sanctions; and
eliminating offshore tax havens.
Above all, we need tough criminal sanctions for the sex trade and other trafficking in human beings, while giving the victims of these industries alternative economic options.
This is the overall message here: markets need to be managed appropriately. Some markets should be outlawed. Some should be supported. Some need governance globally, some need local control, and some should be decentralized but linked regionally. In some cases, say, agricultural production, supply management is essential; in other cases, capital flight, for example, demand must be managed. Some degree of governmental regulation is necessary to direct the market system toward specific public goals.
While regulated markets and the management of supply and demand are primary tools of development, most lists of proposals for immediate poverty alleviation rank debt cancellation and increased foreign aid near the top. Restructuring economic priorities, the financial system, and, indeed, the whole “model” of development are longer-term but absolutely essential next steps.
Ever since the Baker and Brady plans for debt relief, creditors have shown a growing willingness to write off portions of what is owed them, with the Heavily Indebted Poor Countries Initiative the latest attempt by the banks to recoup even modest sums from virtually insolvent economies. When Argentina defaulted on its debt, it suddenly became time to address the accumulating financial problems of the less impoverished nations too.
Both the IMF and Jubilee 2000, the transnational civil society campaign for debt cancellation, have proposed handling the insolvency of countries similar to the way corporate bankruptcies are handled in the United States. But not surprisingly, there are significant differences in the details of their proposals. Jubilee would create an ad hoc neutral panel under UN auspices to evaluate countries’ requests for protection from creditors, while the IMF would retain this authority for itself. The IMF would make bankruptcy protection for a country conditional on implementing the usual structural adjustment program, while Jubilee suggests a process for citizens, civil society organizations, local governments, and the parliaments of the debtor country to determine the conditions, emphasizing that under no circumstances may they override fundamental human rights as defined by the UN.
There are also calls for the total cancellation of all debt incurred under duress of structural adjustment or military dictatorships; write-offs for all but the original principal value or the lowest value that can be bought in secondary and tertiary markets; and “swaps” that would exchange payments for investments in the creation of nature preserves, for example, or investments in immunization programs for children or other spending on development priorities.
Many civil society groups argue that, in fact, after centuries of plunder, the Third World is owed money. In this case, they suggest, the financial debt should be exchanged for the “eco-debt.” Calculations of the environmental damage done by the private sector and rich nations, such as climate change or the destruction of rain forests, measured against the environmental benefits contributed by the people and lands of the developing world, such as providing the raw materials of valuable medicines and absorbing excess carbon in those remaining forests, invariably reverse the creditor-debtor relationship.
Foreign aid is another top priority for providing immediate help to the needy. Of the world’s fifty poorest countries, this type of “overseas development assistance,” or ODA, as it is called, made up more than four out of every five dollars flowing into their economies—while they got less than one out of every twenty dollars of private foreign investment worldwide. For decades, the UN has encouraged richer countries to meet agreed commitments to contribute at least 0.7 percent of their gross domestic product toward foreign aid, but just six countries—Norway, Denmark, the Netherlands, Sweden, Finland, and Luxembourg—have consistently met this pledge. Of its massive gross domestic product—a total of about $10 trillion in goods and services produced in 2002—the United States provides as little as 0.1 percent. The average contribution by all the industrialized countries is just 0.22 percent.
Together, all the industrialized nations provide $50 billion in overseas development assistance, just half of what analysts suggest is needed to meet the goal of cutting poverty in half by the year 2015. This goal, along with numerous other quantifiable targets for improving worldwide welfare, has been reaffirmed over and over—most recently in the UN Millennium Declaration of 2000, the WTO Doha Declaration of 2001, and at two 2002 conferences: the Monterrey Consensus on Financing for Development and the Johannesburg World Summit on Sustainable Development. In Monterrey, President Bush announced the United States would increase its annual contribution to ODA by $5 billion starting in 2004 for three years, with a possible continuation through 2010—but only for those countries meeting certain conditions, a type of unilateral structural adjustment program.
While famine and other crises call for emergency relief, many civil society groups point out that cash assistance and food aid should be considered short-term remedies that, in the medium-to-long term, can become counter-productive. All too often, aid programs wipe out the productive capacity of the recipients and are tied to conditionalities such as requiring the food, equipment and services be purchased from companies based in the donor countries—stimulating an exodus of the vitally needed cash back to where it started. Some activists propose eliminating bilateral aid altogether, in favor of a single pool of funds to be distributed by a council of representatives of the recipient countries. Another approach is called “triangulated” aid, by which donors could offer their cash contributions to a third party in the same region as the recipient, who would then deliver the food, seeds, construction materials or other relief, thus eliminating the problem with conditions and simultaneously supporting regional economic development.
