Transcript

This is a transcript of Taking Embedded Liberalism Global: The Corporate Connection given by John Gerard Ruggie.

Miliband Public Lecture on Global Economic Governance
The London School of Economics and Political Science
June 6, 2002

Twenty years ago I published a scholarly article that introduced the concept of embedded liberalism. It told the story of how the capitalist countries learned to combine the efficiency of markets with the broader values of community that socially sustainable markets themselves require in order to survive and thrive.[1] That lesson did not come to them easily.

It took the calamitous collapse of the Victorian era of globalization – into worldwide war, followed, though not precisely in this order, by extreme left wing revolution in Russia, extreme right wing revolutions in Italy and Germany, militarism in Japan, the Great Depression, unprecedented international financial volatility and the shriveling up of world trade.

Nor was that all. The social strains produced by those upheavals were so great that the world imploded into yet a second world war in the span of a single generation.

When the lesson finally took root, the new social understanding was described by different names: the New Deal, social democracy, and the social market economy. But the underlying idea was the same: a grand social bargain whereby all sectors of society agreed to open markets, which in some cases had become heavily administered if not autarchic in the 1930s, but also to share the social adjustment costs that open markets inevitably produce. That was the essence of the embedded liberalism compromise.

Governments played a key role in enacting and sustaining this compromise: moderating the volatility of transaction flows across borders and providing social investments, safety nets and adjustment assistance – but all the while pushing international liberalization. In the industrialized world, this grand bargain formed the basis of the longest and most equitable economic expansion in human history, from the 1950s to the present. And it provided the institutional foundation for the newest wave of globalization, which began not long thereafter and is far broader in scope and deeper in reach than its 19th century antecedent.

I raise this subject because today we have to learn that lesson all over again, only in far more difficult terrain. Why? Because embedded liberalism presupposed an international world; we have come to live in a global world. It presupposed the existence of national economies, engaged in external transactions, conducted at arms length, which governments could mediate at the border by tariffs and exchange rates, among other tools. But markets have gone global, threatening to leave behind merely national social bargains.

The past is not inevitably prologue. But here is how United Nations Secretary-General Kofi Annan assessed the current state of play at Davos in January 1999, ten months before the “Battle of Seattle.”

Our challenge today is to devise a similar compact on the global scale, to underpin the new global economy. … Until we do, the global economy will be fragile and vulnerable – vulnerable to backlash from all the “isms” of our post-cold-war world: protectionism, populism, nationalism, ethnic chauvinism, fanaticism and terrorism.[2]

My remarks are divided into three parts. First, I briefly describe the main drivers of the anti-globalization backlash, focusing in particular on the growing anxieties in the industrialized countries that the social embeddedness side of the equation is losing out to globalization. Second, I summarize the key features of Kofi Annan’s Global Compact, which enlists the corporate community in promoting human rights, labor standards and environmental sustainability in its global domain. Third, I locate that initiative within the broader universe of innovations in global governance, and I argue, with due appreciation for the irony, that the corporate sector, which has done more than any other to create the growing gap between global economy and national communities, has a critical role to play in bridging it.

The Backlash

The globalization backlash has many sources, but three disparities of globalization have animated particular concern.

First, its benefits are distributed highly unequally, both within and among countries. Large parts of the developing world are left behind entirely; these are the countries where 1.2 billion people somehow eke out survival on $1 a day, or nearly 3 billion on $2 a day; where nearly half of humanity has never made or received a telephone call; where one fifth of the world’s people lack access to safe drinking water.

Africa is less integrated into the global economy today than a decade ago. Insofar as it is, it is largely through commodity exports, which works to the disadvantage of African countries as commodity prices have fallen steadily. But even in the United States, the unprecedented boom of the 1990s lifted incomes in the bottom twenty percent of the labor force only modestly, and then only briefly toward the end.

Second, the backlash is triggered by a growing imbalance in global rule making. Those rules that favor global market expansion have become more robust and enforceable in the last decade or two – intellectual property rights, for example, or dispute resolution in the World Trade Organization. But rules intended to promote equally valid social objectives, be they labor standards, human rights, environmental quality or poverty reduction, lag behind and in some instances have actually become weaker. So we find ourselves in the situation where considerations of patent rights trump fundamental human rights and even human life – at least until that clash became unbearable for the world’s conscience over the AIDS treatment issue in Africa.

