This is the next chapter in my series on Social Risk, enjoy.
What do “doing business” and the degree of democracy have to do with each other?
Well for one there is no doubt that companies that operate in environments where there is none or very few institutions in place to ensure a stable business environment often find themselves in situations where ethic and morality is strained. Just take a look at Shell in Nigeria (Oil drilling), H&M in Bangladesh (Clothing factory) or Maersk in China (Container factory) and one will know what it means to operate in such an environment.
To some degree the democratic deficit is self-imposed or reproduced through the understanding that we are “all on the same boat together”. Businesses blame the business environment, Governments blame international society, NGOs blame international business and the population blame politicians. So what we need is stable democracies that are characterized by good governance e.g. institutional structures in which the individual´s rights and freedoms are respected are a prerequisite for sustainable development. This means improvements in two areas:
- That Rule of Law is upheld, ensuring a level playing field.
- Democratic structures in place that ensures that can ensure that power is distributed and not centralized to a few individuals.
- Cooperation should be undertaken with NGOs and civil society forces that work to achieve openings for democracy. In other cases, such as where civil society is small or non-existing, the focus should be on communicating an awareness of democracy, human rights, gender equality and market economy
In Sub-Saharan Africa, a region where economics determines politics of the day and where a culture of democracy has been absent and if present is under the will of a few elites. Even the smallest democratic opportunities are economically conditioned especially during elections because of poverty, corruption, illiteracy, unemployment and not least a playing field which has been all but level.
As we have celebrated the Arab spring there is no evidence that these old structures are so easily dismantled. We hoped for free-elections and a greater degree of transparency would be present, but it has done little in terms of growing a culture of democratic thinking in the region. For example, the political move by Mohammed Morsi to centralize power around the president in Egypt or the lack of security and move towards radical Islamism in Tunisia. The lesson is that democracy is fragile and needs to be supported by strong institutions that can balance the pursuit for power by individuals with the principles of democracy.
The Social Democratic concept of democracy views political institutions as a means to offset the natural power of concentrated wealth that accrues in capitalist economies. However, during the economic crisis it has become apparent that individual states can’t handle the burden that they have been put under alone and have to seek assistance from others. In Africa for example there is no strong institution that can rescue countries in need so there are basically left to their own devisees, while we in the western world can draw on intergovernmental institutions like the EBC or others. In essence this means that the developing world is left with institutions like the IMF, EU, EBRD and the World Bank that impose strict guidelines for economic behavior and limits the ability for democratic processes. This again leads to a greater gap between the ones that have and the ones that don’t both on a region by region level but also between individual states creating tensions and eventually conflict.
For companies a democratic deficit means an uncertain future business environment. It means increased risk of catastrophic collapse and it means that what you might think is yours today might not be so tomorrow because there is no state to guarantee tour basic rights.