Priorities for poor countries dependent upon agriculture include regenerating rural productive capacity, starting with free access to locally adapted seeds, and adding to the value of harvests with local processing and sale of finished goods—all off which will require several changes in current trade rules. Small- and medium-size enterprises could be supported with linkages to manufacturing and other industrial sectors in the region, achieving economies of scale that, with government backing and reasonable financing, might withstand foreign competition—especially if prohibitions on dumping were enforced. Low interest rates, targeted tax breaks and incentives, tariffs protective of basic industries, limits on speculative financial flows, fair employment policies and investments in public health, education and infrastructure are all government-driven mechanisms that develop productive jobs and long-term economic capacity. This combination, government intervention to support local resource development alongside a targeted industrial strategy, is necessary to regenerate national and regional economies that benefit the poor.
As a first step to enable these priorities, rather than the prevailing approach, substantial debt relief and unconditional terms (or at least very different conditions!) on new loans and additional aid and investment resources are urgently needed. Poor countries must be allowed to exercise their sovereignty in directing these resources towards the most strategic social and economic goals, which will also require a reversal of current international-policy trends. Consultative, participatory and other democratic processes are necessary to ensure wise decisionmaking but they also engage the public and the poor in implementing local development strategies.
Like-minded and like-resourced nations can construct regional agreements that defend their economies from predatory trade and speculative investment behavior, and from economic contagion spilling over from financial instability elsewhere in the global system. At the same time, the international community and the leaders of the richer countries must take responsibility for stabilizing the global financial system and redirecting capital flows strategically to invest in equitable development throughout the world.
Along these lines, the billionaire financier George Soros has proposed that the IMF issue a new allocation of its special currency, SDRs, toward providing public services in developing countries. If successful, it could be repeated regularly. The Soros proposal stipulates that all IMF members with larger foreign-exchange reserves, including relatively well-off countries like China and Botswana, agree in advance to donate their share of the new allocation to ODA. There is a precedent of sorts. In 1997, the IMF members agreed to amend the Articles of Incorporation to allow a single special “equity” issue of SDRs to channel funds—about $28 billion—to the former Soviet republics and other poorer countries. But it still needs to be approved by an 85 percent majority of the IMF vote, and since the U.S. Congress has refused to ratify the deal, withholding our 17.5 percent decisive share of the vote.
Soros’s proposal also stipulates a new governance mechanism for this fund that reflects Keynes’s call for decision making by professionals independent of their governments. This independent board would not have authority for disbursing the money; instead, it would be charged with devising an annual strategy and a menu of options for projects from which the donors of the SDRs would be free to choose. Actual distribution of the funds would take place directly at the community level via a single lead development agency such as the UN Development Program. All in all, Soros’s proposal amounts to a shift of financial resources from rich to poor, creating a significant fund for development in the Third World.
Another funding mechanism could be based on the model of the Multilateral Fund mandated by the Montreal Protocol on ozone depletion. The Montreal Protocol’s fund is financed by industrialized countries through donations assessed according to their level of mandatory contributions to the UN. The fund’s governance structure ensures equity amongst industrialized and developing countries by giving each bloc seven representatives and requiring that all decisions enjoy a majority vote of both blocs. Its resources are devoted to helping developing countries avoid and phase out ozone-depleting chemicals, but this model could be replicated in other technology transfer and development programs.
There is also a proposal on the table at the UN Food and Agriculture Organization to support a global fund derived from a tax on all royalties paid for patents and other intellectual property rights on plants. This fund would allocate revenues to farmer-led programs for the diversification of plant genetic resources for food and agriculture.
Indeed, there are numerous possibilities for taxing internationally traded products, particularly those that generate great wealth for a few companies, and having revenues then redistributed by some type of global taxing authority: one that is transparent, democratic, and mandated to ensure equitable investment toward poverty alleviation and sustainable development throughout the world.
Markets are for buying and selling. Those with little or no purchasing power are left out. Even well-managed markets cannot provide what the poor need, or the intangible stuff (air and dignity, justice and peace) that cannot be bought and sold. Another part of the definition of “public goods”—as these socially valuable, hard-to-market things are called—is the notion that they can be shared universally: my having air, dignity, justice, and peace does not deprive you from having them too. But times change. Until recently, people tended to include water on this list! The water companies have certainly figured out how to buy and sell water, and people in deserts know how little they can depend upon universal sharing.