Third, for many people globalization has come to mean greater vulnerability to unfamiliar and unpredictable forces that can bring on economic instability and social dislocation, sometimes at lightning speed. The Asian financial crisis of 1997-1998 was such a force – the fifth but not last major international financial crisis in just two decades. Indeed, the integrity of cultures and sovereignty of states increasingly are seen to be at stake. Even in the most powerful countries, people worry for their jobs, wonder who is in charge and fear that their voices are drowned out in globalization’s sweep.

From what we know about how and why the embedded liberalism compromise came to be formed, disparities of this nature and magnitude are socially unsustainable, and unless they are attended to they are bound to trigger the “isms” of which Annan spoke.

Moreover, bear in mind that the backlash has bite because it is driven not only, or even primarily, by the poor and the weak. Its vanguard includes large numbers of people in the most privileged societies the world has ever known.

So let us look briefly at what drives people’s anxieties about globalization in the industrialized countries, and how much staying power their concerns are likely to have.

Much of the debate about whether globalization is adversely affecting the social embeddedness of market forces in the industrialized world focuses on the impact of global market integration on domestic public expenditures, especially in social-safety-net-related areas; the pressure of off-shore production on wages; and more elusive issues of identity and accountability.[3]

Vito Tanzi’s work is definitive on the subject of public expenditures.[4] Going back to 1870, he documents that the most rapid expansion in public spending took place between 1960 and 1980, which was a time of successive and significant liberalization in trade and monetary relations – much in the manner the embedded liberalism compromise would suggest.

The 1980s and 1990s first saw the emergence of greater skepticism about the interventionist state, especially in the UK and US, yet public spending continued to rise though at a slower pace. At the same time, it was purchasing fewer social services, in part because of the declining cost-effectiveness of interventions, and in part because the public sector debt burden from previous expenditures consumed a greater fraction of overall spending.

Tanzi foresees a reduction in public spending relative to GDP in the years ahead, reflecting a combination of less favorable attitudes toward the role of the state and a less friendly fiscal environment due to demographic shifts, among other factors.

Geoffrey Garrett has been looking more closely at the relationship between these developments and globalization, and has generated a number of interesting findings. In his book, Partisan Politics in the Global Economy, Garrett showed that European social democracy continued to thrive in cases where powerful left-of-center parties were allied with strong and centralized trade unions, irrespective of differences in the degree of market integration.[5] A shift to the political right, of course, could alter that picture.[6]

In subsequent work, Garrett reports that, whereas greater exposure to trade had been an important contributor to fiscal expansion in the past, in recent years marginal increases in trade exposure have begun to lead to lower government spending, reversing the traditional relationship.[7] Parallel results hold for increased financial openness. Though the magnitudes remain small, the shift may reflect competitive constraints imposed by globalization.

Evidence directly linking either low rates of wage increases or high unemployment in the OECD countries to the outsourcing of production to lower-wage areas remains difficult to disentangle from other factors, such as the impact of technological innovation. Dani Rodrik suggests that the effect may be largely indirect, through power shifts in labor markets.[8]

Globalization makes the services of large numbers of workers more easily substitutable across national boundaries, Rodrik argues, as a result of which the bargaining power of immobile labor vis-à-vis mobile capital erodes. Thus, in the neo-liberal countries labor is obliged to accept greater instability in earnings and hours worked, if not lower wages altogether, to pay a larger share of benefits and improvements in working conditions, as well as more frequent job changes. Jagdish Bhagwati uses the term “kaleidoscopic” rather than “flexible” to describe these labor markets, thereby better conveying the nervousness they induce.[9] In the more traditional social democracies and social market economies where employment is more secure, labor is obliged to accept higher rates of chronic unemployment and lack of job creation.

Finally, in a recent paper two political scientists, Matthew Mendelsohn and Robert Wolfe, explore anxieties about social disembeddedness by means of a sophisticated survey of Canadian public opinion designed specifically for this purpose.[10] They find that Canadians strongly support new trade agreements (65% positive responses), including a Free Trade Area of the Americas (67% positive). But Canadians are dubious about globalization (only 45% positive), and fundamentally oppose ceding national authority over labor and workplace standards (27%), and standards for social programs (17%). In some respects even more interesting, Mendelsohn and Wolfe show that attitudes toward trade reflect individuals’ calculations of self-interest as economic agents – their skill level and sense of competitiveness in the marketplace, for example; but attitudes toward globalization tap into their sense of identity as citizens, and their core values concerning the kind of society in which they wish to live.

