Business as a political actor in an era of emergent social

transformation

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Peter Edward, Newcastle University Business School

DSA conference, November 2012

Outline

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• Changing economy of poverty• From international to domestic politics• The problem of re-politicization• ‘Political CSR’ and its limits• The political as formation of hegemony• New questions, new directions

Poverty forecasts

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Changing economy of poverty

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Poverty in the future – a problem of national distribution

5

Concepts of

development

Business engagement with development

Comprehensive/ holistic

Reductionist/ particularistic

Instrumental

Interdependent / integral

(Edward & Tallontire, 2009)

A: Managerialist

B: Institutionalising

C: Pragmatic

D: Politicising

Concepts of

development

Business engagement with development

Comprehensive/ holistic

Reductionist/ particularistic

Mainstream

ing

Alternative Trade

OrganisationsSetting standards

Fairtrade Labelling OrganisationsInternational (FLO)

??

A: Managerialist

B: Institutionalising

C: Pragmatic

D: Politicising

Concepts of

development

Business engagement with development

Comprehensive/ holistic

Reductionist/ particularistic

Opening to

comm

ercial finance

Women’s self-help groups and

micro-savingsSetting standards

MACS (co-operatives)Standard Assessment procedures

Entry of private banks as lenders

Bailiffs as ‘Stakeholder Engagement’

Farmer suicides

Concepts of

development

Business engagement with development

Comprehensive/ holistic

Reductionist/ particularistic

Instrumental

Interdependent / integral

(Edward & Tallontire, 2009)

How do we get back to

here

in a world where busin

ess is

increasingly th

e dominant

institution?

Political CSR – rethinking business and the political

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Palazzo, G., & Scherer, A. G. 2006. Corporate Legitimacy as Deliberation: a communicative framework. Journal of Business Ethics, 66: 71-88.

Scherer, A. G., Palazzo, G., & Baumann, D. 2006. Global rules and private actors: toward a new role of the transnational corporation in global governance. Business Ethics Quarterly, 16(4): 505-532.

Scherer, A. G., & Palazzo, G. 2007. Towards a Political Conception of Corporate Responsibility – Business and Society seen from a Habermasian Perspective. Academy of Management Review, 32(4): 1096-1120.

Palazzo, G., & Scherer, A. G. 2008. Corporate Social Responsibility, Democracy, and the Politicization of the Corporation. Academy of Management Review, 33(3): 773-775.

Scherer, A. G., Palazzo, G., & Matten, D. 2009. The Business Firm as a Political Actor: A New Theory of the Firm for a Globalized World. Business & Society, 48(4): 577-580.

Scherer, A. G., & Palazzo, G. 2011. The New Political Role of Business in a Globalized World: A Review of a New Perspective on CSR and its Implications for the Firm, Governance, and Democracy. Journal of Management Studies, 48(4): 899-931.

From ‘Instrumental’ to ‘Political’ CSR

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Changing nature of business interaction with society

Emerging institutional context• From national governance to post-national governance

(decline of role of state)Role of law• From hard law to soft law and self-regulation

Scope of CSR• From corporate liability to social connectedness

Legitimacy• From cognitive/pragmatic legitimacy to moral legitimacy

Proposed model of democracy/politics• liberal democracy deliberative democracy

(Habermas)(Scherer & Palazzo, 2011)

Deliberative democracy and its limits

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Deliberative Democracy•Presumed shared will to consensus•Construction of political processes that support consensus formation

Limits of Deliberative DemocracyBeyond process•politics occurs in largely unregulated processes in the public sphere•…where dissent and disagreement can be constructive

‘Disembodied consensus’ Honneth (3rd generation Critical Theory)•Problem: ‘Will to Consensus’ unfolds ‘behind the backs’ of participants •What is the role of emotion and ‘belonging’ in the formation of interests

Limits and the impossibility of consensus (Rescher, 1993)•How can we ever really distinguish between consensus, acquiescence and coercion?•Idealization “involves the projection of a hypothesis that removes some limit or limitation of the real” (p 196)•“in matters of practical philosophy idealization can do actual harm. No doubt, ideals can be a useful motive in the direction of positive action.

Limitations shared with‘stakeholder engagement’ and ‘participatory development’

Post-foundational ‘political CSR’?

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The post-foundational perspective (Norval, 2004)

• social interaction creates & transforms interests & identities• rather than merely revealing and contesting pre-given interests &

identities• construction of hegemony (naturalized system of meaning/understanding)

through articulation in both discourse and practice• articulation invites identification with specific perspectives (and rejection or

overlooking of others)• identification as a process of emotional investment in the sense we make of

our world• consensus and legitimacy are therefore a political (contingent, hegemonic)

accomplishment• rather than outcomes of rational processes and instrumental procedures that

expose and balance pre-given interests

Three faces of Hegemony

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1. Construction of Hegemony• articulation as structuring process “that can win over subjects to a

particular project or coalition”• creation of logics of equivalence that invite inclusion and identification

(e.g. through use of metaphor and metonym to occlude difference)2. Management of dissent

• impeding the formation of competing positions so that they “do not disturb or modify a dominant practice or regime in a fundamental way.”

• involves “the disarticulation of equivalential chains of demands and identities via practices of challenge, institutionalization, deflection, or negation.” - logics of difference

• strategies : differential incorporation, partial co-optation, pluralisation3. Fantasy

• “providing a fantasmatic narrative that promises a fullness-to-come once a named or implied obstacle is overcome, and which foretells of disaster if the obstacle proves insurmountable.”

