This proposal is designed to promote faculty research on issues of justice in the global economy. The purpose is to learn how market systems can be based on a concept of justice as well as freedom. This program will encourage interdisciplinary research on justice-oriented markets.
The idea of justice will serve as a background for theory and research on global markets. It will guide academic discussion about how a market economy develops in a civil society.
This research program at Boston College has four goals.
First, an interdisciplinary group of faculty will study civil markets. Civil markets are justice-oriented systems of exchange, which indicate a condition of social equity and accountability. We can observe justice-oriented norms in agreements and contracts written by firms, trade groups, unions, and Third Sector organizations. People in systems of exchange have defined norms and standards to guide their conduct. Corporate and industrial codes of conduct occurs because markets need a certain reliability, stability, and consistency to sustain themselves in systems of exchange. People in a market, often as members of associations, define standards in their own interest and for their common good. Our framework thus accepts the practical and relative character of market norms and standards. Yet, they need to be carefully studied and compared at the global level, as well as assessed in terms of a broad concept of fairness or social justice.
Social norms take various forms in fair competition and justice-oriented markets. They are in written corporate codes of conduct, and can include procedures for tribunals, agreements on fair competition in trade associations, rules for safety, health, and environmental protection in market sectors. They are also found in trade union contracts with corporations, state charters for corporations, formal statements by CEOs on management policies, civic/business partnerships, and social screens for investment. They are found in rules of employee self-management, the canons of public interest groups, the informal agreements of profit/nonprofit joint ventures. They can be identified in guidelines for making social and financial audits, and in the bylaws of trade associations. Our intent is to characterize, classify, and conduct research on such norms in the global market.
Second, a core of faculty will consult with organizations that desire to learn how justice is self-created and enforced in a free-market economy. The term" civil market" is a starting point for faculty and students to think about how some justice is created in the midst of competition. We plan to consult with global actors, such as CEOs in multinational firms, heads of organizations affiliated with the United Nations (e.g. UNCTAD, UNEP, and the ILO), executives in worldwide business associations as well as leaders of trade unions -- on ethics, human rights, and norms of conduct. We will also consult with non-governmental organizations and civic groups that are in partnership with global business. We consider community development as intricately related to global markets.
We expect to define "civil markets" operationally as we go along with research. We want to learn first-hand how people in global markets define "fairness," "justice," and "good intent." At this point, we think of civil markets as "systems of exchange in which competing actors agree to standards for their common good." This means situations in which trade, professional, labor, and community associations set codes of conduct, perhaps require certification procedures and establish neutral observers (monitors and regulatory systems) and some authorities to issue judgements (perchance penalties) for members who break agreements. For a "free market" to operate with consistency and civility, it is natural to establish certain standards of fair play.
Third, faculty will organize mini-conferences to discuss the idea of justice, fairness, and civility in markets. We see those conferences including business and government leaders as well as leaders in the global Third Sector (i.e. voluntary, grass-roots organizations, and nonprofit organizations). Faculty and students will discuss the formation of codes of conduct and modes of enforcement in a market context. Conferees will be mindful of the way in which global markets impact on communities around the world.
Fourth, faculty will publish research findings. This means publishing
"working papers" on the results of interdisciplinary research. Working
papers will carry reports on the effectiveness of justice-oriented markets,
that is, markets that operate profitably and productively for the common
A Boston College Research Proposal in Detail for Discussion (Rough Draft)
Studies on Justice in the Global Economy: A Concept of Civil Markets
The proposed Boston College Program on "Justice in the Global Economy" will encourage faculties to conduct interdisciplinary research. This Program will support the collaboration of department members within the College of Arts and Sciences, the Carroll School of Management, the School of Social Work, the School of Law…. and other B.C. programs. We see this Program as a joint endeavor of departments and schools that are committed to learning how justice is created in the marketplace.
This Program is will be administered through ("Program" to be named) and organized around a concept of social justice. As we proceed in the proposed program, we will examine the meaning of justice-oriented markets. We seek to do this through interdisciplinary dialogue among faculties and ongoing research. For the purposes of this proposal, we outline the meaning of a few working goals, concepts, and methods.
Goals: Justice in the Global Economy
Many thoughtful world leaders and business executives are joining with community leaders in a shared concern that the global system of markets can be a threat as well as a boon to long term human interests. Hence, a central goal of the Program is to learn how a market economy can be civil, productive, efficient, responsible and optimally self-governing for the common good. We plan to examine how markets work to empower people in the context of business competition, government laws, and values expressed in the Third Sector. We are interested in studying principles of fairness in the quest for social and economic well being.
In this preliminary statement, we view a civil (just) economy to be humane, productive, self-regulating, profitable, and socially accountable. We are interested in studying how a competitive market works for the common good, that is, for the general well being of people around the world.
We will study justice-oriented structures in the economy. We want to determine how systems of exchange become effective in building sustainable communities and publicly responsible markets. The concept of justice is related to human rights and environmental sustainability. We will consult with business and government leaders about how people solve problems in the market economy with a sense of justice.
Concepts: Civil Markets and Systems of Accountability
In this initial outlook, the term "civil market" refers to systems of exchange based on accountability as well as profitability. Systems of accountability are designed today for organizations to respond to "stakeholder" concerns. In business law and management, the term stakeholder refers to people who are affected by organizations in the marketplace. "Stakeholders" include stockholders, managers, workers, customers, sellers, buyers, and local communities. We consider these concepts of "stakeholders" and "accountability" to be related to a concept of justice and civil markets.
In what way do markets and organizations become accountable to stakeholders?
The answer to this question is a matter for interdisciplinary inquiry, but we think it is connected with a concept of justice. We believe that some measure of justice is evolving in the market system. But how?
As we see it, justice-oriented norms and civil structures sustain markets. The forms of justice-oriented norms and structures are wide-ranging in global markets. They include the rules laid down in corporate charters, safety measures in the workplace, codes of conduct in corporations, professional standards and ethics. They include "due process procedures" in trade associations, features of public interest law, principles guiding social screens of investment firms, the written constitution of civic joint ventures. Justice-oriented norms are found in agreements between non-governmental organizations (NGOs) and business firms. They are formally stated in community-oriented banks, civic partnerships between voluntary groups and business. These normative systems are in the private sector; indeed, growing in ways that should be studied as in the context of markets. They are part of the stability, efficiency, sustainability, and trustworthiness of markets.
We think these norms and structures are related to a concept of justice and the common good.
One example of a normative (civil, reliable, and fair) "market structure" is the grading of lumber. Systems of accountability in grading lumber include classifications, codes and norms that were established by " lumber associations." The practice is sustained by certain systems of accountability. These systems include "jointly-managed tribunals for offenders," and monitoring done by "countervailing associations." Countervailing associations that keep an eye on the fairness of this practice are in the construction industry and in the field of real estate ? business associations who depend upon the grading of lumber. In other words, other trade associations monitor the practice of grading lumber. Thus, the grading of lumber is a self-governing (civil) structure in the private sector.
Standards for the technical grading products on the global market have developed. The significant point for our purposes is that these technical standards are capable of being allied with safety, health, and environmental standards. The International Organization for Standardization (ISO) represents professionals and business competitors that want to set standards to protect the environment. Their discussions on social and technical criteria are ongoing, not fully tested and researched. This unique global market structure needs to be studied. It is a global experiment in setting environmental standards that could be a model for global standard making, with self-monitoring and enforcement.
