Recapturing the state from corporate power
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Empower is a worker-owned cooperative based in Mexico City which works with civil society organisations around the world to close the information gap between them and corporations. Its founder and executive director, Benjamin Cokelet, talks to Critical Takes about corporate capture of the state, including:
· What Empower does (to 01:38)
· Defining capture: “replace, commandeer, influence, frustrate, and evade” (to 08:48)
· Corporate capture in Latin America and other regions (to 12:45)
· What happens when leftwing parties come to power? (to 15:31)
· What are the solutions? Lessons from South Africa (to 24:08)
· "There's no support within the public for corporate capture. Everyone looks at it as corruption." (to 27:39)
The transcript below has been edited for length and clarity:
Diarmid:
Hello, this is Critical Takes on Corporate Power and I'm Diarmid O'Sullivan. I'm delighted to be talking to Benjamin Cokelet of Empower in Mexico about a problem we all know well, which is corporate capture of the state.
Ben, thanks for making time to talk. Could you start by telling us a bit about Empower?
Ben Cokelet:
Sure. Empower is a worker-owned, worker-governed cooperative. We're based in Mexico City and we work globally to provide strategic corporate research for civil society organizations that are fighting corporate power.
Whether it's a human rights organization, a workers' organization, a women's organization, an LGBTQ organization, et cetera, whatever civil society organization that fits with our values and is willing to work with us, we provide them with strategic corporate research, basically to provide actionable intel on how to hold a corporation accountable for human rights or environmental abuses.
We never work for corporations, never work for governments, only civil society. We work across the world, mostly in the Global South, not so much in the Global North. We have staff throughout the Americas and in Europe, but we do a lot of our work in the Middle East, North Africa, East Africa, South Asia and that part of the world. We're not so much focused anymore on the Western Hemisphere per se.
Diarmid:
So let's talk about corporate capture, which you did a really interesting report on a while ago. I think that how we define that term is important to how we approach the problem. So how would you define this term corporate capture?
Ben Cokelet:
Yeah, we've gone around on this over the years so I'll read you what our most recent definition is. We understand corporate capture as the influence exerted legally or illegally by private economic elite, particularly large corporations, over state functions, policies, laws, and resources. That's supposed to be a wink and a nod to lots of different movements and actors that have a say in what corporate capture should mean.
Basically it’s how rich people and their corporate entities capture, directly or indirectly, the functions of the state. So it could be lobbying, it could be undue influence, it could be corporate backslapping, it could be the revolving door. There's so many different ways of doing it. It’s all the ways that they're able to essentially wiggle their way into the decision-making structure and make decisions for all of us based on their private economic interest.
Diarmid:
It’s quite a broad term which I find helpful compared to, say, corruption. I used to be an anti-corruption campaigner and one of the difficulties of the term “corruption” is that there's a gap between what the public understands by corruption, which is broadly what you've described, and what the law regards as corruption, which is proven evidence of a specific case of somebody providing money or an advantage to somebody.
There’s a big gap between those two definitions and of course corruption has to be proven to be against the law. So I like “corporate capture” because it spans the legal and the illegal rather than getting hung up on what you can prove in court.
Ben Cokelet:
It’s worth saying that the legal definitions of corruption stem from corporate capture, right? They’re naturally limited in such a way as to not hold a corporation and certain actors accountable. That in itself is an example of corporate capture.
Diarmid:
Yes. I had some dealings years ago with the [US] Foreign Corrupt Practices Act … and it dawned on me that it is partly a pro-competition law. It’s to stop one corporation stealing a march on its competitors by bribing a government official to get a contract or whatever. Corruption is something that gets in the way of the free working of markets, which is quite a conservative definition, isn’t it, so “capture” is more helpful.
In the report [Page 18] you talked about a five-part categorization of corporate capture: replace, commandeer, influence, frustrate, and evade. That’s an interesting typology.
Ben Cokelet:
Yeah. It’s hard, within such an amorphous subject matter as corporate capture, to come up with easy, instructive ways of thinking about it. So we borrowed from a couple of other actors and made a composite table … basically they're trying to be easy ways to identify the modalities of corporate capture when you find them.
There are not a lot of great examples globally, though there are a few, of states who have actually taken on the task of investigating corporate capture and doing something about it legally that would've led us to a more standard definition.
A lot of what we have are things that many academics originally, some multilateral entities and now civil society organizations have come up with as instrumental definitions to help us understand [corporate capture], both in terms of corporate accountability purposes, but also even just from a training and education standpoint to make this amorphous concept real for people. The “replace, commandeer, influence, frustrate, and evade” archetypes are the ones that we think are the easiest to apply.
Diarmid:
I found that very helpful actually. Do you think it makes a difference who is doing the capturing? Because obviously it can be domestic or foreign corporate interests, or wealthy interests operating through corporations, and sometimes they're in alliance and sometimes the’re in competition with each other.