If this is true in Canada it is bound to be so all the more in European Union countries, where identity politics is doubly jolted by globalization and political integration – the latter itself, in part, being driven by globalization. Needless to say, developing countries never enjoyed the privilege of cushioning the adverse domestic effects of market exposure in the first place.

To sum up, the industrialized countries have passed through the 1990s with a fraying of domestic social safety nets, not a dismantling. But the trend lines are heading in negative directions. And anxieties about globalization appear to reflect individuals’ fears not only about potential economic losses, but also losses measured in identity and accountability. Unless countered, therefore, their doubts about globalization can only be expected to grow.

The Global Compact

Kofi Annan followed his 1999 appeal to the global business community at Davos with a concrete initiative called the Global Compact (GC), which went operational in July 2000. It engages the private sector directly to work with the UN, in partnership with international labor and NGOs, to identify and promote good corporate practices based on universal principles.[11] Some 400 companies now participate in it, including a surprisingly large number of firms whose home base is in the developing world, including India, Brazil, South Africa, and Thailand.

The GC encompasses nine principles, drawn from the Universal Declaration of Human Rights, the International Labor Organization’s Fundamental Principles on Rights at Work and the Rio Principles on Environment and Development.[12]

Companies are challenged to act on these nine principles in their own corporate domains, moving towards “good practices” as understood by the broader international community, rather than relying on their often superior bargaining position vis-à-vis national authorities, especially in small and poor states, to get away with less.

Specifically, companies are asked to undertake the following commitments:

1. To advocate the Compact and its 9 principles in mission statements, annual reports and similar public venues, on the premise that their doing so will raise the level of attention paid to, and of responsibility for, these concerns within firms;
   
   
2. To share with all GC participants at least once a year concrete steps they have taken to act on any or all of the 9 principles, thereby triggering a dialogue (the “learning forum”) about what deserves to be labeled a good practice, which the UN will then promote;
   
   
3. To join with the UN in partnership projects of benefit to developing countries, particularly the least developed, which the forces of globalization have largely marginalized. Examples include support for micro-lending, investment promotion, HIV/AIDS awareness and treatment for employees in sub-Saharan Africa, devising sustainable alternatives to child labor, and a host of initiatives in ecoefficiency and other dimensions of environmental management;
   
   
4. To engage in policy dialogues with other GC participants on significant social dilemmas that business has capacity to help resolve – examples include the role of business in zones of conflict, and business contributions to sustainable development.[13]

Organizationally, the Global Compact comprises a series of nested networks. The five participating UN entities constitute one. The Global Compact office in New York is by far the smallest component; its main functions are to provide strategic direction, policy coherence and quality control.

The core network includes the various UN agencies and the other participants: namely, companies; international labor; transnational NGOs; and university-based research centers. Most of the heavy lifting gets done here.

The Global Compact has triggered several complementary regional, national, and sectoral initiatives. Typically, they take a subset of interested GC participants beyond its minimum commitments. For example, Norway’s Statoil and the International Federation of Chemical, Energy, Mine and General Workers’ Unions recently reached an agreement within the GC framework whereby Statoil will extend the same labor rights as well as health and safety standards to all overseas operations that it applies in Norway – including Vietnam, Venezuela, Angola, and Azerbaijan.[14]

In addition, a number of initiatives intended for other purposes have associated themselves with the GC. The most unusual of these partnerships is with the multi-stakeholder Committee for Melbourne, which is incorporating the GC principles into the strategic plan it is developing for that Australian city, and encouraging all firms doing business there to embrace them.

The Global Compact is not a code of conduct. It is a value-based platform intended to align aspects of corporate behavior behind UN objectives.[15] The UN General Assembly could not generate a meaningful code of conduct at this time even if that were deemed desirable.

Besides, many of the GC’s principles cannot be defined at this time with the precision required for a viable code of conduct. No consensus exists on what “the precautionary principle” is – that in the face of environmental uncertainty the bias should favor avoiding risk – even though it was enshrined at the 1992 Rio Conference. Similarly, no consensus exists, even among advocates, on where to set the threshold of corporate “non-complicity” in human rights abuses. The GC’s learning forum helps companies to internalize such principles into their corporate culture, so that they shape and reshape companies’ behavior as external conditions change.