ISO is what we could call a civil (normative) structure developing through the collaboration of people in three sectors: business, government, and nonprofits. This ISO effort to establish environmental standards is one example of what Boston College faculties in law, management, social work, and humanities, could study. This could be one case in our proposed a program. In Appendix G, we discuss more facts about this global effort.
Broader questions grow from examples of this sort. How are civil norms created in a competitive market? How do leaders create market norms in business and within the Third Sector? How do market rules establish consistency and fair play in markets? How do systems of accountability lead toward a more civil economy? How does the presence of justice-oriented structures (codes of conduct, market standards, tribunals based on due process) build toward a civil market? How do they contribute to the development of civil society?
We theorize that competing businesses may become civil (justice-oriented) and profitable through a blend of private interests and common interests. Many justice-oriented structures in the market are designed to advance corporate self-interests for the public good. They help settle stakeholder concerns around specific problems in market sectors. Civil structures, as we define them in this preliminary way, may be the building blocks for a system of justice in global markets. The way they bring together social and financial values, private and public interests identify them. They create a consciousness of fairness and equity in a market economy.
In sum, civil (just) markets are those systems of exchange that are designed to advance accountability, profitability, and "self-sustainability" of the private sector. Our question is -- How do civil (just) markets develop in a global economy?
Method: Interdisciplinary Dialogue and Studies
Our method of inquiry is: 1) Hold interdisciplinary discussions among faculty at Boston College about how social justice develops in the market. 2) Gather data on what is deemed by observers to be civil (just) structures in the market. 3) Consult with global business and civic leaders who recommend systems of accountability for research, assuming they work for the common good. 4) Organize conferences to learn and advance the idea of social justice in systems of exchange.
Brief Guidelines for Study over a three-year Period: A Tentative Plan
First Year: A Dialogue on Justice in the Global Economy
The first year will begin by appointing an Advisory Committee and selecting paid staff to assist in this university inquiry. Although faculty discussions have already begun in planning this proposal, the first year involves more faculty discussion on the method and idea of justice itself. In this dialogue, we will include data on alleged "models" of civil (just) structures in the global market. We will hold public discussions with people who are engaged in systems of social accountability as they are proposed to the Advisory Committee.
We begin studying "model cases" of civil (just) structures. These cases are expected to arise from consultations with local and global groups. Faculties will ask -- What are the best "justice structures" on the market scene? Some examples could involve codes of conduct that have been deemed as effective in global companies and market sectors. Other cases could involve principles that guide the formation of "social screens" used by investment firms. Still other cases could involve civic partnerships that have solved social problems in the market, and especially models of global transparency in financial accounting; still others might involve community land trusts that have worked effectively with global firms, and the like. Our data-collection should lead to consultations with government and business leaders on select cases. Our examples (above) indicate the wide scope of this subject, but faculty in the first year of study must begin to focus their research.
At the outset, we define "model cases" proposed to us as civil (just) systems working in the global market. Faculties will want to know how people define "systems of accountability." Respected observers, as stakeholders in business associations and trade unions, as customers and community leaders, will see certain systems of exchange that appear to be relatively civil and just in the global marketplace. These cases are viewed by professional observers to operate with some measure of justice in the midst of competition, and evaluated by some measure of a common good. The discussion of these cases then requires consultation and research with the groups represented in such model cases.
Faculty will evaluate their progress on definitions, models, and the proper compilation of data on accountability systems. These systems may include trade codes of conduct, organizational tribunals, exemplary business/government partnerships, NGO/business partnerships, community corporations, and the like. At the end of the year, faculty should be in a position to assess the range of their inquiry. This yearlong process of discussion and inquiry will assess the basis for taking the next steps. The second year is dependent on faculty self-evaluation, but here we propose some possibilities for the second year.
Second Year: Implementation of Research on Models
The second year could be "hands-on" research for staff and faculty in special projects. This means advanced study of the models examined through discussions with business leaders and government officials during the previous year. Research could involve consultation with UN officials, leaders in global firms, nongovernmental organizations (NGOs) and intergovernmental organizations (IGOs). As we shall see, this global study of justice also has also a local focus through research projects initiated by faculty at Boston College.
The concept of civil markets and systems of accountability imply an understanding of "civil development." Civil development refers a creative combination of economic and social development. Economic development refers to the cultivation of material resources. Social development refers to the cultivation of human resources. Civil development requires an inquiry into the link between social and economic development. The link is then examined within the broader concepts of social justice and the common good.
Again, a campus self-evaluation of the progress made in this second year will lead to scheduling what can be done in a third year of interdisciplinary dialogue and research. Nonetheless, we can anticipate the possibilities of work in this third year of operation.
Third Year: The Organization of Mini-conferences
If everything goes according to plan, the third year will emphasize mini-conferences on the idea of justice-oriented markets. We would discuss this idea with agency leaders in the United Nations and world leaders -- representatives of NGOs, IGOs, and the business sector. The conferences could be oriented toward field practices, discussing justice-oriented structures and civil models. Civil "models" are those market arrangements appear effective in the way they integrate justice and freedom in the marketplace. We will examine the effectiveness of approaches to current field practices of civil governance, such as global "standard making" and enforcement issues in global codes listed in Appendix A.
Faculty may then prepare "Conference Papers" and write an evaluation of the outcome of these conferences. They will make a list of conferees for future communications.
Fourth Year: Conference Follow-up and Publications
The fourth year in this case would consist of follow-up evaluations of research projects and continued contacts with leaders in these mini-conferences. Program staff will consult with conferees (UN agencies, NGOs, IGOs, and business leaders) in their effort to implement systems of accountability and civil (just) markets. The idea of civil (just) markets continues at this stage to be discussed in terms of a philosophy of social justice and the common good. Time will be devoted to determining the closure or the continuance of this program, including the question of self-financing as new international actors enter in succeeding years.
The faculty team at Boston College will publish monographs or "Working Papers," perhaps prepare a book that reviews accomplishments during the four-year period.
The Academic Rationale: Interdisciplinary Studies
Our purpose is to overcome barriers created by departments and schools where faculties create different vocabularies and specialized systems of knowledge. Universities today segregate their research into departments and professions that become "territories of knowledge." Thus, one school or department cannot do research on a subject like "justice in the global economy". It must be done in an interdisciplinary context. Educators have noted problems in jargon and jurisdiction within this structure of departments and schools.
A common inquiry across disciplines becomes important in subjects such as "justice and the global economy." This proposed program begins without a perfect scheme of thought. A tight conceptual framework is not necessarily more valid than a loosely configured one. A unified theory in any department of knowledge has its value for accuracy within conceptual boundaries, but it fails to yield a larger understanding of the subject, so needed today. Hence, a dialogue on the subject of justice in the global economy has its place at Boston College -- if only to reduce the tendency for faculties to think that their own discipline represents the truth, especially on broad topics like justice and the economy. An open discussion on broad topics has its own reward today’s university that has become so specialized.
What is the role of "norms" in guiding international affairs in the global market? This question gives attention to the role of non-state actors in world politics. Non-state actors act as conduits for new norms that affect the policies of nations. They include businesses and international nongovernmental organizations (INGOs). Such international organizations have a role in developing a global civil economy.
The dominant models of corporate activity view business as self-interested and profit-driven world actors, unprincipled and without any standards of behavior. Popular evaluations of global firms are made generally in terms of their competitive market position and asset structure. But in reality, such criteria are only part of the determinants of corporate conduct in the market. This popular view does not fully convey the complexity of their role in global norm making.
We think that the study of justice-oriented markets fits the mission of Boston College. We also think the study fits the purpose of democratic nations and the advancement of justice-oriented markets around the world.
