Month: April 2019

In the Eclipse of the State? Globalization and the Role of the State, Peter Evans argues that the effects of globalization flow through two interconnected but distinct channels. The increasing weight and changing character of transnational economic relations over the course of the of the last three decades have created a new, more constraining context for state action. As wealth and power are increasingly generated by private transactions that take place across the borders of states rather than within them, it has become harder to sustain the image of states as the preeminent actors at the global level. Ultimately, it is clear that the role of the state has absolutely not been eclipsed, in fact, is more critical than ever before to continuously be involved in regulation and accountability regarding MNCs.

One example of a country who has treated its labour standard regulations as essentially eclipsed is India. India is host to many multinational corporations that reap benefit from its low regulation and accountability by MNC’s. The International Labour Organization is a UN agency directly towards granting rights to workers by setting minimum labour standards. Out of the ILO’s 8 core conventions, India has yet to ratify 4. These include the right to organize, collective bargaining, minimum age convention, worst form of child labour. Notably, many of the MNC factories host child labour and human rights abuses while the existence of organized groups and trade unions is rarely existent or functioning to explain rights or protect.

To parallel, it seems that there is a tendency to treat the ability of a corporation to  take ownership and accountability for human rights abuses, pollution, and labour malpractices. Nike was the first targeted brand with connection to poor working conditions which was revealed to the public, largely because of their size and popularity. Since this, Nike has regularly published reports on working conditions and acknowledges issues within its factories. Public shaming and allegations forced Nike to change their bad reputation and show concern for improving working conditions.

In large part, India has established better judicial mechanisms reflecting human rights standards amidst outcry and disbelief from the international community. Similarly, companies such have Nike has been forced into greater transparency with the public to keep up a good public image. It seems that a myriad of actors who are able to shame, threaten or directly pinpoint to the global community major flaws in their capabilities, then change does happen. While some countries and companies have illustrated poor engagement to any remediation, applying pressure has made for positive change. By using media, freedom of speech, and transnational networks, efforts can be made that states and corporations can no longer chalk up human rights abuses under the guise of an eclipse out of anyones control.

Over the last several years, human rights abuses and labour standard  malpractices by multinational corporations have taken to the spotlight. Notably, a number of factory fires and collapses in export processing zones in Southeast Asia have been advocated for by the media, bringing much needed attention to the global consumer and international community. One example was the Rana Plaza collapse in Bangladesh in 2013 that left over 1,000, majority women, dead. It was reported that just that morning, a number of women complained about the buildings seemingly deteriorating structures and pleaded for someone to look into it. Much to the shock of the international world,  human rights abuse mechanisms and functioning trade unions were, and continue to be, nearly inoperable in many of these regions.

The Ruggie Principles were proposed to measure and strengthen the human rights performances of the business sector around the world. The “Protect, Respect, Remedy’ has been used as a framework for business and human rights.  Importantly, various studies have been conducted on business malpractices globally to consider whether corporations can be trained to recognize that working with the United Nations is positive.

A large scale comparative study conducted by Toffel (2015) produced positive data that supports Ruggies hypothesis. There are functioning accountability mechanisms to support that corporations can be trained to behave better through corporate social responsibility in respect to global labour standards. They found that suppliers are more likely to adhere to global labour standards when they are embedded in states that participate actively in International Labour Organization treaty regime and have stringent domestic labour law and high levels of press freedom. They also found that suppliers perform better when they serve buyers located in countries where consumers are wealthy and socially conscious. These findings suggest the importance of overlapping state, civil society, and market governance regimes to meaningful transnational regulation (Toffel 2015).

Therefore, Ruggies principles are relevant to the critical conversation over the relationship between multinational corporation accountability and state accountability. MNCs are complex international actors with rent seeking capabilities but exhibit certain elements of corporate social responsibility. To make Ruggies principles more meaningful, conversation on multinational corporations must continually adapt to consider a multiplicity of actors (state, global consumers, media, NGOs, people affected by externalities) and seek to hold each powerful actor accountable for the protection of workers and citizens.

Complimentarily, Keck and Sikkink produced interesting research on Transnational Advocacy networks in International and Regional Politics. Network is an appropriate term to describe the conditions under which increased social responsibility upon MNCs might be achieved. Networks allow us to consider the role of media, churches, trade unions, consumer organizations, intellectuals, NGOs, governments, foundations, local social movements, and a myriad of social and political actors. These international actors have widely divergent policies and goals, but their social priorities may place pressure upon larger and more powerful international and domestic actors to implement CSR.

A significant shift in global thinking would be to consider multinational corporations as sources of governance, in the way that we see states this way. Ruggies principles are in part are asking us to shift our way of thinking. Rather than seeing MNCs and states as separate units, considering the relationship between the two as nuanced, dependent, and equally capable of supporting and respecting the protection of internationally proclaimed human rights. Further, by considering a myriad of actors, appropriate accountability mechanisms for human rights abuses and labour standards will influence the state-MNC relationship towards a more socially responsible unit.

Toffel, M. W., Short, J. L., & Ouellet, M. (2015). Codes in context: How states, markets, and civil society shape adherence to global labor standards. Regulation & Governance,9(3), 205-223. doi:10.1111/rego.12076

Crawford, R. (2019). MNC’s and the Evolution of Global Governance (Lecture). Multinational Corporations & Globalization.