Ben Cokelet:
Definitionally, it does not make a difference. Practically, the difference would be the amount of power inserted and the amount of benefit obtained.
The old adage about who benefits is really the guiding factor here. Who's doing the influencing and what are they gaining as a result? And is it something minor or is it something major? They’re all corporate capture but what's the effect on the public interest? There are going to be gradients of gravity in terms of the impact, especially on human rights.
The biggest, most powerful actors and the big impact that they're able to buy for themselves, are the more egregious example. But there are other examples to discuss.
Historically, corporate capture or “state capture”, which is a variant of corporate capture, came from the Philippines and Indonesia in the 1970s and 1980s. It was looked at dictators and their families and how they built family businesses using state functions to benefit and enrich themselves. That was the original idea of state capture, which was this kind of family corporation essentially running a state and milking the state for private benefit at the same time.
And then this evolved over the time to a more inside-outside or outside-inside way of looking at it which is unrelated to the state, or unrelated directly to the state executive or state legislator per se [and more to] a corporate actor that’s able to use other means to work their way into state functions and obtain private benefits. That’s the common modality for corporate capture.
I work and live in Mexico City, in Latin America, and here - but also other places in the world, the United States is one of the great examples – we have organised crime, and organised crime is also a private way of organising (in this case illicit) resources to provide private economic benefit, but they also have to capture the state in ways that facilitate their activities.
It could be a legal entity, it could be an illegal entity or it could be the mix of those two, which is the most common way of doing it. Money laundering is when dirty money finds its way into the quote-unquote, "clean system." And that is an example of some illicit entity maybe creating a legal entity to be able to launder their money. So there’s this grey area. It’s not a black and white divide. Across the spectrum, corporate capture can be found in different places and different gradients.
Diarmid:
Absolutely. Earlier you mentioned Indonesia. I was actually there at the time the Soeharto dictatorship was being overthrown and you could see all kinds of complexities. For instance, you had the US very stridently saying Indonesia must crack down on corruption, which was seen as an impediment to US investment, but not on those corrupt deals which the [Indonesian] elites had signed with US companies.
There were all sorts of tensions there [including] local elites using their capture of the state to screw over their foreign creditors. As you say, it gets messy and complicated and there are a lot of grey areas – not moral grey areas but definitional grey areas.
Corporate capture obviously has common features all over the world but the specifics vary a great deal from one place to another. Would you say that corporate capture has particular characteristics in Mexico or in Latin American countries in general?
Ben Cokelet:
It’s hard to lump Latin America together as an entity, but I would say that certainly throughout Latin America you'll find variations of corporate capture which might be distinct to what you would find, say, in Southern Asia or Northern and Eastern Europe.
When I did this research together with a colleague two and a half years ago [for the] corporate capture report … we found that for example in India it was hard to have conversations about how I understood corporate capture here in the Americas because people there didn't understand it per se as: oh, this is a company coming in from outside wielding their economic power to work their way into government to tap private benefits.
They saw it as: these are politicians stuck in the middle between the corporation on one side and the state on the other, and they're the ones that are essentially acting as arbiters of how the political corporate capture operates. And so the capturing is described as being done by political individuals and political parties, not per se by the outside corporation.
Is the one really an extension of the other? Yes, it is, so there are subtleties here. But what’s different, for example in Mexico or in other places in Latin America, is that corporate capture is maybe a little bit more direct, maybe not as politically tied in as it would be considered in India or other places around the world. I found that intricacy to be very different.
Or there's places like, for example, in Russia, where a lot of this corporate capture happens by the military or entities linked to the military. So is that the state capturing itself? I guess you could argue that, but also the state creates military companies which are wholly privately owned, non-state dependent, at least legally, corporations which themselves are doing the capturing, and there's private benefits accruing to these military individuals who also serve as corporate titans on the side, and it's their corporate side of their business which is benefiting from their military-side connections.
Those are two of the varieties that I found which I don’t necessarily see writ large here in Mexico or Latin America. Here in Mexico, for example – and this is something that we talk about all the time and has been pretty well documented over the years, but it’s almost shocking when you say it out loud - here we have forty-eight men and two women who have captured thirty-eight percent of GDP in Mexico. So it's almost one percent of GDP per billionaire. And that's considered to be the most captured state worldwide in terms of the amount of GDP in the hands of … in this case, 50 billionaires, right?
So here you're actually able to put a number on it and figure out who specifically is doing the capturing and it's not military entities or political parties. It's big billionaires and they've been doing this now for decades, if not centuries, if you go back towards the conquista [the European conquest] and the early days of Latin America and its fateful combination with European powers.
