A UN report on ending poverty has big ideas on corporate power
By the Editor
A new report from within the UN system presents a set of ambitious but achievable ideas for curbing corporate power as part of a global effort to eradicate poverty.
In this article I’ll look at what the report says about corporate power and explain why a necessary next step is to revive the UN Commission on Transnational Corporations.
The “Roadmap for Eradicating Poverty Beyond Growth” was drafted by the UN Special Rapporteur on Extreme Poverty and Human Rights, Olivier de Schutter, to be presented to the UN Human Rights Council next month. It’s currently available in draft form. (The Special Rapporteur has changed since the draft was written).
This is not the only recent report of its kind to consider corporate power: a shorter report last year from the Special Rapporteur for the Right to Food, Michael Fakhri, focussed explicitly on the question of corporate power and human rights in food systems. Both reports are recommended reading.
Such reports are not binding: UN member states can ignore them in practice and many probably will, because this kind of thinking goes against the grain of official orthodoxy almost everywhere.
Even so, I think we should treat such reports as an opportunity to stretch the boundaries of what can and cannot be said in governmental circles.
The Roadmap for Eradicating Poverty Beyond Growth
At more than a hundred pages long, the Roadmap is a big, bold and sprawling document. Despite its title, it does not actually rule out that parts of the world economy should get bigger, particularly in lower-income countries, but it argues for discarding the deeply-embedded assumption that the route to eradicating poverty is via economic growth.
This is not an argument just for replacing GDP with some better-chosen metric, but for a very different kind of world economy. The report argues (page 30) that: “What determines whether people live well is not how large the economy is, but whether what it produces and how it distributes resources actually reaches the people and the purposes that matter.”
The Roadmap is bulging with ideas, based on inputs from hundreds of people, and I couldn’t come close to doing all of it justice here. Instead I’m going to focus on what it says about corporate power and acknowledge that this represents only one strand of a bigger argument about how to eradicate poverty. I’d certainly encourage readers to look at the whole document.
The ideas about corporate power are spread across the report rather than being collected in one place. I’ll come to the significance of that lower down, but first let’s look at some of the ideas in roughly the order in which they appear in the report. These are my summaries, of course, and readers are encouraged to refer back to the original for the full picture.
Incidentally, it was nice for me to see that many of the ideas have already been featured on Critical Takes, which suggests that this platform is doing its intended job of showcasing critical thinking on this subject from across civil society.
1. Reforming corporate taxation
The Roadmap endorses (Page 7) the main goal of the global tax justice movement: a UN Framework Convention on Tax Cooperation which introduces unitary taxation with formulary apportionment, a minimum tax rate, public country-by-country reporting and public registries of the ownership of companies (Page 42).
The aim of these reforms, as you’ll know, is increase and redirect the flow of tax revenues to states by aligning taxing rights over corporate profits with the places where profit is actually created by people, rather than tax havens, while also opening up corporate taxation to greater public scrutiny.
As Attiya Waris explained recently for Critical Takes, negotiations for the tax convention have gone better so far than might have been expected.
The Roadmap calls for more use of taxation as a policy tool for good, including:
· more use of excess profit taxes to deter corporate rent-seeking
· digital services taxes to get at the hard-to-tax profits of Big Tech
· taxes on resource use and environmental harms, including a “climate damage tax” on fossil fuel companies.
2. Use of competition law to break up corporate monopolies
Competition law is an established tool of regulation in capitalist economies but, as the anti-monopoly movement has been pointing out, the law hasn’t been applied with nearly enough rigour in recent decades to stop the extreme concentrations of market power that we now see in Big Tech, Big Pharma, Big Agriculture or asset management, for example.
There are more conservative and more ambitious interpretations of what it means to take on corporate monopolies and the Roadmap argues (on Page 50) for the latter: “monopoly power is a political structure and a solution to the monopoly problem must focus on redistributing governing authority rather than merely correcting market failures.”
Building on this point, I personally think the anti-monopoly movement could say more about how far the process of corporate deconcentration needs to go because there is a risk that governments eventually take its argument on board, as the Biden government did in the US, but spend years breaking up the very biggest monopolies while leaving wider concentrations of power untouched.
3. Democratising the firm
The report calls among other things (Page 51 onwards) for states to support enterprises with a social purpose; to strengthen collective bargaining rights, including by extending them to workers in lead firms’ supply chains; and to promote workplace democracy.
The firm includes in this area a call for the long-awaited adoption of a Binding Treaty on Business and Human Rights which should not only help to safeguard workers within supply chains but also to curb corporate collusion in human rights abuses more broadly.
(There’s more here on democratic public ownership and more here and here on collective bargaining rights).
I think that the core of any long-term agenda for transforming corporate power has to be not only democratising the ownership and control of very large corporations but also changing their corporate purpose so owners and directors are compelled to give the same attention to impacts on society and nature that they give to profits.
That’s the work of a generation, for sure, and the massed forces of private greed will resist it to the last ditch. But I think that work needs to be done if other goals of economic justice are to be attained, because otherwise corporate power will get in the way. I'll come back to this point at the end.