Moreover, ex ante standards tend to become performance ceilings and are difficult to change. Relying on community-defined “good practices” makes it more likely that performance is ratcheted up on an ongoing basis.

Nevertheless, there is every reason to expect that, at some point down the road, the accumulation of experience will lead gradually to a desire for greater benchmarking, for moving from “good” to “best” practices and even formal codification – including by industry leaders wanting to protect themselves against the possibility of suffering competitive disadvantages. The accumulation of experience – through trial, error, and social vetting – will gradually fill in the blanks. And laggards will have a harder time opposing standards based on actual achievements by their peers than ex ante standards.

In sum, the Global Compact is a heterodox addition to the growing menu of responses to globalization’s challenges that aim to engage or modify corporate behavior – a menu that now includes more than 240 codes of conduct, by one count, numerous social and environmental reporting initiatives, and various means to monitor corporate social responsibility.

Global Governance

Once upon a time, governance at the international level was entirely a statist affair. Whether the instruments were alliances, regimes, international organizations or transbureaucratic networks, states were the primary actors, and the primary objects of their joint decisions and actions. That was the foundational premise of the traditional system of global governance.

In recent decades, actors and forces for which the territorial state is not the primary organizing principle have begun to outflank the state externally and to gnaw away at its governance monopoly from the inside. They may be driven by universal values or factional greed, by profit and efficiency considerations or the search for salvation. They include multinational production networks and financial markets, civil society organizations and such “uncivil” entities as transnational terrorist and criminal networks.

I want to focus here on two of these social actors: civil society organizations and transnational corporations. And I want to suggest that the interplay between the two is creating, for the first time ever, a truly global social domain, however inchoate it still may be – a space that allows for the direct expression of human interests and values in global governance, not simply those mediated by states.[16]

Although the discipline of international relations has not figured out fully how to conceptualize civil society organizations, real world players now recognize their involvement in at least six different spheres of governance activity at the global level – where, by “recognize,” I mean that the other players regard their participation as more or less legitimate, and in varying degrees they actually count on CSOs to play those roles.[17]

• Civil society organizations have become the main international providers of direct services to people in developing countries, be it foreign aid or humanitarian assistance, and whether funded by agencies of national governments such as USAID or DfID, international organizations or the CSOs themselves;
  
  
• CSOs play increasingly important roles in generating, deepening and implementing transnational norms, as in the areas of human rights, the environment and anti-corruption. They do so through their global campaign activities, but also by direct involvement in governance forums such as the UN’s human rights machinery, or the OECD and World Bank in the case of corruption;
  
  
• CSO coalitions have become a significant force in blocking or promoting international agreements. Two exemplars have acquired iconic status. The most celebrated blockage, of course, was of the Multilateral Agreement on Investment, which would have been the high water mark of the neoliberal quest in the 1990s. And the most dramatic case of promoting a new agreement – even participating fully in negotiating it – is the land-mines ban, which was begun, literally, by two people with a fax machine, and ended up prevailing over the opposition of the most powerful bureaucracy in the world’s most powerful state: the US Pentagon;
  
  
• Coalitions of domestic and transnational civil society networks perform critical roles in promoting human rights, environmental standards and other social concerns within countries where the normal political process impedes or opposes progress in those areas – via the so-called boomerang effect first identified by Keck and Sikkink and elaborated upon by others.[18]
  
  
• CSOs have also become the main advocates for reforming international institutions, including the Fund, the Bank and the WTO, and to a lesser extent the somewhat people-friendlier United Nations;
  
  
• Finally, civil society organizations have become a major force to induce greater socially responsible behavior in the corporate sector, largely by exploiting the vulnerabilities of corporate brands to consumer pressures.

Let me elaborate on the last of these. Transnational corporations have negotiated scores of arrangements with CSOs, in addition to adopting codes unilaterally or through business associations. Gary Gereffi and his colleagues call these “certification institutions.” [19] By now they exist in most major economic sectors, including mining, the oil industry, chemicals, automobiles, forest products as well as apparel and footwear. Their scope ranges from setting the floor on prices paid to small-scale family farmers growing coffee beans in Costa Rica, to ensuring that plywood originating in British Columbia or cashmere sweaters knitted in South China meet sustainable forestry practices or agreed labor standards. Third party monitoring and reporting even of unilateral and plurilateral company codes have become widespread.