Diarmid:
I’m sitting halfway around the world, in London, and I know very little about Mexico or about Latin American politics more broadly, which I recognise is very different from one country to another. But I do notice that there seems to be a quite marked alternation between governments of “the left” and governments of “the right”.
What typically happens to corporate capture when governments of the left are in power? You have a government in Mexico at the moment which is generally considered to be a government more of the left than of the right. So under those circumstances, what if anything changes in the way that capture operates?
Ben Cokelet:
When you've had one political party or tendency in power for a very long time without any sort of political alternation, then the political alternate is often not a captured entity because all the corporate capture has gone to focus, of course, on the political party or the state apparatus that was already in power.
When you have alternation is when corporate capture evolves to capture equally the different political tendencies. And so until recently here in Mexico, we had a political party which was very much focused on the centre- right, and it wasn't until eight to 12 years ago when we had this tendency to start voting centre-left.
And so 10-12 years ago, some of that centre left state apparatus was largely uncaptured and seemed to a harbinger for the possibility of anti-corruption, for the possibility of good government, for the possibility of doing some of these more reformist or, you know, democratic-leaning reforms.
But that has changed over the last decade. We see examples of those billionaires who for decades were capturing the centre-right, now they're starting to capture the centre-left. And what's interesting is that you also see at the same time politicians evolving. So politicians who once raised the flag for the right now will suddenly miraculously change their opinions around life and start raising the flag for the left.
And kind of like in India, actually, some of the same politicians were helping with the capture on the right, and they're now helping with the capture on the left because they've moved from politics into a state function as a regulator, a legislator, or part of the military or some other part of the state.
So to answer your question, as always it’s not black and white but there’s this migration both of politicians and of corporate power to figure out how to capture the government power. Maybe the examples aren't as exorbitant or as illustrative as it would've been 20-30 years ago, but certainly we're now seeing examples of corporations capturing the state on both sides of the political spectrum.
Diarmid:
Based on the experience of the countries that you've worked in, what can be done to limit or to roll back corporate capture of the state?
Ben Cokelet:
There’s so much to say here, but essentially the paradigm would be that we need greater transparency and access to the black box of what’s happening inside the corporation. So the figurative suitcase full of euros or dollar bills or pesos which exchanges hands between a corporate person and a state regulator. How to track that black box of activity is nearly impossible unless you have an eyewitness to that transaction who's willing to come forward as a whistleblower.
Realising that [this] is virtually impossible to track or systematize, we have to focus on two things:
- how to make the rest of the financial transactions … transparent and getting round some of the transparency traps that exist. For example, transparency laws worldwide have exclusions for security or public interest, or for privacy reasons, banking secrets, things like that. There's different pretexts that are used to exclude this or that piece of information. To the extent that we can open up those lacunas of information to make them more available and more disposable, that will help.
- and we have to have Australian-level whistleblowing laws and protections that are able to really effectively not just protect whistleblowers and their anonymity, but also offer economic benefits for them to come forward and blow the whistle, as well as criminal sanctions for those who go after whistleblowers and look to cause retribution against them for their bravery in coming forward. These two things at least would get the ball rolling in terms of transparency and access to information.
So A, different laws and B, different enforcement of the laws … There has to be a more clear mandate for jurists around how to interpret the law so as to promote transparency and find corporate capture to be in violation of existing regulations and legislation.
A third [measure] would be obviously effective enforcement and sanctions and penalties. If the end result of all this is a misery-level fine that's essentially a slap on the wrist for a big billionaire, who cares? You know, life goes on and the wheel keeps turning. We don't want that. We want the opposite. We want something that hurts, whether it's a significant effect on the pocketbook or whether it is criminal sanctions in the case of criminal practices.
What we champion a lot here is keeping blacklists or no-contracting lists alive: when a corporation's been found guilty of having their hand in the cookie jar, keeping them from ever having public contracts again. So most corporations and places where capture takes place are essentially looking to get public contracts, licenses, concessions, or some sort of other benefit from the government. And if they're found guilty, they should be prohibited from participating again in that type of scheme.
And so that means not just the subsidiary company, but also at the very top level, the headquarters company. I would even go farther to say the beneficial owner behind that headquarters company and all their other ancillary and diverse business interests should also receive the same treatment. If we're willing to send a signal that this is not how business is gonna be done any more, then it has to be a pretty complete sanction and a pretty broad signal that can be sent across all forms of public contracting to keep that beneficiary of corporate capture from ever repeating that practice again.
To get at the larger question of how to do this: there’s no perfect example, but South Africa is considered the place where the best examples are found. There was a commission there several years ago looking at how corporate capture took place and how the state was captured effectively by private political interests as well as economic interests.
That led to a significant amount of investigation and essentially public documents that allowed one to understand how the state itself was captured, how that hurt democracy and how to prevent that from going forward. A lot of recommendations flew out of that process that were adopted within government. Some weren't, and that's a problem and they should be revisited. There's still a chance to have another bite of the apple and do it the right way.
