We have entered a new period in governance – from the Westphalian nation-state system, we now live in a world where true power lies beyond the hands of traditional government.  The previous revolutions will test the mettle of our leaders as they seek innovative solutions to address these myriad problems.  Strategic coalitions consisting of governments, corporations, NGOs, and academic institutions will need to be stood up in order to mount an effective response and to capitalize on important opportunities.

Corporate Citizenship

According to Klaus Schwab, Executive Chair of the World Economic Forum, corporate citizenship “expresses the conviction that companies not only must be engaged with their stakeholders but are themselves stakeholders alongside governments and civil society.” [1]   According to this philosophy, private companies must do more than simply provide goods and services to the public, they must serve the public good.  And many private companies are well positioned to do this.  In 2008, the revenue of the largest private company, ExxonMobil, made it the twenty sixth largest economic entity in the world, right behind the country of South Africa. [2][3]  With such massive profits, consumers will to look to the private sector to remedy many of the world’s ills.  In fact, according to the 2004 Cone Corporate Citizenship Study, 77 percent of Americans believe that companies have a responsibility to support a cause. [4]   It would seem that business leaders are in agreement as well.  According to the Harvard Business Review, “when a well-run business applies its vast resources, expertise and management talent to problems that it understands and in which it has a stake, it can have a greater impact on social good than any other institution or philanthropic organization.” [5]  However, at the end of the day, most CEOs are more concerned with the bottom line than they are with shaping public discourse and it is unlikely that private companies would be involved in this work if it proved unprofitable.  The financial crisis is forcing businesses to reevaluate their practices, and in the end they may find that the most profitable strategy is also the most socially sustainable.

Civil Society

With the decentralization of capital, technology, and information, civil society organizations (CSOs) and non-governmental organizations (NGOs) have become important actors, filling gaps in the provision of social services, encouraging participation in local and national politics, and connecting people, resources, and ideas across the world.  Each of the revolutions will affect civil society the world over, some negatively, some positively.  For instance, communication technology may encourage individuals to disengage from formal politics.  Meanwhile, immigration may fundamentally alter the cultural and religious makeup of political constituencies and force politicians to reformulate their platforms.  Some governments, confronted by terrorist threats, may implement new security measures that infringe on civil liberties, while others may assume a smaller role and encourage the professionalization of the “third sector” of non-profit organizations. [6]  NGOs are already playing an important role around the world – according to the Union of International Associations, there are over 60,000 international NGOs in existence - but the role they will play in the future depends on what exactly private citizens expect from their governments. [7]   These expectations differ starkly in developed and developing countries.  In failed states, like Somalia, where neither the government nor civil society organizations can provide for citizens, people have come to rely on international aid organizations for their most basic needs.  Development organizations have been active in these places for years working to engender civic participation, but building a truly robust civil society is a decades-long process.

Corruption

Corruption erodes public confidence in government institutions and encourages individuals to act outside their purview.  According to Huguette Labelle, Chair of Transparency International, “the continuing high levels of corruption and poverty plaguing many of the world’s societies amount to an ongoing humanitarian disaster.” [8]  Corruption, including bribery, fraud, and extortion, in low-income societies keeps people in poverty by dramatically increasing the cost of providing them with public services.  It is estimated that unchecked levels of corruption would add $50 billion to the cost of achieving the Millennium Development Goals for water and sanitation alone.  This is equal to half the total amount of foreign assistance paid in one year. [9]  Corruption does not just affect the developing world, however, and causes excessive waste even in more advanced countries.  For example, notoriously bad corruption has created stark income inequalities in Russia.  There, corrupt officials siphon $120 billion dollars from the federal budget annually.  In 2008, that number represented almost a third of government spending for the entire year. [10]   The government has responded to criticism by imposing limits on free speech, and in so doing it has created an environment that is hostile to business and ripe for social instability. 

Megacommunities

Dynamic, innovative and strategic partnerships between governments, civil society, the private sector, and international institutions will be necessary to address the many challenges ahead. [24]   National governments are no longer the most powerful actors, nor do traditional international governing institutions hold the clout they once did.  Nation-states have struggled to adapt to sweeping changes and have been slow to reformulate their roles and responsibilities.  Likewise, organizations like the UN and NATO are becoming overly bureaucratic and ineffective and may face extinction if they are unable to modernize as well.  Recent pledges to expand the International Monetary Fund’s (IMF) war chest may hint at an expanded role for that organization, though it may operate with less control by Western countries. [11]   Where these organizations have failed, new groups and partnerships have stepped in.  Private companies, civil society organizations, and international collaborations have emerged as major players on a host of economic, social, political, and cultural issues.  The roles of the private sector and civil society have already been discussed, but fledging international partnerships, like the G8 and, perhaps more importantly, the G20 should not be overlooked.  In 2009, especially, the G8 and G20 meetings were followed with great anticipation as they were seen as the most auspicious venues to solve the international financial crisis.  

The problems we face today result from our interdependence, so it is not illogical to assume that we need a collaborative and integrated solution.  We will also need leaders with the wherewithal to say that our current mindset is flawed.  The pressures of quarterly profit statements, election cycles, and annual reports currently prevent leaders from thinking strategically and in the long-term.  The effective leader will jettison vertical integration, information hoarding, and dogma in favor of optimization, recalibration, and negotiation. [12]   In an increasingly integrated world, seeing the big picture requires a daunting breadth and depth of knowledge. Those leaders able to bridge these gaps will enable the innovative partnerships we need to build a better future.

 Erik Peterson on Governance

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