With no formal government or enforceable law framing a foundation for global markets, we see a special need for our study. This proposed research program at Boston College is focused on systems of accountability and norms of conduct that work through the collaboration of all three sectors of the economy: business, inter-governmental agencies, and nongovernmental organizations. This study is about the capacity for markets to be organized with justice, based on making a creative match between private interests and the common good.
The B.C. research team on Justice in the Global Economy will focus on norms and structures in systems of exchange. Markets are many-sided. Market sectors are connected to a concept of fairness and justice, not only a concept of finance and profits. People suffer when international competition fails to take into account the well being of people in communities around the world.
Program Organization: Faculty Advisors and Staff Directors
A staff Director will have responsibility for administrative work in the program. He or she will work with two Associate Directors. The Associate Directors will work with faculty to study models of civil markets within the purposes of the Program. Each will have a special orientation. One Associate Director will emphasize research and publications on the civil governance in world markets. A second Associate Director will emphasize consultation on civil governance. They will work together on local/global models and projects. The directors will be in constant dialogue about how a concept of justice links within local-to-global levels of market organization. Their goal is to enable people to have information available to them in any effort to organize civil structures that can be effective in global markets.
A Boston College Advisory Committee
Appropriate BC administrative offices will govern the Program. An Advisory Committee will guide the Program. Faculty in different departments and schools will reflect together on the direction of the program and discuss issues of justice in local-to-global markets. Representative members of that Committee may include:
The Jesuit Institute
College of Arts and Sciences (Philosophy, Political Science, Sociology, Economics)
Carroll School of Management
School of Education
School of Law
School of Social Work
Paid Program staff will be guided by this Committee. The Committee members will discuss and offer counsel to researchers on the subject of justice and the global economy. They will oversee Working Papers written by program staff and faculty. The Committee plans to hold monthly meetings, and discuss the overall philosophy and direction of the program. Members may serve as consultants on research needing their expertise.
Finally, Program staff will need advice on research subjects and educational
philosophy. The program seeks to develop a "training field" for people
to learn more about norms of civility in the private sector. This training
may become part of a program for international education at Boston College.
Staff Responsibilities and Duties
The Director has responsibility for the oversight of program research and responsibility for the coordination of all aspects of the program, including the relationship of the program to Boston College departments and outside agencies. This responsibility includes:
1) Establishing relationships with department faculty and administrative
officers in divisions of the university to advance the purposes of the
2) Talking with outside officials concerned with global markets, including those in the United Nations.
3) Developing relations with global business leaders, including those in Business for Social Responsibility, engaging their assistance in research.
4) Explaining models and projects to local organizations, making Field Site arrangements for studies.
5) Working with the Associate Directors for Research and Projects to guide on data collection, the selection of research sites, and the formulation of models of "civil structures."
Associate Director of Research
The Research Director has responsibility for opening the door for legal/scientific inquiries, project consultation and publications, compiling data, developing professional relationships with agencies outside the Program. This office includes the following types of work:
1. Compile data: E.g. Corporate and association codes of conduct, Global
Codes of Conduct (e.g. ICC, CERES; OECD, ILO, WHO/UNICEF, FAO, Keidanren,
Caux Principles, Local to National Codes, Professional Associations, Realtors,
Newspapers, Lumber, Oil, Autos, Pharmaceuticals, etc. as well as compiling
private tribunals (problems of civil structure, due process, etc. and legal arguments on Business/NGO partnerships. (See Appendix A)
2. Develop Working Relationships: E.g. UN Affiliated, Assistant Secretary General, UNCTAD, NGO Exec. Comm., World Social Summit Business Network, Global Commission to fund the UN, Union and Trade Association representatives
3. Explore contacts through international organizations, including leaders in business associations, IGOs and NGOs. (NGOs have grown in numbers and also their importance in recent decades to provide guidance for global governance; NGOs and private voluntary organizations (PVOs) by-pass national governments in every member country to create a worldwide constituency of citizen interests which are not always met by business and governments. It was the volunteer enterprise of such groups, not of government officials, that helped create technical agencies in the UN, the newest of which is the UN Environment Program, growing out of a concern of leaders in environmental movements convening the UN Conference on Human Environment in Stockholm in 1972. Those movements compelled the creation of environmental protection agencies in 143 countries,
Associate Director of Projects
The Associate Director for Projects joins with the Associate Director on Research in compiling data and consulting with UN officials on justice-oriented structures, but his/her emphasis is on local communities and business leaders. This part of the Program will complement the UN work by engaging university students in local studies of global firms and environmental alternatives. Faculties have indicated an interest is guiding students toward research projects on the environment.
The Project Director may:
a. Discuss Local Field Sites for student projects and assist in organizing a Civic Council to study methods for implementing business conservation efforts as well as implementing programs in collaboration with nonprofits to advance civic-oriented markets. b. Help study local civil markets developed by business associations.
Graduate Students, Consultants, Secretary and Office Equipment
Graduate students will serve as assistants to Associate Directors in
data collection, the development of projects, as well as consulting on
Field Sites where undergraduate students may be assigned for intern research
through the Boston College PULSE program. Consultants to the Program include
experts in essential areas covered by activities in the Program. The Advisory
Committee may call on faculty in a law school to consult on civil business
contracts, codes of conduct, and advise on the legal aspects of law in
different countries. The program staff may pay a fee for some services
of consultants who work with civil structures. Faculties may consult with
corporate executives in U.S., union leaders, and international trade associations
on self-regulatory procedures in their industry. Consulting fees may range
from $100 to $1,500. The program will need a half time secretary for purposes
of correspondence and a computer for writing staff reports.
Proposed BUDGET (Draft Idea)
Categories: Agency BC Total
1. Director (Administrative Appointee)
10% effort contributed 10,000 10,000
2. Assoc. Dir. (Research)
3. Assoc. Dir (Projects)
4. Graduate Assistants (2)
100% acad. yr
100/mth x 9 mths
10 @ $400/day x 2 days
7. Fringe Benefits:
23.5% of #1 & #2 9,400 2,350 11,750
30% of #3 & #6 9,600 9,600
8. Travel 4,000 4,000
10. Printing/xerox 500 500
TOTAL DIRECT COSTS: 123,000 12,350 135,350
59% 30,750 49,160 79,856
(25% applied to agency)
TOTAL COSTS: $ 153,750 $61,456 $215,206
2nd Year (the same budget with 5% increase in salaries)
3rd Year (the same budget increase)
4th Year (same increase)
The following Appendices offer more detail on concepts and faculty options
for conducting research on justice-oriented markets. They are drawn from
unpublished papers written by Severyn Bruyn on the subject of justice and
the global economy.
Appendix A: (Adapted from Unpublished Papers, STB)
International Codes and Standards: A Basis for Studies of Global Justice in Development
In order to develop studies of justice-norms in the global market, work on research projects, prepare a series of strategic conferences with international business people, and write a publishable study, faculty need the support of staff to help them examine the current state of accountability systems in markets.
The staff would be directed by the faculty Advisory Committee to collect data on the following codes of conduct:
ICC [International Chamber of Commerce] Business Charter for Sustainable
CERES [Coalition for Environmentally Responsible Economics] Principles (1992);
OECD [Organization for Economic Cooperation and Development] Guidelines for Multinational Enterprises (1976);
ILO [International Labour Organisation] Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy (1977);
Code of Best Practice from the Cadbury Committee on the Financial Aspects of Corporate Governance (1992);
WHO/UNICEF [World Health Organization/U.N. Children’s Fund] International Code of Marketing of Breast milk Substitutes (1981);
FAO [Food and Agriculture Organization] International Code of Conduct on the Distribution and Use of Pesticides (1981);
Keidanren [Japan Federation of Economic Organizations] Global Environmental Charter (1991);
Caux [Minnesota Center for Corporate Responsibility/Canon] Principles (1994).