Public services have evolved as society’s way of providing some public goods to the whole community. Where markets fail to provide public goods and services, civil society has often empowered their governments to create laws and institutions that will. The governments unite their taxpayers’ purchasing power to provide water and sanitation systems, health and education, public parks, police and fire protection, cultural events, pollution prevention, and so on. While a lot of rich individuals do buy their own purified water, private parkland, personal security, private tutors, and personal physicians in the marketplace, it is probably not possible for every human being to do so.
However, if all 497 billionaires on Earth (as counted by Forbes in 2002) donated $1 billion each to one of the global funds, the resulting jackpot of $497 billion would go a long way; that is, if the fund were governed transparently enough to be incorruptible, and democratically enough to be spent equitably. Why, $100 billion is all it would take to meet the Millennium Declaration goal of cutting poverty in half by 2015. Even so, this model is based on charity rather than self-sufficiency. Holding corporations to account for their appropriations of labor and the environment would go a longer way toward sustainable development and peace. However, progressive members of civil society aren’t the only ones at work to take the edge off the market’s ruthlessness. Corporate lobbies garner great subsidies, their own form of welfare, in the bailouts of private enterprise.
There is a labor market, of course. But labor markets, like most markets, suffer from “market failures”—that is, factors that interfere with the so-called free exchange between equally endowed buyers and sellers. Over and over again, action on the part of governments has been necessary to establish and protect the rights of workers. In the United States, as in other countries, plenty of trade unionists have lost their lives in efforts to win national legislation guaranteeing their right to organize and bargain collectively, to the eight-hour day, the five-day week, and so forth. The same is true in lots of other countries. Unfortunately, the IMF and World Bank have deliberately used structural adjustment to drive down wage rates, and transnational corporations freely relocate their operations to lower-wage countries where labor rights are not well protected, leaving thousands of unemployed behind in destitute communities. Many companies deliberately employ illegal immigrants at illegally low wages under inhumane, sometimes toxic conditions, aware they cannot file complaints. Some even contract with smugglers, who bring in shipments of workers under conditions of virtual slavery. And in the growing sex markets workers are likewise treated as slaves.
There is also a market for culture—theater and dance tickets at twenty-five dollars a pop, eco-tourism visits to exotic villages in the Himalayas, pre-Columbian artifacts and contemporary handicrafts all sell well—but this market does not provide cultural security in the least. To the contrary, the merchandising of traditional communities often destroys their way of life, bringing them ever closer to actual demise. Eco-tourism can bring much-needed revenue to remote communities, but it can also convert their daily routine into performance and create dependency. Indigenous art is frequently pirated for sale in the marketplace and display in museums, or merely to inspire commercial designs. Anthropologists employed by pharmaceutical companies pirate indigenous knowledge in their search for medicinal plants. Dams, agricultural “modernization,” and other so-called development projects continue to displace millions of indigenous peoples from their homes. Some six hundred languages, and the communities that speak them, have become extinct in the past century, and another three thousand are considered in danger of extinction in the next few decades.
With an eye to moving all nations towars meeting basic human needs and protecting basic human rights, the UN Universal Declaration of Human Rights (UDHR) of 1948 lays out very specific entitlements due all people on Earth. “Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services,” it states. “Everyone has the right to work, to free choice of employment, to just and favorable conditions of work and to protection against unemployment” as well as “just and favorable remuneration” and the “right to form and to join trade unions.” In addition, everyone has “the right freely to participate in the cultural life of the community, to enjoy the arts and to share in scientific advancement and its benefits.” Among dozens of other rights, the UDHR adds that everyone is entitled to a “social and international order in which the rights and freedoms set forth in this Declaration can be fully realized.”
Two subsequent treaties, called covenants, define more specifically the obligations of national governments to ensure these rights: the Covenant on Civil and Political Rights and the Covenant on Economic, Social, and Cultural Rights. Each is managed by a UN committee that reviews the behavior of the participating governments and makes recommendations for changes in their national policies and practices to fulfill the obligations. Recently, the Committee on Economic, Social, and Cultural Rights has begun a “dialogue” with the World Bank, IMF, and WTO examining how their policies have affected the capacity of nation-states to protect and promote these human rights.
