Corporate governance: Towards bonum commune?

Perspective is about bringing together things that seem to have no relation to each other so that they could be more easily understood in a context. It sounds simple. But it helps scrutinising the relationship between noble idea of good governance and hullabaloo of corporate responsibility. Why these two? Firstly, because discourse about good governance today cannot but touch upon the issue of corporate governance. And secondly, because corporate responsibility has become the issue of corporate governance.

It has been admitted that corporations are playing vital role in developments as they create employment, produce goods and services, bring investments and thus economic growth. As no one would disagree that good governance is necessary for development, neither do they contradict the idea that good governance should be applied to corporate world. Even, it flowers a thought that business should be allowed to regulate themselves.

But, when it is alright to scrutinise state governance through democratic and accountable means, it is not at all acceptable to apply such criteria to corporate communities. Instead, it is responsibility, not democracy or accountability, of corporations that could be farthest demanded. While corporate responsibility is of paramount importance for business today that they could contribute positively towards development, it is actually valid to question why it must be ‘responsibility’ and not ‘accountability’ that matters.

For those in effort to scrutinise business governance, the same question would also apply: why must it be ‘self-regulatory’ and not ‘regulation’ –as well as ‘voluntary’ and not ‘bound to standard’—that counts? These questions are hard to answer unless we approach them from a certain perspective: power.

Governance is all about controlling power. Good governance is about to make the exercise of power accountable. A great philosopher, Baruch Spinoza, in his Tractatus Politicus (republished 1958 ) distinguishes between potentia and potestas. ‘Potentia’ signifies the power of things in nature, including persons ‘to exist and act’; ‘potestas’ is used when speaking of being in the power of another.

What is the ‘potentia’ of business and corporate world? Researches reveal that they are now even more powerful than government and nations: of the 100 biggest economic units in the world today, more than half are corporations. ExxonMobil, an oil company, for example, is much bigger than the combined revenue of poor 180 countries. Sure, money does not automatically reflect power, but it is certainly parallel to power – and, of course, control.

All the goods and services we buy or use –fuel, medicine, water, transport, health and education, even computer software and crops growing in the fields in our surroundings– are increasingly controlled by corporations which may, at their whims, choose to nurture, support or choke us. Even, governmental policies are gradually controlled by corporate interest in the name of market.

But, why on earth are many of us happy to be in the power of business as such? Why do we play the same computer games, which run on the same system and platform, watch the same Hollywood films and listen to the same Western pop music without complaints? Why do we consume softdrink, smoke cigar, wear clothes and shoes, with brands that we can find easily at a cornershop in London but also at a kiosk in remote area in Yogyakarta without questioning? Why do we let ourselves be persuaded by the fast-food restaurants to buy the same high carbohydrate food which also destroys local tastes and to shop in the gleaming, interchangeable, air-conditioned shopping malls and hotels without grumbles? Just because people get what they want does not mean that is the end of the story – it is all about ‘potestas’.

In a condition that ‘potentia’ is astronomical, ‘potestas’ can make us unaware of being under the power. The absence of the critical capacity towards the governing power is what is referred to by Gramsci as being under ‘egemonia’ or hegemony.

So, here the key: it is also the ‘potestas’ why we all are now in the chorus of ‘corporate social responsibility’ (CSR).

Indeed, since 1995 when the oil company Shell set a precedent for future behaviour when it decided to reverse its decision to dump the oil storage platform, Brent Spar, into the sea, we have seen that notions of CSR are influencing business like never before. When there is a growing criticism that business practices have contributed to global inequality, environmental problems, poverty, non-compliance to labour, women and children rights, among others, business reacts by proclaiming CSR as the solution. Everywhere, virtually all corporations today attempt to be more responsible, improve social, environmental and ethical performance and engage in better stakeholder relations. Along with CSR, public-private-partnership is promoted as solution for public governance.

But when business is demanded to be accountable –socially and politically—they strongly disagree. When asked to comply with labour standards and environmental laws they refuse; when asked to be regulated under compliance of labour rights, women rights and children rights, they say no. They are more in favour of self-regulatory rather than being regulated; they prefer voluntary initiative and not bound to standard. And, even just for campaigning and public-relation purpose, they reject the wording ‘corporate accountability’ and prefer ‘corporate responsibility’.

This is why CSR remains scrutinised. Scholars and activists have continuously seen that there are a lot wrong with CSR. CSR is part of the game of power – it is the product of an undemocratic collaboration between multinationals and campaigning organisations: the former buying peace and acceptability by succumbing to the demands of the latter (Tomkins, 2001). Some critical civil society organisations (CSOs) are even ‘moderated’ when faced by CSR campaign and agenda. Their main function to criticise and balance the role of state and corporations in shaping society has been seriously tampered. Instead of being public voice, some CSOs are acting as the public-relation of companies and donor agencies promoting CSR. As result, broader public interest is neglected. Thus, imposing CSR the way it is today would probably be found to be doing more harm than good (Kapstein, 2001; Henderson, 2000).

Clearly, ‘potestas’ has made us –government, business, CSOs—think and agree that responsibility is the matter, and CSR practice is the solution, while it is not. So, what is the remedy?

As Spinoza tells us clearly that it is all about power, the fundamental answer lies in the control of its exercise. To say blatantly, business power needs to be controlled, to be made accountable. One way, among many possibilities, is to set a tool so that the exercise of business power can be measured, controlled, audited and thus made accountable. For example, ‘social-audit standard’, proposed by all power-bearing social actors –state, CSOs and business—is much more valid rather than the fashionable self-initiative of ‘CSR best practice’. Why? The answer is twofold.

First, it is obvious that powerful businesses are now in the driver’s seat, where instead of governments, corporations determine the rules of the game and let the former become referees, enforcing rules decided upon by the companies. It is why the business power must be controlled and made accountable. Second, for the corporate’s own sake: the corporate world cannot be divided easily into “good guys” and “evil companies.” Companies are dysfunctional families writ large. Mistakes are built into life, including the life of business. Accountability is thus essential. The measure of a company’s integrity is not how loudly it beats its own breast crying ‘mea culpa’ when problems happen, but its accountability.

Only in this light, many CSR fora (maybe the likes of Asian Forum for Corporate Social Responsibility-AFCSR), get their meaning. Otherwise, it is just another part of the ‘potestas’ – to persuade us to agree to be governed by corporate interests, rather than by public civility. No wonder if fora as such are challenged by many civil society initiatives (maybe the likes of Local Resistance Forum as part of regional social forum) who are questioning the ‘potestas’, i.e. gathering efforts to survive from the blatant impact of unaccountable accumulation of profit done in the name of globalisation.

Promoting good (corporate) governance through CSR without attempting to make business power accountable is only an empty cliché. Governance is definitely about controlling power, but it is also aimed at creating a shared life where we all live accountably – a ‘bonum commune’.

  1. Friday, 20 June 2008 at 3:08 pm

    Well written, Mas. A small question, shouldn’t the second “corporate governance” on “because discourse about good governance today cannot but touch upon the issue of corporate governance” on the first paragraph be “corporate responsibility”?

  2. Wednesday, 30 July 2008 at 9:24 pm

    translet dong, Bos.. :((

  3. Thursday, 31 July 2008 at 9:35 am

    bung ivan – thanks. re: your question – you spotted it! — corrected herewith!

    bung arham – terjemahannya di sini

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