The staff may identify international business associations in major industries, such as the American Chemical Manufacturers, locating their reports and publications (Kirstein Business Library).
The staff may review the literature on norms of global self-regulation, as by Harris Gleckman and Riva Krut: ISO 14000: An Uncommon Perspective; Democratic Global Civil Governance; The Social benefits of Regulating Transnational Corporations.
Also the issue of "norms and structures" for Internet self-regulation: http://www.ilpf.or/selfreg/bib4_18.htm.
The staff may develop contacts with business leaders and associations.
World Business Forum at the Habitat II conference in Istanbul, 3?14
June 1996 (Marcello Palazzi);
Independent Commission to Fund the United Nations (Diane Sherwood);
Business Council for the United Nations (Samuel Brookfield);
International Chamber of Commerce (Noreen Kennedy);
Rotary International (Sylvan M. Barnet, Jr.);
International Organization for Standardization (ISO) in Geneva (Richard Cahaly in Lexington, MA.. 617-860-5240);
International Business Council of the Institute for Multi-Track Diplomacy, 1819 H St., NW, Suite 1200, Washington, DC 20006.
Business for Social Responsibility (Bill Bradley, New England Regional Coordinator, 603-645-0099).
Faculties may develop personal contacts with U.N. specialized agencies and examine the suggestions on international business in the Secretary-General’s 1995 Report on the Work of the Organization, Confronting New Challenges : They may review UN Ecosoc rules on NGO accreditation. Ecosoc has established an Open-ended Working Group on the Review of Arrangements for Consultations with Non-Governmental Organizations. The United Nations University (UNU, Tokyo) is supporting research on "new directions for the world economy."
Faculty may want to gather information on the following:
The U.N. International Symposium on Trade Efficiency, held in Columbus, Ohio, attended by over 2,000 decision makers from both the public and private sectors. This conference "marked an unprecedented involvement of the private sector and of local governments … on problems encountered in international trade." Out of it was established the Global Trade Point Network. Contact: UNCTAD.
The Global Environment Facility, implemented jointly by UNEP, UNDP, and the World Bank, has been "restructured" and "operationalized." Within this Facility, the U.N. Environment Programme (UNEP) is "catalysing" the development of scientific and technical analysis, promoting environmental management.
UNEP, the ILO, FAO, WHO, UNIDO, and (the non-U.N.) Organization for Economic Cooperation and Development (OECD) have established the Inter-Organization Programme for the Sound Management of Chemicals "to increase coordination and information exchange on chemicals and chemical wastes." UNEP has also established a Code of Ethics in the International Trade in Chemicals. These initiatives seem made to order for exploration with the American Chemical Manufacturers.
The U.N. Development Programme (UNDP) held a Conference on Peace and Development in Honduras, aiming to bring together representatives of "governments, the private sector, cooperatives, trade unions, indigenous communities, universities, regional organizations, and the donor community, thus institutionalizing the dialogue with civil society."
Two UN contacts: 1. Ms. Jennifer De Laurentis, Department of Policy Coordination and Sustainable Development (212-963-4641). Her department has considered the role of "major groups" within the framework of the Commission on Sustainable Development and Agenda 21. Also: Ms. Zehra Aydin in De Laurentis’s department above (963-8811).
Faculty may want to analyze the situation of those industries having difficulty with self-regulation at the international level. The hard cases include the Chemical Industry, Oil, Textiles, Autos, Steel, Pharmaceuticals, Raw material commodities, and Agricultural commodities. The first of these were never brought into the GATT framework for free trade, and the last two continue to be the subject of tedious negotiations within UNCTAD.
What are the justice implications in the norms created by the World Trade Organization?
There are many critiques of the emerging capitalist global market, some with suggestions for the legal rechartering of transnational corporations. An up-to-date, critical bibliography will be developed.
Two graduate students will be paid to help to gather data on local to global markets. Other students taking courses in international organization, community studies, and social economy may engage in the process of data collection and analysis.
Faculties will study local civic structures that are affected
by the global economy. They will work with the aid of leaders in community
groups. Consultants may provide models of justice solutions to problems
that they see from their perspective. They may point out problems and collect
data for faculties on codes of conduct for local/state trade and professional
associations, exploring the impact of global decision-making on local community
Appendix B (Adapted From Unpublished Papers based on UNCTAD consultations, STB)
Options for Research with the United Nations
The concept of a civil (just) market fits the purposes of the United Nations. Former Secretary General Boutros Boutros Ghali has said that
...peace in the largest sense cannot be accomplished by the United Nations system or by Governments alone. Nongovernmental organizations, academic institutions, parliamentarians, business and professional communities, the media and the public at large must all be involved.
The specific aims of UNCTAD and other UN affiliates are connected to this proposal to study civil justice in the global economy. The Secretary-General of UNCTAD Rubens Ricupero, said that the sole claim for UNCTAD's existence "is its ability to make a relevant contribution to the tasks of fostering growth, reducing inequality and building its capacity to make a difference to people's lives." UNCTAD IX addressed the challenge of "sustainable development" which it was said "requires action by both governments and non-governmental actors which form the civil society.' The latter consists of 'companies, large and small and both domestic and transnational, private investors, non-governmental organizations, universities and research centres."
The projects for the second year will emerge from faculty research on civil structures and staff contacts with local and global leaders. Below we list options for implementing testable model structures. Some of them have already been discussed with local leaders and with UN officials. Such projects can be implemented by local/global groups in collaboration with Program staff.
The Director for Research may be given prime responsibility for implementing projects through the United Nations while the Director for Projects may be given have prime responsibility for research in community development, but the intent is to have a close working relationship between associate directors.
Possible Project Work with UNCTAD: Potential Research Consultations
Economic Alternatives: Plant Closures
UNCTAD seeks "economic alternatives" to social problems in the enterprise system. For example, the expected closure of diamond mines in the province of Namaqualand (South Africa) will place thousands of miners and their families in critical situations.
The staff and consultants in a B.C. Program have experience in working on "economic alternatives." U.S. plant shutdowns have been handled through worker buyouts, business-government partnerships, and special market studies. We have suggestions on studying corporate funds for job retraining and for government incentives given to firms for the creation of a reserve-fund preparing them to invest in new enterprises for workers in a market crisis. Program consultants will talk with UNCTAD about such alternatives.
Economic Alternatives: Civic-oriented Corporations
UNCTAD seeks sustainable development for communities and aims to reduce inequities in trade and commerce. We will discuss community corporations (CCs) which offer opportunities for local people to guide economic development of their locality.
For example, the community land trust (CLT) provides for local land to be controlled by residents and leased to global firms. Residents are trained to exercise responsible use of local land, leasing it proportionally to multinational corporations for development. In this case, our program would help UNCTAD training teams work with local people and write social contracts with global firms (e.g. mining companies in rural areas) and with small enterprises in local shopping centers. There are other CCs, such as community development corporations, customer-owned banks and similar "civil structures" designed for socioeconomic development. Such cases in the U.S. require "adaptions" to the laws and cultures of host countries.
We will also discuss experimental projects in the joint-ownership of global subsidiaries in localities. These practices in community self governance increase the likelihood that the benefits from global investments will be shared with local people in a process social development. Our Program will provide models of such approaches to UNCTAD officials and IGOs whose concern is economic development.