The ILO has established 184 conventions to protect and promote labor rights. ILO Convention 169 eloquently addresses the rights of indigenous peoples, as do the Convention on Biological Diversity and the Draft Declaration on the Rights of Indigenous Peoples—a UN text prepared in consultation with representatives of the First Nations themselves, which now awaits ratification and implementation by the official UN governments. These rights include, first and foremost, the right to self-determination. They also include the rights of people to manage their own lands and natural resources, legal and economic systems, science, technology, art, and culture.
While human rights, defined broadly, have been well articulated in the UN’s extensive legal system, advocates today must focus on developing effective enforcement mechanisms, [See appendix]—although this is one of those things that is much easier said than done. Under existing international law, each sovereign state has the option to commit itself to each particular treaty. For example, only sixty-nine countries have ratified all of the fundamental conventions of the ILO, and the United States has ratified only two of them—keeping company with China, Burma, Oman, and Armenia in this dubious distinction.
While urging enforcement of international law, however, pro-global justice activists most certainly do not seek uniformity on a global scale—quite the contrary! But as long as economic and political pressures can force countries to accept the WTO’s jurisdiction over their own economies’ in the interests of commercial enterprise, a coordinated economic and political strategy must be devised amongst the rest of the world to force the United States and other international “outlaws” to accept minimal standards for labor rights, environmental and ecosystem protection, indigenous peoples’ cultural sovereignty, and other human rights recognized by the community of nations.
Proposals for strengthening international enforcement mechanisms include more frequent use of joint economic sanctions, such as those exercised against South Africa and Iraq. Another proposal would link UN agreements with WTO rules to invoke the WTO’s powerful dispute settlement system against violators of the UN rules. But to implement such proposals fairly, and ensure truly social objectives, requires developing a broad-based multilateral mandate in democratic consultation with civil society. This is precisely what spawned sanctions against the apartheid government in South Africa and facilitated that country’s transition to democracy. This type of consensus-building did not precede the violent war against Iraq, nor the imposition of sanctions against Iraq for years before that, and the failure to do so now haunts not just the long-suffering Iraqi people but the whole world.
Other proposals suggest creating new multilateral institutions with mandates that, similar to the WTO itself or the conditionalities of the World Bank and IMF, take authority over national governments. Only in this case they would not prioritize commercial and financial returns, but oblige conformance with international social and environmental policy. Another option would involve empowering the International Court of Justice or the Permanent Court of Arbitration to settle conflicts between international agreements.
Governmental action can also intervene to correct market failures in another way, without creating new institutions or new international authority. For example, the tools of public policy can be used to create economic incentives and disincentives that stimulate “market-based” behavior toward social goals. Flip-flopping the concept of public goods, proponents of such “market mechanisms” argue that taxes, subsidies, tolls, tradable permits, and other mechanisms “internalize” the costs or, in other words, eliminate the profitability of “bad” behavior such as the dumping of wastes. These economic policies, while still dependent upon government action, can shift patterns of production and generate resources for alternative investments.
Some proposals for “market-based” cost internalization mechanisms involve:
taxes on carbon, nitrogen, gasoline, kerosene, and other fossil fuels;
tolls on the long-distance transport of goods that accrue in a fund for investing in renewable energy;
trading schemes that permit certain levels of pollution and auction off the surpluses, limiting total emissions;
the elimination of subsidies that encourage trade in scarce or harmful products alongside the creation of new subsidies, perhaps through public bond issues, to provide low-cost, long-term financing to develop more benign forms of production;
third-party certification and the labeling of products so willing buyers may choose more benign products;
customs tariffs that charge exporting companies for the costs of handling waste disposal and cleanup in the importing country; and
liability provisions that make manufacturers responsible for the costs of handling damage and cleanups, as well as parallel bonding requirements for up-front insurance.
Another proposal for cost internalization has been dubbed “full-cost accounting.” Historically, natural resources have been undervalued; only as they become scarce does society appreciate their full value, which may even exceed commercial prices set in a market. For example, in addition to providing shelter, firewood, and habitat for millions of species of creatures, forests are now understood to retain water and prevent flooding. They also sequester carbon in woody tissue and slow global warming. These “ecological services” are valuable to the public, even if they are not reflected in the price of wood.