Moreover, the investment community has shown growing interest. Amy Domini’s social responsibility mutual fund is the frequently emulated pioneer, and major pensions funds, including America’s largest, the California Public Employee Retirement System, have made socially responsible investment a priority.

Despite their many differences, certification institutions share one common feature: governments are nowhere to be seen in them. CSOs view governments and intergovernmental processes to be too slow and too unresponsive to rapidly changing societal needs, while companies prefer voluntary initiatives to legislated standards. To date, governments seem content with this arrangement as well. Only a very small number of OECD countries – the UK, France and Netherlands – have begun to encourage or require companies to engage in social reporting. And apart from voluntary OECD guidelines for transnational corporations and the Global Compact, the intergovernmental arena has been largely silent as well.

This enthusiasm for certification institutions is matched, alas, only by our collective ignorance of their effectiveness in improving the lives of people they impact directly, and in triggering broader spillover effects in the societies around them. An enormous research task awaits us here. But I want to put that issue aside for present purposes, and draw attention to three more fundamental analytical implications.

The first is that these newly recognized civil society roles create a transnational space in which human interests can be expressed and pursued without being mediated by governments, as in the traditional system of global governance. Moreover, this space reaches deeply into societies and touches on the most intimate aspects of domestic social life, including the rights of individuals vis-à-vis their own state and employer. And it links domestic social groups into increasingly dense transnational networks that operate in real time: the record, no doubt, is held by the “ambush” against the MAI, which eventually involved more than 600 organizations in 70 countries, but was orchestrated in just 48 hours.[20]

This global social domain comprises rudimentary people-to-people links, including the corporate social responsibility initiatives. We are a long way from turning consumers into global citizens, but insofar as they often pay somewhat more for certified products it may be argued that the issues at stake, whether human and labor rights or environmental standards, do evoke deeper citizen-like values – at a minimum, values we might describe as “affordable fairness.”

The employees of firms, especially transnationals, are another potential constituency, overlooked by activist groups who tend to “black box” corporations as adversaries. The Global Compact, for example, has had its greatest successes in companies that fully engage their own employees in its implementation: in addition to wanting high salaries and favorable benefits, many employees, it turns out, also desire a sense of social efficacy for themselves and their firms.[21]

My second proposition concerns the nexus of public-private sector relations. I contend that the interplay between civil society and transnationals offers new possibilities for a reconfiguring and rebalancing the public and private sectors at the global level. Some examples will help clarify the point.

Corporate leaders in the social responsibility movement have come to realize that the concept is infinitely elastic: the more they do, the more they will be asked to do. We already find companies building schools, housing and hospitals, as well as running a variety of social services in developing country communities in which they operate – tasks at which they have no comparative advantage. So companies have begun to ask, “Where is the public sector?” Surely it is no mere coincidence that three elite global business groups – the World Economic Forum, International Chamber of Commerce, and World Business Council for Sustainable Development – recently launched governance initiatives, intended to clarify where private sector responsibility ends and public responsibility begins.

Similarly, the world’s eyes were fixed on the large pharmaceutical companies as long as they stubbornly refused any compromise on the pricing of HIV/AIDS treatment drugs. But the minute they did, attention shifted to the public sector requirements of education, public health facilities and distribution networks, and on ways the international community can and should assist public authorities in the affected countries – with the firms adopting an unusual public sector advocacy role.

There should be no doubt that this terrain is fraught with strategic manipulation and shirking. The fact remains, however, that it also embodies great potential for public sector capacity building in developing countries, and for rebalancing the skewed system of rule making in the global arena.

But that will not happen by itself. And that’s my third point. Policy brokers are required to bring it about, institutions or networks that tap into the realm of public authority. Here the Global Compact stands apart from all other so-called certification institutions. Anti-globalization activists have tended to view the Compact simply as another code, and one without teeth at that. It is not a code, as I have stressed, but a learning network. Even more important are the legitimacy of the Compact’s universal principles and the authority of the United Nations.