Industry-specific Codes and Tribunals
a. SME Ventures.
UNCTAD encourages the creation of small and medium-sized enterprises (SMEs). We will talk with staff about helping business organize associations and trade groups which establish standards for the common good. This involves consultation on such models with IGOs and NGOs.
New enterprises which enter developing countries will then belong to an industry association or an area-specific group which defines codes of conduct and organizes tribunals to handle social problems arising in the private sector. Our Program staff will supply models of public-interest codes, private tribunals, and legal information on enforcement in the private sector.
b. TERM (Trade Efficiency Review Mechanism): The Social and Economic Factor
The UNCTAD secretariat proposed that UNCTAD IX initiate a one-year pilot phase of the "Trade Efficiency Review Mechanism." The ultimate goal of TERM is to contribute to lowering the cost of trade transactions, and to lower barriers to participation in world trade. Efficiency is related to the quality and cost of services in business prdactices, customs, transport, trade information, telecommunications, and the like. UNCTAD has been at the forefront of offering assistance.
Our discussion with UNCTAD staff in this case would involve the relationship between social and economic factors in trade efficiency. The "social factor" refers broadly to "the way trade is humanly organized." This factor opens a new perspective on trade and relates our discussion to civil structures.
In other words, the concept of efficiency is linked with the social organization of business transactions. Every transaction invokes a social (human) factor. We discuss the way trade is collectively organized to improve efficiency. Efficiency is related to the organization of markets in the public interest, reducing government costs for unanticipated consequences in the implementation of transactions. We assume a "socioeconomic" perspective on trade. UNCTAD's projects in this area then reveal the progress and weaknesses in trade-related services from this socioeconomic perspective.
When an UNCTAD team reports on the problems of a country in areas of trade efficiency and business practices. Our Program staff will consult with teams on maximizing competitiveness through civil structures contructed in the private sector. We will read early drafts of team reports on a country's problems, and offer suggestions for setting standards through business associations designed for efficiency in the public interest and the common good. If our recommendations are deemed helpful in terms of "efficiency," these ideas may be introduced into the final team report to the country.
According to UNCTAD, "TERM reviews" require "close cooperation between public and private sectors." They intend "a better synergy between government and entrepreneurial cultures." Our consultation on these country-wide reports would add the perspective-culture of NGOs on trade relations.
c. Collaboration of Business, NGOs and IGOs: Creating Civil Structures
NGOs and IGOs interact through the auspices of UNCTAD.
Upon the invitation of UNCTAD, we will discuss "civil structures" in the private sector , created between business and NGOs with the assistance of IGOs.
One example. Let us say that there is no "environmental protection agency" in a host country wanting to sponsor a global firm for a mining operation. With BC consultation, the host country (or people in a locality) sign a contract with the transnational mining company along with an NGO (or a nonprofit corporation). The NGO monitors the firm's effects on the environment. The monitoring nonprofit (NGO) could be the host country's college or university. The monitoring system is done in this case with the aid of university scientists and graduate students. The faculty in university departments (e.g. biology and chemistry) contract with the government to study the local mining process to assess the environmental effects of the global firm on the air, rivers, etc. during its operation. Thus, a profit corporation is assisted by a nonprofit corporation (e.g. a university) to make public studies of the excavation and refining processes.
Another example: NGOs and business leaders join in creating a television station which reaches the population of the whole country or perhaps covers an inter-nation region. Representatives of the country's council of churches/temples, business and labor associations, etc. help hire professional staff for the TV station and assist in writing its public-interest objectives. Financial investors -- or social investors -- allocate capital at low interest rates. NGOs serve with financial investors on the board of directors of the TV (or mass media) corporation.
This example is offered here because UNCTAD plans to work on international telecommunication systems. UNCTAD proposes to become the forum for creating intergovernmental consensus on developmental aspects of the GII. This is in line with the Ministerial Declaration adopted at the UN International Symposium on Trade Efficiency. UNCTAD's role here complements the programs launched by the International Telecommunications Union (ITU) and the World Bank, focused on the financing and privatization of telecommunications infrastructures and on the promotion of the use of "universal norms and standards for equipment and signals."
The BC Program views "universal standards" relating to both technical and social criteria in the development global communication systems. Our expansion of this idea of combining social standards with technical standards follows the lead of ISO 14000. Business associations and governments have begun this self-monitoring process. The practice of creating sociotechnical standards in this case would be applied to UNCTAD activities. We would consult with UNCTAD with information on ISO 14000 and other self-monitoring programs.
d. Civil Training Packages
UNCTAD offers training packages (TRAINFORTRADE) on trade-related services. They are written for policy-makers in developing countries. Such training programs have been organized on "trade and environment," "national trade policies," "competititon polticies," as well as "trade perspectives" with EU Single Market countries.
On invitation from UNCTAD, our Program staff will consult with their staff on writing a training package on the development of civil structures and economic alternatives in the market.
e. Identified Investment Opportunities
UNCTAD's annual World Investment Report is the world's main source of comprehensive information trends in foreign direct investment and on the activities of transnational corporations. Recent editions of the Report have focused on subjects such as the economic restructuring impact of TNCs; on TNCs, employment and the workplace; and finally on TNCs and competitiveness.
Our discussions with UNCTAD will involve the option of adding sections to the Report which include social (ethical) criteria used by investors (U.S. and Britain) making portfolio decisions on standards for health, safety and environmental protection. We will also review code principles and standards from other NGOs and UN affiliates such as the ILO and WHO.
f. Privatization and Civil Enterprise Development
UNCTAD "co-organized" in October 1995 an international business conference on "privatization" in Uzbekistan, at which some 15 business agreements and understandings were signed. Around 200 participants from the business community participated in the meeting and were informed about the investment opportunities in Uzbekistan. This brought together government representatives and international business executives and organizations.
We would discuss the idea of a future conference where IGOs, NGOs, and business leaders review "privatization" as a form of "civic development." (Roughly stated: "civicization, rather than privatization.") This conference would include economic alternatives and setting social standards for the common good as part of enterprise development.
g. World Trade Agreements
UNCTAD has been a forum for intergovernmental conferences on commodities. It has facilitated international agreements on trade in sugar, olive oil, cocoa, timber, and rubber.
We would discuss future planning of such conference agreements which include standards for safety, health, and environmental protection. These conferences could include industries such as autos, oil, and steel.
We will discuss the introduction social standards into trade agreements. This consultation for international conference/agreements would include representatives from other UN affiliates (e.g. ILO and WHO) and selective NGOs. These "representatives" become advisors on setting standards in trade agreements in these industries.
An advanced plan along these lines would involve "internalizing social costs" among companies in these industries for the purpose of industry self regulation. Each company would pay its proportionate share in financing a global monitoring agency to oversee the agreement. The agency is then funded by contracting firms with the authority of the international agreement. A professionally-staffed agency is then given the power of on-site inspection for all companies and a tribunal is established for conducting inquiries and issuing penalties (fees) for offenders. Global firms would compete within these standards of competition. The offenders would be subject to "public reports." NGOs, in turn, would publicize the findings of tribune rulings.
h. Problems of Least Developed Countries
In September-October 1995, national governments carried out a review of an action program for "least developed countries." They adopted a Declaration stating their determination to accelerate economic and social progress in these countries. UNCTAD is entrusted with the international monitoring of this program.
