-- Kimon Valaskakis PhD
Kimon Valaskakis is a former Canadian Ambassador to the OECD President of the New School of Athens and emeritus professor of economics at the University of Montreal.
Without Law there is no civilization. This principle is well known and applied in all national states where a central organization called a ‘government’ establishes and enforces rules to regulate the economy and society. Yet, at the international level, we seem to lay aside this idea and under the system of national sovereignty, inherited from the 1648 Treaty of Westphalia, each state is free to accept or reject international rules, by signing or not signing treaties.
Even more surprising, private sector actors, such as individuals, corporations and special interest groups, although submitted to national rules, can well escape from the latter by moving to other jurisdictions. This explains the proliferation of tax havens, outsourcing to low wage areas and environmental dumps. When these private sector agents are asked to show ‘corporate social responsibility’ it is mainly through ‘guidelines’, ‘frameworks’ and general recommendations which are left optional. In spite of globalization, very few, if any, intergovernmental organizations have the power to exert any direct authority on these private actors. Most IGOs are designed to discipline signatory governments by moral suasion or in some cases, sanctions, but not corporations which remain completely unregulated at the global level. As a result, the ‘guidelines’ and ‘frameworks’ end up having the same status as New Year Resolutions, such as quitting smoking or losing weight. Most of them are just not kept.
In the paper which I was asked to write for the G8 Research Group in preparation of the Aquila Summit, I have argued that the Good Samaritan approach, which relies exclusively on benevolent or philanthropic CEOs to implement global corporate social responsibility, very quickly meets its limits. Good Samaritans, like Philosopher Kings are few and far between. The financial excesses of 2008 which led to the current global crisis confirm the proposition that for every philanthropist there are many more cheaters who don’t play by the rules. More importantly, the absence of global rules makes the very concept of cheating too vague to be applicable, since it is quite possible to be outrageously irresponsible without breaking any laws, whatsoever. It follows then that, in our view, a Global Standard, which is an excellent idea to begin with, can only be meaningful if enforceable by some form of global law.
How can this happen in a Westphalian World, designed around national sovereignty ? This is a tricky question and, as a former OECD ambassador, I am well aware of its complexity. However there are at least three plausible solutions which should be explored:
(1) Create a new IGO with direct authority on private actors. One model could be the UN Security Council. The idea of creating a Security Council for the Economy, for the Environment or for Health, among others has already aroused some interest. It would mean that the rule making, once approved by the member states could then be implemented with sanctions for non- compliance. A second model could be the International Criminal Court, which has the authority to prosecute individuals without the permission of national governments. An equivalent International Economic Court could be envisioned with powers to impose penalties on offending economic actors.
(2) Endow one or more existing IGOs with direct authority over private sector agents, in order to enforce the agreed upon Global Standard. If the first solution is too cumbersome, existing IGOs could be given the same authority. This could be done by treaty or agreement allowing the IGOs to take direct measures against offending private sector agents based in the signatory states. The candidate IGOs which could be entrusted with that task could be the IMF, the OECD and the WTO or some combination of all three.
(3) Simultaneously enact identical corporate social responsibility legislation in all signatory countries, fully enforceable by national states. This proposal is the least complicated to implement and is advocated by the John Bunzl among other in the Simultaneous Policy Movement. Each sovereign country would enact identical laws, because subtle differences in wording could be exploited by cunning lawyers to create loopholes. The effectiveness of this approach will also depend on its inclusiveness. If some major players are absent then it will obviously fail.
We have become One Interdependent World which obviously requires global standards, to be effectively managed. But without appropriate enforcement mechanisms these standards are unlikely to go beyond the status of wish lists.