Center for Governance and Sustainability

at the University of Massachusetts Boston

Missing Sense of Ownership

pg. 37 : The time has come for a new stakeholder paradigm of international governance analogous to that embodied in the stakeholder theory of corporate governance on which the World Economic Forum itself was founded. The 1945 UN Charter explicitly identifies people, or society at large, as the ultimate stakeholder of international governance, notwithstanding the role sovereign states play as the central actors in the international system. The state-based core of the system needs to be adapted to a more complex, bottom-up world in which nongovernmental actors have become a more significant force. But what is also required is a corresponding sense of ownership in the health of the international system by these very non-state stakeholders, which until now have tended, with the notable exception of certain NGOs, to leave such matters entirely to their national governments.

Readers' Guide Comment on “new stakeholder paradigm of international governance analogous to that embodied in the stakeholder theory of corporate governance on which the World Economic Forum itself was founded”


The stakeholder theory of corporate governance is one of the early ideas of Klaus Schwab, the founder of WEF and one of the three co-editors of the GRI report. Schwab argues that firms should engage with a wide range of stakeholders in order to augment the thinking of their corporate executives. These stakeholders, however, serve more like unpaid advisors than participants in a firm’s corporate governance. They do not get to provide directions to key corporate leaders or make joint leadership decisions. WEF uses this approach to structure its annual January event in Davos, Switzerland and its various regional events. The participants in these events are hand selected by the Schwab and the WEF leadership staff.


  The Davos Man, as participants in WEF events are characterized, is a bit of a curious choice to use as the basis for a new global governance system. On the one hand it makes perfect sense for WEF to build a case for global governance out of its own experiences. On the other hand, the Davos participants are from the elite of the business world, the governmental world, civil society and related institutions, and are therefore not exactly a model for a democratic global system.


Readers' Guide Comment on “legitimacy and effectiveness”


WEF sees loss of legitimacy and lack of effectiveness as the primary problems that have provoked its redesign of global governance. In selecting these two issues -- not human rights, the eradication of hunger, ecological damage, or social inequality -- WEF has narrowed sharply the possibility to intentionally craft an ethically-based global governance system. Notably absent from the 450 pages of recommendations in the GRI are recommendations to enhance 'equity' or 'democracy.'


Readers' Guide Comment on “nongovernmental actors have become a more significant force”


The terms ‘nongovernmental actors’ and elsewhere ‘non-state organizations’ are used for both multinational corporations and international civil society organizations. In many cases, the reference is made in circumstances where the asymmetric power relation between the two is quite relevant or when ‘non-state’ is used as a masked reference to multinational corporations.


Related Ideas: loss of legitimacy; lack of effectiveness; MNCs as governing actors; civil society as a governing actor; constituencies; Schwab’s stakeholder views; democracy; missing issues


The Readers' Guide welcomes comments with alternative examples or counter examples, supplemental assessments of the extracted GRI text or commentary – critical or otherwise – of the above interpretation of GRI’s perspective.

 

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