We would discuss "culturally-adaptive" civic-oriented firms as part of this process of accelerating economic and social progress in these least developed countries.
i. Information Collection
UNCTAD is taking initiatives to establish GII "nodes" in Africa at Trade Points proposed by the secretariat. "Nodes" are points at which information can be collected and received, and from which it can be disseminated. These "nodes" are locations where information, training and contacts are obtained. Through GII nodes, local communities can be linked to international networks. Nodes function as centers for exchanges of experience, training, and research.
We will discuss how these "nodes" can be organized for the collection and dissemination of models on civil structures in the private sector.
j. Database Input and Documentaries
UNCTAD has a database for trade control measures (TRAINS) and offers computerized information on all measures affecting trade for more than 50 countries. The objective is to increase "transparency" in trading conditions and facilitate trade.
We suggest databases for measuring the ecological impact of business. This database would help business competitors and inhabitants form economic alternatives and thus shape a different future.
UNCTAD creates documentaries.
We would consult on documentaries regarding economic alternatives and corporate codes of conduct to offer business a common playing field for fair competition in the interests of a host country.
Appendix C (Adapted from Unpublished Papers based on local consultations, STB)
Community Development and Environmental Justice
In recent years, environmentalists and human rights workers have joined forces in many local struggles over land and water rights, toxic dumping, and issues of air pollution.
The Associate Directors have the assistance of two graduate students in promoting local projects on environmental protection. The focus at the local level may be facilitated through class projects among undergraduate and graduate students, guided by faculty engaged by the idea. The focus may be on the particular problems faced by Newton businesses. Global firms, such as oil companies, grocery chains, with a study of ways to solve those problems through civic structures.
Local/Global Petroleum Industry: Conservation in the fuel distribution system. We will look for methods of conservation within this distribution system. This project focuses on environmental problems associated with the distribution of petroleum. The Project Director may talk with local and regional gas station associations and petroleum distributors who are interested in discharging civic responsibilities in this aspect of conservation.
The Associate Director and graduate students may consult with owners of service stations, garages, and automotive centers located in the Newton community about the use of environmentally friendly products and services, including: a) recycling of CFCs extracted while doing maintenance on auto air conditioning systems, b) recycling anti-freeze while servicing coolant/heating systems, c) offering to use recycled motor oil when doing oil changes, d) offering asbestos-free brake pads, lifetime sparkplugs, air filters, etc., e) implementing water conservation measures in restrooms (i.e. water dams, low flow toilets, aerators, etc.), f) offering used/rebuilt autoparts, g) installing energy-saving lighting, h) hanging plants to reduce CO2 in ambient air, i) offering retread tires and recycling worn tires, j) recycling used oil, k) installing "pump collars" to reduce venting of gas fumes, l) recycling paper, non-glossy cardboard, sheet metal, wood, glass, aluminium, m) using environment-friendly cleaning compounds. We will then discuss the overall mechanisms of compliance among gas station owners with standards based on their consensus. We will examine how standards are formulated at the level of trade associations.
Local/Global Grocery Industry: Availability of Green Products to Consumers. This project will involve discussions with supermarket managers on highlighting the sale of "green" consumer products to their customers. The project will involve a specific section of a store devoted to the introduction of green products and consumer education. Products will be shelved throughout the store by generic categories. Products include: a) household goods made from recycled paper (i.e. paper towels & napkins, toilet paper, stationery & envelopes, greeting cards, etc.), b) biodegradable cleaning compounds, laundry soaps, etc., c) natural personal hygiene products (i.e. skincare, unbleached tampons, soaps, scents, hair products, cloth diapers, etc.), d) goods made without styrofoam or CFC produced foams, e) organically, locally grown produce, meats and chemical free foods, f) canvas (or other reusable) shopping bags, g) environmental books and publications and games, h) products made from recycled plastics, i) products sold in bulk with reusable containers, with minimal packaging, or packaged recycled/recyclable materials, j) chemical free pet foods, k) rechargeable batteries/solar powered electronics.
Local/Global Banking Industry: Loan Incentives in Conservation. This project will involve civic structures related to banks and banking associations. The Associate Director (or paid graduate student) may talk with a bank manager about promoting competitive low interest loans to residents, business, or institutions that are borrowing money to make improvements in resource conservation. These loans will be available to those who are borrowing for the following purposes: a) weatherization, fuel conversion/efficiency, b) water conservation, c) anti-pollution technology or clean-up/remediation, d) energy efficiency (i.e. low energy lighting, autoswitches, solar installation), e) alternative fuel vehicles, production equipment, f) open space preservation, g) recyclng technology.
Local/Global Publishing Industry: Environmental Issues in Publications. This project will involve the study of civic structures in media associations. A student will spend time with a publishing company (e.g. book, newspaper) to discuss efforts to: a) increase the use of recycled paperstocks, b) use environmentally safe inks and glues, c) increase energy efficiency of production d) reuse water in production, e) reduce toxic emissions into workplace and outside environment, f) recycle production byproducts, g) conduct public information campaign on end-user recycling.
Local/Global Automotive Industry: Conservation through Retail Outlets for Vehicles. This project will involve consultants talking with car dealerships on promoting sales of solar electric and hybrid vehicles. The project includes the following options: a) discussing the idea of selling "alternative vehicles" in addition to offering showroom pictures of their brand of passenger car powered by an alternative fuel such as: electricity, solar photovoltaics, natural gas, etc., b) training sales staff to educate the public on the benefits of solar electric cars, c) displaying the vehicle at local environmental fairs, d) offering the car for sale to the general public at a slightly lower cost than the manufacturer's retail price (not at a loss to any participating sponsor), e) offering "test drives" and/or short-term rentals to the public, f) highlighting the sale of high-mileage cars with a consumer education component.
In such options, Boston College students may serve as interns. They could assist the Associate Director in consulting projects. In each case, Boston College students will work under the supervision of faculty. The academic side of fieldwork may include interviewing, survey techniques, content analysis, and participant observation. The students become aware of channels for change within the business community and the broader social issues behind local development.
Appendix D: Options for Mini-Conference Themes (Papers based on UN consultation, STB)
With proper preparations, faculty may plan a series of collaborative conferences, called Local/Global Public Forums, with U.S. government delegates, business leaders, NGO and civil society representatives, and U.N. civil servants to plan a stepwise strategy for expanding the practice of self-regulation of business at the international association level. Suggested (optional) forums:
Global Forum I:Creating Codes of Conduct among Corporate Competitors.
How are global rivals developing social standards?
Daytime sessions: On Combining Technical and Environmental Standards.
International Organization of Standards: ISO 14000.
What are the ISO 14000 Series standards? What is behind the EMS (Environmental Management Standards) movement? How did it start? What is the Guidance Document?
What is included in ISO 14001? Is ISO 14001 applicable to all industries? What are ISO 14010 audit standards? What are ISO labeling standards?
Performance standards? Life-cycle assessment standards? Are government bodies adopting ISO 14001? What is the role of ISO 14000 in the European Union?
The Chemical Manufacturers Association.
What are the ten guidelines for Responsible Care adopted by the CMA board of directors in 1988? What is the relationship between ISO 14001 and Responsible Care?
NSF International, Inc., Ann Arbor, MI.
How are NSF standards established? How is government and industry jointly involved in setting global standards? Is there a balloted consensus by a special technical committee composed of government regulators, users, manufacturers, and NSF staff? How are U.S., Canadian, and Nordic standards associations integrated into this world body? What is the relationship of NSF to other standards organizations (e.g., ISO 14000, American Standards Institute)? To what extent is environmental and consumer protection guiding principles behind these standards?
Evening session: On Cooperation between Competing Companies.
