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“Why this debate matters to me”

Martin Wolf Sophia Tickell Malini Mehra Tom Burke
9 April 2003

View the Roundtable discussion on the boundaries of corporate power and responsibility in the 21st century

Malini Mehra: I come from India and have worked on international policy issues as a campaigner and advisor for most of my professional life.

We are in a delicate position. Concern about corporations is at an all time high, yet we rely on them more than ever for economic growth and development.

Most campaign groups are out to change multinational corporations, but have lost sight of the fact that the majority of the world is employed by small to mid-sized firms. The real challenge should be to get indigenous firms like these to play a positive role in sustainable development, especially in poorer countries.

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Malini Mehra: “The real challenge is to get indigenous firms in poorer countries to play a positive role in sustainable development.”

This is why my organisation, the Centre for Social Markets, focuses on two key constituencies: domestic industry in developing countries such as India, and ethnic minority and diaspora communities in countries such as the UK. These groups, especially overseas Indians and Chinese, are playing a major unseen role in shaping globalisation, yet they hardly figure on policy maker’s radars. That has to change. We must work harder to bring these groups into the main policy debates on responsible entrepreneurship, accountability and governance. This is important not only from the point of view of representation, but in actually succeeding in improving business practices in developing countries – if that is what we say we’re concerned about.

Martin Wolf: I write for the Financial Times on economics. I have been interested in economic development since the early seventies when I joined the World Bank and worked there for ten years.

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Martin Wolf: “The more integrated the world economy becomes, the weaker companies get. Governments remain overwhelmingly dominant in setting the rules and regulations that govern the world.”

This debate about corporate power and responsibility is a vital one because it bears on the role of the market in the world economy, the place of business organisations within the market, the relationship of both the market and business organisations with politics, and the relationship of all this with the global community.

There is a huge debate, vitiated by wilful misunderstanding of the role of business – both a huge and deliberate exaggeration of its sheer scale, and a misunderstanding, and therefore exaggeration, of the sources of its power.

We need to realise two things. First, that the more integrated the world economy has become and is becoming, the weaker companies get. Second, that governments remain overwhelmingly dominant in setting the rules and regulations that govern the world.

I think the debate has become confused about what business can sensibly be expected to do. Essentially their role is to be good, moral businesses – a very difficult thing to define – and in the process to generate wealth for society. The record is absolutely clear. The twentieth century was the century of business organisations. It was also incomparably the most dynamic and progressive in world history. There is a very close connection between the two facts, and whatever we do to regulate business, it is essential that they continue to perform these vital economic functions.

Tom Burke: I am an advisor to Rio Tinto, a large mining company, on environmental issues. I am an environmentalist by profession. I used to run Friends of the Earth and then ran Green Alliance. I was a special adviser for three secretaries of state for the environment, so I have a background in government, in the NGO sector and in business. What brings this together is my engagement in making a transition to sustainable development.

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Tom Burke: “The success of companies has led to a general rise in expectations meaning people expect more from business and thus want to renegotiate the terms of that contract.”

The debate on corporate social responsibility (CSR) is significant because of the crucial role business plays in making this transition, since it is the primary mechanism by which people’s aspirations, needs and desires are satisfied.

Business is able to succeed in when society has agreed to limit the liability of individuals who form companies. We would not have business in the way we now have if we had not created that particular device, which is, in effect, a contract between business and society. The success of companies has led to a general rise in expectations meaning people expect more from business and thus want to renegotiate the terms of that contract.

Sophia Tickell: I am Senior Policy Adviser on the private sector at Oxfam UK. I think the problems lie not with corporations per se but with the global market.

Capital markets encourage a downward pressure on costs and are also totally unable to address the gross inequalities in the world. People naturally turn to corporations for answers. They are very big players in the market with demonstrable impact on public policy and on people’s lives. It may be that some of their expectations for business to tackle global inequalities are rather unrealistic, but some are right and should be extended.

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Sophia Tickell: “Ultimately the problems lie not with corporations per se but with global capital markets.”

Martin Wolf makes an interesting point about not wanting companies to go too far beyond their core competence. But I think that approach often constrains people in their thinking, we need to explore corporate responsibility much more creatively.

Take the debate about access to affordable medicines in developing countries, for example. Here is a case where some companies are starting to be quite revolutionary in their thinking, taking the perspective of poor countries that need their drugs and asking: “How can we reduce prices in developing country markets so they are in line with people’s incomes? And if we are to do that what needs to be done to protect our rich country markets?”

Ultimately, Corporate Social Responsibility is about the proper interface between governments and companies, and how you actually ensure that governments stand up and defend the public interest in a way that is good for everybody in the long run.

Now read the roundtable discussion itself

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