The Global Compact is based on principles that have been universally endorsed by governments, thus they stipulate the kind of global society the entire international community aspires to. The Compact enlists companies to help bridge the gap between aspiration and reality; in this respect, it seeks to make the private sector an agency for the promotion of community norms.

But the Compact also serves as a bridge in the other direction, from the private sector back to the realm of public authority. Its products – whether “good practices” in implementing the principles, recommendations from its policy dialogues or lessons learned from in-country partnership projects – feed directly into the policy sphere. And in some instances, as I suggested above, its “soft law” practices or understandings can be expected to yield “harder law” outcomes down the road.

Lastly, while the Global Compact, like other certification institutions, comprises networks involving all relevant stakeholders, it reinforces, rather than further diffusing, political accountability. Through the Secretary-General it is responsible to the United Nations General Assembly, and the Assembly, in turn, to its 190 member states.

To summarize, the dynamic tension between civil society organizations and transnational firms is producing an expanding and deepening global social domain. But private certification institutions will remain small islands of progress unless their achievements are rooted in, and generalized through, the sphere of public authority. The Global Compact exemplifies one way to do that: bridging the gap between the global reach of the corporate and civil society worlds and the territorially based universe of authority relations.

Conclusion

Devising new institutional forms for “embedding” global markets in shared social purposes is a monumental challenge. Reflecting on how hard it was, and how long it took, for the industrialized countries to institute the original embedded liberalism compromise, one is readily led to conjure up frightful scenarios of things to come. But our discussion does suggest some promising routes to explore.

To begin with, the territorial state isn’t going anywhere, not even in the increasingly integrated European context. There simply is no other entity that competes with or can substitute for the state. Indeed, weak states are one of the main impediments to effective governance today, at national and global levels alike. For the good of their own people and for the sake of our common aims, everything must be done to help strengthen the capacity of those states to govern, not undermine them further.

What is more, there is no simple or single way to meet the challenges by creating new global bureaucratic behemoths. The existing international economic organizations already are far too unresponsive and intrusive, and from the vantage point of promoting social inclusion and cohesion, they often intrude in entirely wrongheaded ways.

But beyond that, the very notion of centralized hierarchies is an anachronism in our fluid and highly dynamic world – an outmoded remnant of nineteenth century mindsets. We are much more likely to succeed with agile global networks that more readily span existing institutions and jurisdictions, and which can more readily shift, or be reconfigured, as circumstances change.[22]

The emergent global social domain constitutes a key building block. There is broad consensus now that the growing reach of civil society makes a positive contribution, but far greater ambivalence remains regarding the role of the corporate sector. That’s a mistake. At latest count, there were some 63,000 transnational corporations, with more than 800,000 subsidiaries and millions of affiliated subcontractors. They think, and act, globally, even as they are a presence in towns and villages across the world. They are too important a global platform not to be part of the global governance solution.

I have suggested that they can ease the burden of public policymaking by preparing the ground for it; they can help build public sector capacity; they can stimulate a recalibration of the public-private sector balance; and they can help pull the mantle of public authority in a more global direction. Those are all critical elements of the solution.

But when all is said and done, private deals can take us only part of the way. They cannot substitute for effective governance. Governance remains a public affair. So it was in the polis, and so it must be, somehow, globally.

1. See John Gerard Ruggie, “International Regimes, Transactions and Change: Embedded Liberalism in the Postwar Economic Order,” International Organization, 36 (Spring 1982). That essay was explicitly based on Karl Polanyi’s classic and still unsurpassed account of these wrenching struggles in The Great Transformation (Boston: Beacon Press, 1944).
   
   
2. Kofi Annan, “A Compact for the New Century,” 31 January 1999 (UN, SG/SM/6881).
   
   
3. For an earlier and more elaborate discussion of some of these issues, see John Gerard Ruggie, “Globalization and the Embedded Liberalism Compromise: The End of an Era?” in Wolfgang Streeck (ed), Internationale Wirtschaft, Nationale Demokratie (Frankfurt: Campus Verlag, 1998).
   
   
4. Vito Tanzi and Ludger Schuknecht, Public Spending in the 20th Century (Cambridge: Cambridge University Press, 2000).
   
   
5. (New York: Cambridge University Press, 1998).
   