International Chamber of Commerce: Codes and Tribunals.
Why did corporate codes develop? On what theory of business are they based? How did it happen? What relation do they have to the U.N. code? How are they enforced? What is their success? Is there a business ethic here?
The Caux Principles, 1994.
How did chief executives from key TNCs in Europe, the U.S., and Japan write those principles? How do these principles connect with others developing in the global market? Does any monitoring of corporate conduct take place?
Keidanren Global Environmental Charter.
Japan Federation of Economic Organizations
Commentators to be chosen—e.g., from major newspaper writers on the economy, business scholars, U.N. analysts, international organization theorists).
Global Forum II: Allocating Social Capital: Professional
How are investment professionals creating standards?
The CERES Principles, Franklin Research Corporation.
How did the "goals for excellence" develop? What are they? Who are members? How are the codes enforced? How do firms develop social audits? What is a "disclosure form"?
Principles for Global Corporate Responsibility: Benchmarks for
Measuring Business Performance, Interfaith Center on Corporate Responsibility
(U.S.), Ecumenical Committee for Corporate Responsibility (Britain), and
Task Force on the Churches and Corporate Responsibility (Canada).
How did the measures develop? What are "bench marks"? What is unique about this code? How is it implemented?
Commentators to be chosen—e.g., Business Council for the U.N. representative, Council for a Parliament of the World’s Religions representative, Council on Economic Priorities representative.
Global Forum III: Corporate Codes of Conduct: The Salience
of Subsidiary Systems.
How do corporations introduce social standards in their global subsidiaries? How do companies enforce their own standards?
General Motors Board Guidelines on Corporate Governance Issues.
Levi Strauss & Co.
With sales approaching $6 billion per year and 36,000 employees, how is the three-part mission statement implemented?
Cadbury Committee on the Financial Aspects of Corporate Governance.
What is the "Code of Best Practice"? How is it implemented?
Global Forum IV: Connecting Global Code Complexities with the
What is the relationship between ethical codes and standards in the global market?
International Labour Organisation (ILO) and Global Firms.
Field Guide to Labour Rights.
Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy.
Convention 87: Freedom of Association.
Convention 98: Right to Organize and Bargain Collectively.
Convention 100: Equal Remuneration for Men & Women.
Convention 105: Abolition of forced Labour.
Convention 111: Non-discrimination in Employment and Occupation.
Organization for Economic Cooperation and Development (OECD).
Guidelines for Multinational Enterprises, 1976, 1991.
U.N. Draft Code of Conduct for Transnational Corporations (abandoned
U.N. representative: Samuel Asante.
Human Rights and Corporate Codes.
Universal Declaration of Human Rights (1948).
Convention on the Elimination of All Forms of Discrimination against Women (1979).
Wood-Sheppard Principles for Race Equality in Employment (Race Equality Project, Ecumenical Committee for Corporate Responsibility, 1993).
U.N. Draft Declaration on Gender Equity (Nairobi, 1985).
Code of Practice for the Employment of Disabled People (Manpower Services Commission, Britain, 1984).
Global Forum V: Special Industry and Market-Based Codes.
What application do national codes have to international codes of advertising?
British Committee of Advertising Practices representative
U.N. Affiliate Codes.
International Code of Marketing Breast Milk Substitutes (WHO, UNICEF). International Code of Conduct on the Distribution and use of Pesticides (FAO).
Global Forum VI: The Future of Association Codes and the U.N.
The Secretary-General of the United Nations: Keynote Address.
Collaboration of Inter-governmental, Non-governmental, and Business
How can the U.N. play a part in the advancement of effective market self-regulation?
Representatives of governments, IGOs, NGOs, and business associations.
The Proposed Civil Society Forum as a Transitional Device to Reintegrate
Business into U.N. Deliberations.
The Civil Society Forum would be an annual meeting of NGOs to advise the General Assembly, as proposed by the Commission on Global Governance in their book, Our Global Neighborhood. Business associations have or may acquire NGO status.
Commission on Global Governance representative.
New Proposal of a "Third Chamber" Representative of International Businesses and Their Associations.
The General Assembly currently is representative of states only. It has been proposed, by the Commission on Global Governance and others, to establish a "Second Chamber" or Parliamentary Assembly representative of the peoples of the world, like the European Parliament. Business still would be excluded from deliberations and negotiations in which it has a vital interest. A "Third Chamber," which eventually might provide a concurrent majority for recommendations of the General Assembly, would remedy this case.
Appendix E: Concepts for Discussion (Adapted from Unpublished Papers, STB)
Civil (just) markets have yet to be defined, studied, tested, and researched in the global economy. A civil market, as faculty might define it, could have: 1) "accountability systems" that require corporations to be answerable to the people they affect and 2) "civil structures" that solve problems of justice and fairness in the higher levels of a global market system.
These two concepts are associated with civil corporations that have a) their own self-enforcing codes of conduct -- giving them a capacity to respond effectively to their stakeholders, and b) participate in civil trade associations which have ethical standards written by members, including tribunals designed to induce compliance. In major markets, monitors or neutral outsiders report on how civil agreements are followed in a market. Neutral outsiders can be international lawyers appointed jointly by competitors, countervailing powers, impartial observers in the UN, the Third Sector, or national governments. Let us look in more detail at both accountability systems and civil structures.
Accountability systems are designed in the private sector to operate for the good for all member-participants. They do so by contracts, standards, monitors, and regulators to whom enterprises are answerable.
1. Contracts are written agreements between people that set standards for civil conduct in the marketplace.
2. Standards are guidelines (norms, rules, and principles) for conduct, which are written into contracts. By contracts, we include broadly corporate charters, bylaws, constitutions, mission statements, and corporate codes of ethics.
3. Monitors are "watchdogs" and countervailing organizations that keep the stakeholders and the public informed on how well the standards are maintained. We have argued that monitors cannot do their job adequately without transparency. Monitors include NGOs, social-financial auditors, public interest groups, consumer federations, social investment firms, and UN agencies.
4. Authorities are judges and rule-enforcers in the private sector. They operate at different levels of organization and can be called tribunals, arbiters, courts, judiciaries, boards of directors, final decision-makers, and enforcement groups that are empowered by stakeholder agreement to make judgements and issue penalties for misconduct. They are designated groups who judge offenders, and issue fines or specific punishments against offenders and help bring toward conformity with the agreed standards. A national government has been the traditional regulator, using courts and judges to decide on penalties such as probation, restitution, fees, jail and prison sentences, but the private sector has developed a different tradition.
"Regulatory systems" in the private sector are varied in their organization, more than governments. For example, standards are in written contracts and formal agreements, not in statutes. Violators of agreements must face "tribunals" and "final arbiters" which are established by consent among the people involved. The penalties are made by their consent. Regulators include civil (non-government) courts where, based on prior agreements, representatives of competing groups issue judgements, prescribe corrective actions and levy penalties. Consenting groups at different levels of organization enforce judgements against offenders. They may be peers, managers, executives, stakeholders, or trade and professional associations.
Violators are not sent to prison, but it is important to recognize the power of norms of consent, as well as folkways, traditions, conventions, customs, and mores in the private sector. These guides to conduct often rule the market more powerfully than any government. In some cases, the judgement of a trade group can have more power than a government regulator. The judgement of friends can be more powerful than an official court of justice. Peers may punish offenders by social isolation and have a stronger impact than offenders facing a court sentence. If an agreement or contract is breached, stakeholders (unions, suppliers, customers, workers, etc.) can virtually destroy a corporation.