But essentially the Zondo Commission in South Africa is the best example we have of how to continue investigating corporate capture and state capture at large.
Diarmid:
The difficulty with getting these kinds of rules into place is that they're resisted or that the judiciary is corrupted and so even if they're on the statute book, they don't necessarily get applied. I guess there’s something about a political moment coming along when people are already organized and ready to articulate demands for change which then get adopted.
Within Latin America, has there been anything you've seen recently which encourages you to think that it's possible to roll back corporate capture by instituting these kinds of rules?
Ben Cokelet:
There's individual cases. I wouldn't say there's anything paradigmatic. Examples have come out of scandals whereby the state was found to be captured by private economic interest: for example, corporations seeking to get a certain kind of public contract or benefit that might have led to some sort of poor service or industrial mishap or something that became a scandal in newspapers and became a political crisis for the government, then you see crackdowns happening in a specific way.
You see sometimes criminal sanctions. You'll see whole public contracting processes being rewritten and overhauled to become more transparent and independent. You do see that. I can think of Argentina, Chile, Colombia, Brazil, Mexico: these places all have examples of what we're talking about.
The Odebrecht scandal from Brazil, which led throughout all of Latin America including Mexico, was one of the most famous examples. Strangely enough, Mexico is one of the countries that has done the least about going after the corporations and entities that were captured by the Odebrecht scandal … whereas there's places like Chile and Peru or Brazil which have gone whole hog into changing how government can be captured by that type of entity and that type of practice.
So each scandal hits differently in a country where it impacts. Those are the types of examples we've seen. But they've usually had to have a significant kind of political crisis befall the government that's led to a mass outcry for change, and that's usually led to a deep, but not necessarily broad, specific regulatory change or specific enforcement practice,
Which itself sends a signal. But that signal, of course, is not institutionalized and not broad and not enduring. It's hard to see how it will last forever. And so in some of these cases people start to look the other way: there’s another shiny thing over here that draws our attention and we begin to forget that the same phenomenon might be reoccurring in a place where it occurred originally.
That’s largely part of the problem: there’s not a systematic attention to the issue, unlike in South Africa where it’s still a kind of a front page issue and allows people to have a common dialogue around corporate capture because it's typified and part of the lexicon of the country, and they have all sectors of society involved in the proceedings and the trials and tribulations that come out of it. There's very much a kind of enwrapping or enrapturing process that we haven't had in Latin America.
So beyond just the individual scandals, we haven't had anything that endures like it's endured in South Africa.
Diarmid:
Looking at where we are now, do you feel optimistic about the future, or do you feel gloomy about the prospects for rolling back some of the corporate capture?
Ben Cokelet:
I love the question. I probably answer this question two or three times a day. It’s something that I find extremely fascinating because I don't think there's a great answer. I'm a optimist when it comes to this, and I'll say the following: having the naked example of the United States being captured by the corporate titan at the White House gives us all this global paradigm that we can look to and say: "This is how we don't wanna end up. This is how we don't wanna be."
There’s a lot of political fodder and opportunity if parties and politicians were brave enough to get into it, where they could really double down on the critique of corporate capture of the state. And frankly, it could be a whole political platform that could lead to major change in democracies and in countries across the world if people would become this anti-corporate capture party, right?
So I see lots of opportunity politically, lots of fodder, lots of ways where we can lean into this. There's no support within the public for corporate capture. Everyone looks at it as corruption. Everyone looks at it as a bad practice. Everyone looks at it as unfair play. Those are win-win political points for a politician looking to make hay against the authoritarianism and corporate capture of the state that we see in major countries around the world right now.
If they were truly to read our report, get behind it, double down, and actually use this as a platform piece going forward, I actually think you would make major political hay against authoritarianism, against neoliberalism, against corporate capture just by going out there talking about what's needed to reform society and become a much cleaner place to do business, do politics and live and operate.
I'm personally optimistic about it. I think the fodder is there. There's ample opportunity. What there isn't is a ton of political will and bravery to go out there and name it what it is. You know, if we're gonna be honest, capitalism's insidious.
Certainly I would say that democracy's a facade in front of capitalism. And if capitalism really lingers behind it all and political parties think that they need money in politics to survive, then it's hard to come out against, corporate capture if it means sending billionaires to jail for corrupt practices.
And so I think that the bravery that's needed often comes from places or from people who have learned that they do not need money in politics to survive. When we can find those champions and those examples and those opportunities, I think, yeah, there's ample opportunity to make a difference.
Diarmid:
That's a very encouraging and inspiring point on which to end actually. Thank you very much for making time to talk. It was a really rich and interesting discussion.
Ben Cokelet:
It was nice meeting you. Thanks for inviting me.
This is the end of the transcript.