   
6. See Alan Cowell, “Europe is Rubbing Its Eyes’ at the Ascent of the Right,” New York Times, May 18, 2002.
   
   
7. Geoffrey Garrett, “Capital Mobility, exchange rates and fiscal policy in the global economy,” Review of International Political Economy, 7 (Spring 2000): 153-170; and Geoffrey Garrett and Deborah Mitchell, “Globalization, government spending and taxation in the OECD,” European Journal of Political Research, 39 (2001): 145-177.
   
   
8. Dani Rodrik, Has Globalization Gone Too Far? (Washington, D.C.: Institute of International Economics, 1997).
   
   
9. Jagdish Bhagwati, “Trade and Wages: A Malign Relationship?” Columbia University, Department of Economics, Discussion Paper # 761, October 1995.
   
   
10. Matthew Mendelsohn and Robert Wolfe, “Values, Interests and Globalization: The Continued Compromise of Embedded Liberalism,” Kingston: Queens University, 2000.
    
    
11. The GC participants include the UN (the Secretary-General’s Office, Office of the High Commissioner for Human Rights, International Labor Organization, UN Environment Program and the UN Development Program); the International Confederation of Free Trade Unions (ICFTU); more than a dozen transnational NGOs in the three areas covered by the GC, such as Amnesty International and the World Wildlife Fund; as well as individual companies and international business associations. For up-to-date information, see www.unglobalcompact.org.
    
    
12. The 9 principles are: support and respect for the protection of internationally proclaimed human rights; non-complicity in human rights abuses; freedom of association and the effective recognition of the right to collective bargaining; the elimination of all forms of forced and compulsory labor; the effective abolition of child labor; the elimination of discrimination in respect of employment and occupation; a precautionary approach to environmental challenges; greater environmental responsibility; and encouragement of the development and diffusion of environmentally friendly technologies.
    
    
13. Companies that have taken only the first step are considered “supporters” but are not publicly identified so as to deny them a relatively free public relations benefit; companies must also engage in at least the learning forum to be identified as “participants” on the GC website. The remaining two forms of engagement are optional.
    
    
14. “Statoil Signs Agreement with ICEM,” Europe Energy, March 30, 2001.
    
    
15. This distinction is discussed at greater length in John Gerard Ruggie, “The Theory and Practice of Learning Networks: Corporate Social Responsibility and the Global Compact,” Journal of Corporate Citizenship, 5 (Spring 2002): 27-36.
    
    
16. A suggestive treatment of these issues may be found in Daniel Drache (ed), The Market or the Public Domain (London: Routledge, 2001), though its scope is largely domestic. But see the chapter by Georg Kell and John Gerard Ruggie, “Global markets and social legitimacy: the case of the ‘global compact’.”
    
    
17. For good overviews, see Jessica Mathews, “Power Shift,” Foreign Affairs, 76 (January/February 1997), and Ann M. Florini (ed), The Third Force: The Rise of Transnational Civil Society (Washington, D.C.: Carnegie Endowment for International Peace, 2000).
    
    
18. The pioneering study of this subject is Margaret E. Keck and Kathryn Sikkink, Activists Beyond Borders (Ithaca, N.Y.: Cornell University Press, 1998).
    
    
19. There are no comprehensive surveys or even inventories of the exploding universe of such arrangements, or even a common vocabulary to describe them, and no good understanding yet of when or where they produce what effects. A very promising project is under way at Duke University. See Gary Gereffi, Ronie Garcia-Johnson and Erika Sasser, “The NGO-Industrial Complex,” Foreign Policy, 125 (July/August 2001); I have also benefited from reading several unpublished papers by the project directors, some of which are available on their websites (www.env.duke.edu/solutions/colloquia-7th.html/, and www.env.duke.edu/solutions/research-envcert.html).
    
    
20. Stephen J. Kobrin, “The MAI and the Clash of Globalizations,” Foreign Policy, 112 (Fall 1998).
    
    
21. Volvo and Novartis are outstanding examples; consult the Global Compact website, at www.unglobalcompact.org. On “internal branding” of this sort, see Bernard Stamler, “Companies are developing brand messages as a way to inspire loyalty among employees,” New York Times, July 5, 2001.
    
    
22. Tony Porter, “Compromises of Embedded Knowledges: Standards, Codes and Technical Authority in Global Governance,” Hamilton: McMaster University, May 29, 2002.

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