4. Opening up intellectual property regimes
Turning knowledge into private property is one of the ways in which very large corporations can capture rents from society and dominate other industries, as well as helping to concentrate profits where they choose and thus to avoid tax.
As Jayati Ghosh pointed out to Critical Takes last year, the extent to which knowledge has become a privatised asset in the modern age is extraordinary.
The Roadmap proposes (from Page 88 onwards) the creation of review boards which assess intellectual property (IP) rights against human rights criteria and can override them where necessary, as various countries have done for life-saving medicines (the report names Brazil, India, Malaysia and Thailand).
Framing exclusive corporate control of IP as a human rights problem seems a good approach from a political point of view, as a first step at least towards breaking down the walls of IP fortresses, because human rights have a basis in international law and it’s harder in reputational terms for a corporation to be “against human rights” than to be against more nebulous concepts of open knowledge.
The Roadmap also proposes the dismantling of dispute mechanisms which allow investors to sue states for policies which affect their profits, noting that some have done this already in one or more cases, including South Africa, India, Indonesia, Ecuador and Bolivia.
5. Preventing corporate capture of democratic politics
The Roadmap calls (Page 92) for “lobby firewalls” which clearly separate corporate interests from public decision-makers and for a prohibition of the “revolving door” which allows people to move between public office and jobs with big business.
Bram Vranken recently talked to Critical Takes about corporate lobbying in the European Union, one of the world’s three main centres of commercial regulation, and suggested remedies such as banning lobbyists from meeting policymakers other than in open meetings where other concerned parties are present.
It would be hard in practice to stop lobbyists from having a private word with politicians or officials they are trying to influence – I’ve seen it happen, and you may have too – but banning such private lobbying should at least limit its extent.
The Roadmap makes one suggestion (on Page 58) which I don’t think would work well in practice: a Corporate Democratic Development Index which evaluates corporations on “voice” and “ownership” and creates incentives for good behaviour by tying firms’ scores to access to “corporate tax rates, state aid and public procurement access.”
I think such an index would become highly politicised by lobbying pressure in favour of well-connected companies, while its scores would be hard to fit in practice to national laws and policies in diverse countries.
A simpler approach for incentivising good corporate behaviour would be the opposite: create black lists for companies which have behaved unethically and which are then banned from public procurement and state subsidies, joint ventures with public agencies and so on.
A black list would also be politicised and subjected to lobbying – look at the European Union’s blatantly political black list of tax havens - so it’s likely that few corporations would end up on it. Even so, a fear of being black-listed and losing business could, I think, be a powerful influence on the decisions of corporate executives. I think this idea is worth bouncing about to see where it lands.
Seeing corporate power as a single problem
As anyone knows who’s written a big report, the need to sort the material into chapters or cross-cutting themes creates a writer’s dilemma about what to put where that has no perfect answer.
That said, I would personally have liked to see all the Roadmap’s arguments about corporate power gathered in one place because corporate power is a single, structural phenomenon, albeit one with many manifestations.
The Roadmap recognises this (on Page 51, for instance). So does last year’s report on corporate power and the right to food which notes that “corporate law turns corporations into legal persons with an inordinate number of rights and very few binding obligations” (Page 13) and adds: “It is very difficult to curtail corporate power or hold corporations accountable unless corporations are changed from within” (Page 21).
However, I feel the recommendations of both reports stop a few inches short of the core of the problem. Corporate power is hard to tame because it is concentrated in the privileged institution of the very large corporation. In order to hold that power to lasting account, it is necessary to change the character of the institution.
This is not to say that nothing changes without institutional change. As the result of years of campaigning, bad press and consumer pressure, many multinationals have become visibly more concerned to manage their own reputations in relation to accusations of complicity in human rights violations, for example. But in that period corporate power has also grown and become more concentrated, with all the continuing systemic effects on human rights which are described in the two reports.
So curbing corporate power ultimately means not just imposing external constraints on the institution and shrinking its size but also transforming the nature of that institution to create internal constraints on it (and one day, perhaps, the institution can be replaced by something else entirely).
Creating a space at the UN to discuss corporate power
As the Roadmap notes about its general conclusions on eradicating poverty, change will be prolonged and gradual and may take different shapes in different places. So, how to extend the conversation which this and similar reports have taken up?
An obvious and necessary next step would be to revive the UN Commission on Transnational Corporations (here’s the link again) as a dedicated space within the UN system where ideas for curbing and ultimately transforming corporate power at the global level can be considered over time by states.
The limitations of the UN are well-known but it's still much the only space where all states have at least some prospect of being heard in debates about global norms.
What the revival of this commission would lead to is another question. Corporate power is a huge phenomenon – the world’s two thousand largest public corporations make more than $50 trillion a year in sales according to Forbes magazine - so it’s not realistic to think in terms of a single legal instrument which could respond to all the manifestations of that power.
It is possible, however, to imagine a series of soft and hard law instruments emerging from the UN which deal with different aspects of corporate power and gradually come closer to its core: the tax convention is en route, a business and human rights treaty is some way behind and we could envisage a treaty to limit global monopolies and cartels, for instance, and others in future.
And so the global norms which currently enshrine corporate power, too often at the expense of justice and democracy, might slowly be changed for the better.