Economists nowadays are proposing that the way economic growth is measured could be adapted to more fully account for real costs. Thus, the depletion of natural resources, including timber, oil, minerals, and fish, might more accurately be counted as a net loss of a nation’s assets, rather than as net growth in gross domestic product through their commercial sale. Government officials seeing this type of balance sheet might decide that spending a particular asset faster than it can be reproduced actually jeopardizes their country’s economy. So, too, the World Bank and IMF might want to alter their structural adjustment policies to reflect this understanding, in order to protect their debtors’ assets over the long term, ensuring their future productivity and sustainable development. But caution is called for. Especially for developing countries in negotiations over aid or structural adjustment packages, the premature application of these accounts could become prejudicial. Comparisons between countries are particularly inappropriate—at least until a standardized methodology has been widely tested and found to be fair by all.
A good place to start might be the energy sector: developing a reasonable mechanism to internalize the full costs of its extraction, refinement, transport, varied uses, relative emissions, and waste disposal from cradle to grave. All too often, the hidden costs tend to accrue on one side of a trade deal while the clear financial benefits accrue on the other—like when oil spills destroy entire villages in Nigeria or Colombia or the Arctic yet the oil companies still profit as U.S. consumers keep flooring their SUVs. In the international context, this kind of analysis should be sure to identify the full costs from “cradle-to-export-border and from import-border-to-grave,” as one report from the UN Conference on Trade and Development proposed.
Public policies are needed to establish and enforce the provision of public services, and the protection of public goods, from the community level to the international level. Public education is essential to increase our awareness of the global implications of our individual and national behavior, so that our collective sense of responsibility generates the political will to comply with the UDHR. Individuals, communities, nations, corporations, the WTO and World Bank and IMF, and all the other institutions of our society should be held accountable to the UDHR and all the other social and environmental treaties—thus constructing a “social and international order in which the rights and freedoms set forth in this Declaration can be fully realized.” It might even look like democracy and justice.
When Eastern Europe opened its borders to capitalism, the UN sponsored a survey of four hundred corporate executives asking about their strategies for locating new subsidiaries. Labor costs were nearly always their first consideration, but taxation and transfer pricing (manipulating prices on transactions between subsidiaries of the same firm) were near the top of their lists. Several companies acknowledged they keep two sets of books, one for the tax authorities and one for themselves. Post-Enron, we’ve become aware that many such accounting practices are not even illegal—and that corporate corruption is fairly widespread.
Dozens of sets of voluntary guidelines for responsible business practices exist—some established by the businesses themselves, such as the Responsible Care program of the chemical industry; some by the UN, including the Global Compact; and others by intergovernmental agencies such as the World Bank and the Organization for Economic Cooperation and Development. Both corporate and civil society leaders are cooperating in a Coalition for Environmentally Responsible Economies (CERES) to develop a standard for corporate disclosure of environmental management and labor practices called the Global Reporting Initiative. All of these contribute to shedding light on corporate behavior and encouraging greater public accountability, but there is very little obligation.
Labor and student activists have successfully highlighted the unfair labor practices of many corporations, including Nike and The Gap, that have utilized child labor in sweatshop conditions and otherwise abused workers’ rights. These successful campaigns, relying on a lot of highly visible negative publicity, have induced many companies to clean up their operations in the places that were highlighted. Unfortunately, the companies have not reformed their labor practices everywhere they do business, and in some cases, after the television cameras go home and public pressure eases, it’s back to business –as usual. The activists continue their monitoring and publicity, but it’s simply not possible to effectively do so on a worldwide basis.
Virtually every national government has some degree of regulatory authority over companies doing business within its territory; but as companies went global there was no parallel process for globalizing governance of their behavior. A comprehensive approach for building an international regime for corporate regulation might start with expanding the use of national law, then emphasizing regional capacity and institution-building, and finally constructing links among the regions until a global system is in place.
At the national level, activists could work for legislation to hold parent companies accountable for all their subsidiaries everywhere they do business. This could include global compliance with the home country’s labor, safety, health, and environmental regulations, and require the publication of records on financial solvency, liabilities, employment decisions, health and safety, and so on by all subsidiaries of the parent companies. The publication of payments for mining concessions (which often amount to a form of veiled bribery) and offshore tax havens, too, could be regulated through national legislation. While much easier said than done, simultaneous campaigns in numerous countries targeting the same transnational company could convince its management to raise standards across the corporate chain.