• explains how logics or articulations ‘grip’ individuals through an emotional investment that sustains our subjective desires and identifications

Poststructuralism and After (Howarth, forthcoming)

Example 1: FLA

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• Fair Labor Association (FLA)• “the gold standard among voluntary [multi-stakeholder] initiatives”, John

Ruggie, former UN Special Representative on business and human rights• No longer just apparel: Nestle joins Nov 2011, Apple joins Jan 2012: ‘FLA is

the credible partner with capacity’• Tripartite governance: business, consumers, NGO’sBUT• Business funds FLA• Consumers = university representatives• NGO’s are (western) human rights, not labour organisations• US tradeunion UNITE withdrew early on• Marx (Axel, 2008) – active unions in a corporation reduce the likelihood of

joining FLA• Dissent confined mainly to university campuses - United Students Against

Sweatshops (USAS)

FLA – Stabilising Equivalence

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Fair Labor Association (FLA)• How did FLA manage to establish itself as hegemonic ‘gold standard’• How was rhetoric of deliberation and inclusion sustained as

legitimate/credible even when (or maybe because) FLA is so unrepresentative?

• Why did FLA become ‘credible partner’ but others (eg. ILO?) did not?

Example 2: FSC

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• Forest Stewardship Council (FSC)• Similar governance to FLA but chambers (economic, social, environmental)

have equal voting power• High profile NGOs are members and endorse: e.g. WWF, Greenpeace• S&P propose it as one of best examples of deliberative model todayBUT• Rainforest Foundation (2002) report:

• Key stakeholders excluded• Non-functioning complaints procedures biased in favour of commercial

interests• Lack of transparency or ‘democracy of knowledge’

• Joint assessment by Greenpeace et al. 2008: “problems with FSC are so severe that supporting FSC threatens their own organisations’ credibility”

• June 2011, FERN (Dutch not for profit) resigns• But Greenpeace stays in and maintains high-profile support

• FSC logo is ‘Greenpeace approved’• Jan 2012: ‘Vote NO’ letter added to Greenpeace FSC webpage

FSC – Dissent and Difference

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Forest Stewardship Council (FSC)• How should we make sense of different actions (discourses and practices) of

FERN and Greenpeace (since they probably have very similar aims)?• Deliberative approach might judge Greenpeace’s action as ‘more legitimate’

(engagement, transparency into FSC). • Post-foundational approach would consider influence (articulatory effect) of

these different behaviours (and their interaction) on discourses and practices at FSC and beyond.

Example 3: Shell in Nigeria

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• 2011 study by Hennchen and Lozano (not yet published), explicitly uses the political CSR model

• Local criticisms of Shell: pollution (leaks and gas flaring), human rights abuses (e.g. Ken Saro Wiwa), links to security forces, own armed police.

• Response to growing local criticism is to partner more with government agencies and NGOs

• Withdrawing of external audit of sustainability reporting in Nigeria “signals the maturing of Shell’s reporting”

• Sunmonu, Shell Nigeria chairman, 2010: militant violence and lack of government funding is the main problem

• “We don’t have the skills to be a government ... We are a bloody technical company”

• Beyond lobbying: former employees become Minister of Petroleum, bribery and expenses paid trips for officials, secondments of experts to ministries

• Surveillance contracts: controlling security through local power-brokers and strongmen (fuels inter- and intra-community violence), contracts are ‘excluded’ from Shell’s global principles of responsibility

Shell - Creating fantasy

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Shell• H&L conclude that we need a less dichotomous view of ‘political CSR’ – i.e.

we need a hybrid between liberal and deliberative models• e.g. Extractive Industries Transparency Initiative (EITI) is hard law

• But “the alternation between two opposing solutions [liberal and deliberative] is an inherently unstable solution”

• Reassess Shell’s discourses and practices as an attempt to articulate a hegemonic position• Surveillance failures support a security/policing discourse (fantasy)• Displacement (depoliticization or sedimentation) onto government is

aided by Shell’s working deep inside the political system• Inter- and intra-community violence promotes security discourse and

impedes radical alternatives of ‘tolerance’, ‘sensitivity’ and ‘moral discourse’

• Can ‘post-foundational political CSR’ avoid ‘inherently unstable alternation’?

References

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Edward, P. and Tallontire, A. (2009). 'Business and Development – towards re-politicisation'. Journal of International Development, 21, 819-833 Hennchen, E. and Lozano, J. M. (2011). 'Corporate political responsibility in a globalized world: The case of Royal Dutch Shell in Nigeria'

Howarth, D. (forthcoming). Poststructuralism and After: Structure, Subjectivity and Power. Palgrave Macmillan: London

Marx, A. (2008). 'Limits to non-state market regulation: A qualitative comparative analysis of the international sport footwear industry and the Fair Labor Association'. Regulation & Governance, 2, 253-273

Norval, A. J. (2004). 'Democratic Identification: A Wittgenstinian Approach'. Political Theory, 34, 229-255

Rainforest Foundation. (2002). 'Trading in credibility: the myth and reality of the Forest Stewardship Council': Available from: http://www.rainforestfoundationuk.org/files/Trading%20in%20Credibility%20full%20report.pdf,

Rescher, N. (1993). Pluralism: against the demand for consensus. Oxford University Press: Oxford

Scherer, A. G. and Palazzo, G. (2011). 'The New Political Role of Business in a Globalized World: A Review of a New Perspective on CSR and its Implications for the Firm, Governance, and Democracy'. Journal of Management Studies, 48(4), 899-931