Stakeholders protest in a government court. Customers boycott, suppliers refuse to sell products, workers go on strike, etc. A responsible tribunal in the private sector is necessary to ensure that the rules of fair competition and civility are followed. Such councils are organized inside corporations (e.g. labor-management committees). Business associations also write codes of conduct and establish tribunals. If a member firm breaks a formal agreement, the participant members have given themselves the power to make their own judgements. If the system does not work, there are alternatives. The government is a last resort in case things go wrong. A hundred different types of enforcement mechanisms already exist in the private sector, depending upon the nature of the contract, the formal agreement, the level of organization, and the particular market sector. Examples of accountability systems are summarized below.
Appendix F (Adapted from Unpublished Papers, STB)
Examples of Accountability Systems
I Accountability to Buyers
Example: Grading of Lumber Quality
A. Contract: democratic agreement among competing members of a lumber
B. Standard: grading code for wood products.
C. Monitor: buyers in construction firms and customers who are affected by grading.
D. Authority: lumber associations with tribunals to hear cases about offenders breaking the rules.
E. Example: Southern Pine Lumber Association
F. Civil function: the system eliminates the need for a state agency to make lumber standards.
II Accountability to Employees
Example: Enterprise Self Management
A. Contract: labor agreement on democratic (electoral) structures
inside the firm.
B. Standard: written principles on types and degrees of participation/ownership.
C. Monitor: the governing board of employees, sometimes watchdogs are trade unions and appointed ombudsmen.
D. Authority: representative board of directors chosen by employees.
E. Example: Mondragon co-op boards; Milwaukee Journal board.
F. Civil function: employee self-management reduces the need for government labor departments.
III Accountability to Residents
Example: Community Corporations (CDCs, CDFCs, and CLTs)
A. Contract: bylaws for elections and distribution of authority.
B. Standard: written constitution/bylaws on community norms.
C. Monitor: citizens act through periodic elections.
D. Authority: a resident board and judiciary in the community corporation.
E. Example: San Bernadino CDC, CA:.
F. Civil function: CDCs reduce the need for government protection agencies for local citizens.
IV Accountability to Customers
Example: Consumer Co-ops and Customer Boards
A. Contract: bylaws and elections
B. Standard: member and public norms written in bylaws.
C. Monitor: customer owners
D. Authority: elected board powers, and due process in decision-making.
E. Example: (customer-owned) Cleveland Electric Utility, Ohio; also Seikatsu.
F. Civil function: Consumer governance reduces need for government utilities and bureaucracies.
IV Accountability to the Public
Example: Public (Non-governmental) Corporations
A. Contract: social constitution/bylaws.
B. Standard: professional codes of member associations and standards in bylaws.
C. Monitor: elected NGO groups on board of directors tempered by audience polls.
D. Authority: elected board deciding on programs; power to judge and fire executives.
E. Example: German Television Station, Second Channel.
F. Civil function: societal governance on board avoids private oligopoly and government media.
VI Accountability to Students and Parents
Example: Colleges and Universities
A. Contract: accrediting agreements between institutions and professional
B. Standard: academic excellence, accreditation norms.
C. Monitor: watchdogs: students, teachers, parents, alumnae associations.
D. Authority: elected boards of associations of colleges and universities, guided by state charters.
D. Example: American Council on Education, Assoc. of American Colleges.
E. Civil function: professional associations avoid the need for state accreditation agencies.
A civil structure can be a group of accountability systems (contracts, standards, monitors, and arbiters) which solves stakeholder problems in a larger market system. A self-governing system of organizations requires firms to be accountable to the people they affect at the level of a nation or the global society.
An example of a civil structure is the technical classification and grading of products in the whole economy, not just one system of accountability in a specific firm or industry. Standards for size and the grading of thousands of consumer goods, like shoes, light bulbs, circular saws, and lumber, are defined and maintained through the cooperation of competitors in trade associations. These structures also function at global levels.
Another civil structure is the system of public accounting in the private sector. Keeping proper company books is done with the aid of a society-wide set of professional rules supported by associations whose job it is to monitor the fiscal status and reliability of the firm. There is a system of agreements and standards for accounting procedures that is taught professionally in schools of management. Its latent function is to eliminate the need for government agencies to assess the bookkeeping of firms and to judge their financial credibility. Certified professionals do the job. Governments support the procedure and serve as a last resort if the system breaks down.
The Southern Pine Lumber Association has its own accountability system for grading, but it represents only one part of a civil structure in which thousands of products are graded in the American economy. Systems of accountability in this grading process include democratic trade associations, codes of conduct, jointly managed tribunals, and countervailing organizations. Countervailing organizations in the case of the lumber industry include construction firms and real estate associations who depend upon (thus, monitor) the grading of lumber. The nationwide grading of lumber is then a civil, self-governing structure in the market that eliminates the need for governments to intervene on behalf of the public. Civil structures provide for fair competition at the national and international level.
Civil structures are usually produced through the pressures of competition and conflict in the market. Solutions are privately negotiated. Structures are organized just to solve mutual problems, not particularly with an intention to fulfill civil-society values, such as justice and freedom. Nonetheless, the presence of these arrangements within a market expresses such values in the market. Indeed, new accountability systems develop to become part of these structures, without public attention. For example, social audits are coming to be included with financial audits of global corporations. As we shall see shortly, global environmental standards are developing today that relate to the grading and classification of products.
In other words, competing corporations become civil through accountability
systems and civil structures. The extent of their existence is a study
in itself, but we can say summarily that corporations become responsible
through their associations. Through their associations, they operate collectively
in the public interest as well as in their own self-interest. They construct
a market system which functions, in effect, like a civil commonwealth.
They synthesize social goals (e.g. fairness) with economic goals (e.g.
efficiency) to operate for the good of the whole society.
Appendix G (Adapted from Unpublished Papers, STB)
International Organization for Standardization (ISO): Standards and
ISO is a worldwide federation of businesses founded in 1947 to promote development of international manufacturing, trade, and communication standards. ISO is composed of member bodies from more than 110 countries. It receives information from government, industry, and other parties before developing a standard. It develops standards that mediate between the interests of business, NGOs and international governmental organizations (IGOs).
Although standards developed by ISO are voluntary and no legal requirements force countries to adopt them, countries and industries are adopting ISO standards in ways that make them virtually mandatory. They could become part of the evolving "world mores" as well as the law of individual nations.
ISO represents (by its own estimate) more than 95% of the world's industrial production; it has more than 200 technical committees and almost 3,000 technical bodies that develop and publish standards. Governments are invited to have observer status at ISO committee meetings. Decision-making in ISO is by member associations and firms.
ISO 14000 is a series of standards being tested in selected markets for managing environmental impacts of business. The standards include basic management systems, auditing, performance evaluation, labeling, and life-cycle assessment. An environmental management system (EMS) is designed for third-party certification as a method of monitoring compliance. It addresses the immediate and long-term impact of products, services, and processes on the environment. EMS is an organizational method that works toward compliance with national and international requirements.
The effort to create a single, generic, internationally recognized environmental management system is motivated by the desire among corporations to avoid duplicative and sometimes competitive corporate and governmental programs.
EMS is intended to achieve:
...a commitment to prevention of pollution ... management and employee commitment to the protection of the environment with clear assignment of accountability and responsibility...encourage environmental planning throughout the full range of the organization's activities, from raw material acquisition through product distribution...establish a disciplined management process for achieving targeted performance levels...establish a management process to review and audit the EMS and to identify opportunities for improvement of the system and resulting environmental performance...establish and maintain appropriate communications with internal and external interested parties....