At the regional level, data-sharing systems on nationally held business information such as taxes paid, number of employees, trade volumes by product categories, injuries and accidents, and environmental compliance might help build the capacity to set common regional standards. Regional registration of companies of a certain size—setting thresholds for number of employees, number of national affiliates, total assets in the region, or regional sales volumes—could avoid duplicative record keeping in neighboring countries too. Perhaps regional agreements could be reached for common requirements amongst the parallel national agencies—labor relations, health departments, food safety and environmental protection agencies, securities and accounting regulatory authorities, and so on—so that companies could not evade such standards simply by moving their business to another country. Or maybe regional agreements could mandate that the most stringent labor, safety, health, and environmental regulations of any country in the region be applicable throughout the region. Regional antitrust policies to break up monopolistic firms could be based on the best national laws of the United States, United Kingdom, Germany, and Japan. Why not set up a regional taxing authority, regional liability obligations, and a regional enforcement mechanism, using the national courts?
Strong regional capacity might form the best foundation for constructing a global system of corporate regulation. This, too, might begin by establishing links among all regional offices, sharing information and building an ever- greater common data base; obligating every transnational corporation to adhere to the most stringent labor, safety, health, and environmental regulations of any country where it operates; and designing globally enforceable civil and criminal sanctions. Eventually, the community of nations might be ready to hold transnational corporations reaching a certain threshold of size accountable to the conventions of the ILO, international human rights agreements, and the multilateral environmental agreements.
As with the management of public goods and services, accounting mechanisms to internalize social and environmental factors may be a first step to foster more responsible business practices. “Triple bottom-line accounting,” for example, proposes corporate reports publish three sets of indicators: one measuring the financial bottom line, one measuring the bottom line for employee health and welfare, and one measuring environmental performance. However, some degree of government action is probably necessary to ensure the consistency and thus the reliability and fairness of such tools. If some companies report wastewater recycling and paternal-leave policies while their competitors announce wastewater treatment before discharge and an extended disability program, potential investors and customers may have difficulty comparing the available information.
The Global Reporting Initiative (GRI) is an alliance of environmentalists, socially responsible investors, and professional accountants who together are trying to standardize how this type of data gets reported. Companies following the GRI’s voluntary guidelines must provide data on their environmental practices, compensation, diversity, community investment, and philanthropic commitments. The Corporate Sunshine Working Group is lobbying the U.S. Securities and Exchange Commission to make the GRI guidelines mandatory.
Other “indicators” have been devised to evaluate corporate performance in different areas. A group known as Transparency International has developed a set of indicators to measure corruption. Nongovernmental organizations working with the UN Food and Agriculture Organization are developing indicators for sustainable agricultural production. Indigenous peoples propose a set of cultural indicators to be reflected in corporate reports. Any of these factors could be built into a model that is applied to screen and evaluate corporate bids for World Bank and other public projects, corporate bids for procurement contracts with public agencies, and the corporate beneficiaries of export credit agencies.
Comparisons of corporate reports across national and cultural borders must be handled with great care, however; sustainable production methods in some ecosystems would be quite unsustainable in others. Purely on the financial side, standardization is not nearly adequate for international comparisons as yet. When Germany’s Daimler-Benz corporation decided to list itself on the New York Stock Exchange, the Securities and Exchange Commission required a uniform listing of its assets throughout its group of companies—and the result increased its bottom-line value by some 4 billion deutsche marks!
The UN’s Transnational Corporations and Management Division has been working to develop a model for “accounting for sustainable development” internationally, as has the International Chamber of Commerce, the Institute of Chartered Accountants in England and Wales, and many others. Eventually, an accepted system evaluating each transnational company’s social and environmental responsibility, as well as their general financial health, indexed by an official ratings agency (along the lines of the Dow Jones Sustainability Index) may be achieved.
Marjorie Kelly, publisher of Business Ethics magazine, suggests a very different revision of the bottom line. She points out that the goal of maximizing shareholders’ returns is simply a culturally agreed upon bias in business management, and society could instead decide that maximizing employee welfare is the priority. Some simple changes in the structure of corporate accounts would facilitate this shift. Instead of designating gains to employees (payroll) as expenses and gains to shareholders as income, the equation could be reversed. The new goal would be to drive the company’s capital income down as low as possible, with gains distributed toward costs, growth, and wage increases. Capital income would still be a necessary cost of doing business, but it could remain relatively fixed. Thus, the business could thrive and the employees would get rich.
Fortunately, the cascade of scandals—Enron, WorldCom, Tyco, Adelphia, Global Crossing, ImClone, and more—has exposed large gaps in corporate regulation. We can hope this will lead to even more deliberate efforts to create standardized systems of accounting across borders, and tighter regulations on the use of derivatives and other financial instruments. So, too, we can hope that the Enron bust will provoke stronger rules governing the relationship between business executives and public officials—not only in the United States but worldwide. Perhaps it is time to reverse the “free trade” concept of investors’ rights and instead create new accounting and legal vehicles enshrined in international law that enable citizens to document and sue corporations for financial, social, and environmental abuses in the courts of their home or host country, whichever seem most public-spirited.
Strong democratic institutions are needed at all levels to regulate corporations, protect public and human rights, eliminate poverty, and manage markets—all components of a just and sustainable model of development. Democracy is essential, but justice requires more than democracy: an appreciation of diversity, respect for minorities, and the inclusion of all in the undertaking of civil society.
Thus, a hierarchy of representative authority, vertically integrated from the local to global levels, is not good enough. We must develop stronger horizontal institutions across each of these jurisdictions: regional and hemispheric and global associations of local communities, regional and hemispheric and global associations of parliamentarians, hemispheric and global associations of regional authorities, and so on. The same is true of nongovernmental entities. We must encourage regional, hemispheric, and global associations of small business associations, librarians, housing developers, students, food safety inspectors, nurses and epidemiologists, gardeners, and so on. The resulting social fabric, with tight horizontal woofs and vertical warps, will indeed be strong.
Many of these institutions already exist, some better organized than others. Trade unions, farm groups, and consumer organizations, for example, have local, national, regional, and international structures in place. The European Parliament is a relatively recent institution with actual governmental authority helping to democratize European relations; it needs a sister regional parliament in the Western Hemisphere and other relatives in Asia and Africa. There is the International Union of Local Authorities (IULA), which gathers hundreds of the world’s mayors regularly—not for decision making but for consultation, debate, and recommendation. Similarly, Global Legislators Organization for a Balanced Environment (GLOBE) brings together some eight hundred parliamentarians from more than a hundred countries to consider policy options for sustainable development and bring recommendations home to their national governments. There may be a place for representatives of local, national, and regional authorities to formally advise and perhaps eventually participate in the formal decision making in certain international matters.
The challenge is to create an integrated system that allocates decision making at the most appropriate level. Lord Keynes, one of the founders of the World Bank and IMF, put it this way: “Ideas, knowledge, art, hospitality, travel—these are the things which should of their nature be international. But let goods be homespun whenever it is responsibly and conveniently possible, and above all, let finance be primarily national.” In Europe, the term “subsidiarity” has been used to describe a process of shared decision making amongst the nations, regions, and the EU as a whole. The nations have retained their authority over most internal matters, while giving up their sovereignty to the Brussels-based European Commission over currency and foreign affairs, and creating new powers for underrepresented peoples, such as the Basque, through the regionally structured European Parliament.
Ultimately, a hierarchy of decision making could evolve that is explicitly designed to be inclusive of local communities while seeking a broader public-interest agenda across the planet. The emphasis should be on integrated decentralization, not the creation of a unitary globalized government. Regional associations within nations might serve as a sort of transmission belt from the communities to the national capitals, and various regional associations amongst neighboring nations—if they are relieved of the pressure to deregulate their economies through the “free trade” variety of regional negotiations now proliferating—could serve as the transmission belt to global institutions.
The Southern African Development Community (SADC), for example, has developed jointly funded programs for collaboration between its member countries. In one program, these national governments offer support and legal recognition to local communities, nongovernmental organizations, and the private sector to aid in managing forests, wildlife, and protected areas. These African nations were also strong proponents of the international treaty known as the Convention to Combat Desertification. While severely underfunded, this treaty emphasizes the important role of traditional communities and opens the door for the participation of all stakeholders in implementing its mandates through locally accountable national and regional planning processes.
This model, regional planning for global policies to be implemented locally, deserves to be practiced more often. If, let’s say, the ministers of agriculture or the ministers of health from Central America met regularly to prepare their proposals for a Latin American development program, it seems likely they would come up with investment strategies quite different from the $3 billion highway program known as Plan Puebla Panama that is being promoted by their presidents. The ongoing negotiation of the proposed FTAA might also benefit from such regional consultations amongst ministers and stakeholders from agriculture, health, and other affected sections, too, and not leave it all to the trade ministers.
Of course, all of the international planning and negotiating processes should seek recommendations from civil society groups—farmers and nurses, trade unions, environmental and other nongovernmental organizations, small- and medium-sized businesses, and yes, even transnational corporations. But why not require their input? Much the way public hearings are mandatory for many local development projects in the United States, formalized mechanisms inviting public review of all the globally inspired projects—including trade negotiations, World Bank investments, structural adjustment programs, aid packages, and UN treaties—could be required. Local planning and oversight mechanisms should also be set up in the districts where the impacts from globally financed projects will occur. While powerful and corrupt decision makers may ignore citizens’ recommendations, such processes obligate the disclosure of corporate and governmental plans and related details that, in turn, enable activists and organizers to build awareness, popular support, and political influence.
Another way to engage the public more directly in international processes would be through the creation of global parliaments. Some advocates have proposed a World Parliament with elected regional representatives to provide input to the UN, World Bank, IMF, and WTO. Another proposal would create a directly elected Water Parliament with authority governing all aspects of managing freshwater supplies. This proposal outlines a Water Parliament declaration that access to clean drinking water is a fundamental human right and suggests a pricing policy that reflects this entitlement. Quantities sufficient to meet a household’s daily need should be provided free of charge. Enough to supply basic community needs, including subsistence agriculture and sanitation, would be priced at cost. The users of larger amounts would be billed at steeply escalating rates with exorbitant levels considered illegal. It would be up to the Water Parliament to design a system for enforcing this plan, with parliamentary assemblies gathering regularly at the regional level for each of some 215 interstate water basins around the world.
Reform of the existing international institutions is also high on the list of civil society proposals for democratizing global governance. For starters, the governors of the World Bank and IMF ought to take responsibility for weighting the voting rights of countries more fairly—perhaps balancing the shares held by creditors and debtors alike and requiring a majority from each bloc, or allocating shares according to each country’s relative population. The WTO should ensure the equal participation of all members in all negotiations, and set up adequate legal and other technical assistance for countries in need. Its dispute settlement system could be multilateralized, so big-economy violators would be sanctioned collectively by all the other members and maybe the smaller-economy violators would be fined according to a reasonable proportion of their gross domestic product, instead of the value of the unfair trade gained; after all, these unfairly acquired funds accrued to companies, not national treasuries. All three of these international institutions should also increase the transparency of their operations, publishing far more of the documents and data informing their decision-making processes than they now do. A time and place for public input could be built into routine procedures.
One particularly insightful set of proposals for international institutional reform has been published in a little report called “Reimagining the Future: Towards Democratic Governance.” In 2000 the Department of Politics at Australia’s La Trobe University convened a working group including members of Hawaii’s Toda Institute for Global Peace and Policy Research and the Bangkok-based group Focus on the Global South. They came up with a wealth of ideas, including the following specific suggestions for new global governing bodies:
a directly elected People’s Assembly at the UN, parallel to the General Assembly, to monitor and review its decisions, each elector having one vote representing about 6 million people;
a Consultative Assembly with representatives recommended by the secretary general and appointed by the General Assembly from the corporate sector, trade union and professional organizations, and the broad nongovernmental public interest sector;
a new UN Department for Disarmament and Arms Regulation with direct links to the secretary-general and the General Assembly;
a regional structure for peacekeeping and humanitarian responses to emergencies, and the preparation of a comprehensive plan for each mission that includes a statement clarifying its legal authority, objectives, impact-assessment process, termination procedures, and a designated peace ombudsperson; and
several new UN institutions including a permanent civilian police force, a Women’s Development Bank, a World Educational Fund, a Global Commons Bank, and a Global Knowledge Bank.
The Dag Hammarskjold Foundation of Sweden published another set of detailed recommendations for democratizing global governance in 1994. Two long-term civil servants at the UN, Erskine Childers and Brian Urquhart, proposed an extensive reform agenda for the international institutions in their article “Renewing the United Nations System.” Their proposals include:
creating a directly elected Parliamentary Assembly at the UN, with management oversight and a budget but no voting authority;
upgrading the UN office of the high commissioner for human rights to become a UN deputy secretary-general for human rights;
consolidating all economic and development functions—not only the multiple agencies and programs of the UN but also those of the WTO, World Bank, and IMF—under one UN development authority, with a deputy secretary-general for development; and
converting the Trusteeship Council to a “Council on Diversity, Representation, and Governance,” with a mandate to obtain the “widest range of analyses and recommendations on means of peaceably accommodating cultural and ethnic aspirations; providing adequate domestic and international expression to groups hitherto treated as minorities within nation-states but aspiring to such expression; adjusting exogenously established boundaries; and creative options for the transition of societies from traditional centralist nation-state structures.”