What role for elected politicians in the world of ethical trading ?
I would like to concentrate on the role of elected politicians in policy formation, especially in the field of economic external relations.
There is a growing trend to include everyone in the dialogue on economic policy formation except the only people who have a democratic mandate to be engaged in policy formation, that is politicians - regionally, nationally and internationally.
I feel also that I can make that point with more effect nowadays as I have not been an elected politician since I left the Lancashire County Council in 2005 and additionally I have not been directly involved in European policy making since I voluntarily left the European Parliament in June 1999. So what follows is in no way special pleading on my own or my former colleagues behalf.
I should explain that I remain an unapologetic member of the political Left believing that the disparities in wealth distribution are not only morally unsupportable but also endanger our social and political stability. Historically it is when people feel, or are told, that comfort is within reach, but are cruelly and sytematically denied access to that well-being, that they become insurrectionary. Mature democracies have developed and survived by making concessions to growing expectation, not in the purely materialistic sense of acquiring consumer goods, in order to stave off a violent and vengeful seizure of power by the power hungry in the name of the "sans culottes". Within the nations states which emerged and were consolidated throughout the nineteenth and twentieth century - and in my view which still exert and can exert far more influence that the proselytisers of "globalisation" proclaim - a shifting and negotiatiable compromise between the interests of capital and labour has always been the hallmark of democracies. It is this dynamic which saw the government regulation of the private sector for the general good and saw the progressive movement in politics establish the notion of collective welfare as being something which the state should strive for and maintain. Crucially capital saw itself as part of the national consensus - "what's good for General Motors is good for the USA - and what's good for the USA is good for General Motors".
The national body politic, by its division into classical partisan poltical parties, was an expression, in democratic form, of this (creative) tension and the national general elections were taken as an accurate barometer of the balance of power and an indicator for the political classes of how to trim and tack.
To what extent that national consensus has been broken by the mobility of capital, the mobiltity of production, is debateable, what is beyond dispute is the fact that this consensus building has been disrupted and equally beyond debate is that the power of organised labour and politics based on labour representation has been correspondingly diminished.
Let me quote on historical example to illustrate this point.
When the final GATT Round began in the mid-1980, a round which resulted in the setting up of an international body to regulate trade - the World Trade Organisation (WTO) - A Social Agenda and Social Clauses for world trade was high on the agenda. This reflected the general view that trade based on poor wages and poor conditions was in effect "unfair competition" and poor social conditions were as detrimental to competition as government subsidies and protectionism. No-one in the Uruguay Round paid much attention to the environment, yet when the WTO came into being it had a "trade and environment" department and social clauses had disappeared from the scene. Not only does this illustrate the decline of labour power but also the rise of the Green lobby - which I welcome - and which I shall refer to later.
The task facing democrats is to fashion an accountable, regulatory governance, which matches the exigencies of the globalised economy in which we now live. Having already been successful in finding such mechanism on the national state level I find no reason to be ultimately pessimistic about us finding international structures.
When I was elected to the European Parliament in 1984 I asked to go on the External Economic Affairs Committee (in effect the Trade Committee) for very specific reasons. Firstly because the EU has very clear competences in trade - unlike other areas of EU activity. It has been said that the EU has "pretensions" in foreign affairs but "competences" in trade. I think broadly speaking that is still true, and it certainly is in terms of the European Parliament - the Parliament may huff and puff, sometimes to good effect on foreign affairs - in trade the Parliament can actually ratify a trade bill. Secondly, as a fully paid up redistributer of wealth, I believed that world poverty would not be addressed unless there was a change in the "terms of trade".
I began researching into the question of social and human rights conditionality in trade agreements - how, or even if, one can demand that trade arrangements take into account the potential "collateral damage" done to social welfare and human rights. Slavery after all made some economic sense, certainly a lot of people made money from it and huge amounts of capital were accrued through slave trade which acted as a catalyst for economic growth - but it was morally repugnant.
At my first meeting a trade agreement with a Middle Eastern state was being discussed and I with the brashness of the newcomer boldly asked for a report about the human rights situation in that country.
The reaction was astonishing - the next speaker actually said "wrong committee young man". To cut a very long story, very - but not too short - the European Commission now makes good governance and observation of basic human rights the sine qua non of its trade agreements. I can only claim the minutest portion of the credit for this, but there was throughout the 1980s, contrarywise to the "greed is good" mantra, a steady accumulation of regulatory conditionalities adopted by the EU in regard to its relations with third countries.
Similar mechanisms exist within nation states - US law still allows Congress to call a hearing into the USA's economic relations with any country if it is believes that the social and human rights situation in that country gives cause for concern.
The puzzle remains - and I hope will be taken up in discussions - as to why having these powers elected politicians are quite reluctant to use them.
One simple reason is that waging trade is seen as like waging war - the prerogative of the executive branch of government. Certainly the European Commission and European Council's reaction to the European Parliament's exercise of its rights in trade matters has been hostile, and whereas the Parliament's power to actually make policy has grown in a range of issues from consumer affairs to transport, it has actually stood still, if not gone backwards on trade matters.
In ealry 1989 the European Parliament rejected a financial cooperation package with Israel for two reasons. Firstly, because it had been quite insultingly taken for granted by the Commission and the Israeli government, who expected Parliament to rubber-stamp the deal and secondly because many Parliamentarians - on all sides - were reluctant to grant favorable terms to Isreal at the time of the first "Intifada". There was a brief and embarrassing crisis, because the EU constitutional arrangements have no guidance on what to do with a rejected treaty (parathetically a dilema which reappeared with the rejection by France and Holland of the EU Constitution. Interestingly the way out of the dilema proved the same in both cases - the wording was adjusted a little and lots of back door deals and trade offs were done under the counter) The important point and it is a sad one, is that unlike some nation states (the case of the USA as mentioned above) the European Union devised no constitutional mechanism for tying trade/econmic agreements to Parliamentary scrutiny. And so it remains to this day.
In the meantime other actors have entered the stage. Quite specifically the single issue NGO campaigners, and the single biggest issue of recent times - the Environment. As a believer in democracy I remain deeply ambivalent about NGOs. I openly admit that the great campaign issues of my life time (I was born in 1947) have been driven by extra-parliamentary and indeed extra-political party activity - and I have played my own proud part in such activity. Women's Lib, equal (race) rights, the Peace movement and now the "Green" issue have met with resistance from the political establishment and only adopted by traditional parties when those ideas proved to be potential vote winners. My ambivalence comes from the fact that the NGO world has scant democratic credentials.
Space inside the policy-shaping tent is made for NGOs, they are a growing, yet self-appointed ethical (and moralising) voice. Few NGOs’ internal structures bear examination as democratically accountable even to their own members.
Indeed NGOs are often founded to circumvent such scrutiny. Although I do acknoweldge that in some states where outright oppposition can be life-threatening, NGOs are a more palatable, and less painful, form of political action.
One can argue their emergence is symptomatic of a loss of confidence in more traditional forms of political representation, particularly the party structures which emerged in Europe and elsewhere in the nineteenth century.
Nonetheless it is remarkable how large international institutions which shape our world, IMF, World Bank, WTO and EC Commission, seem more comfortable in a dialogue with NGOs than with elected politicians.
Why should this be so ? My own view may be described as cynical, and I am willing to debate, but it is simply that NGOs can be more easily and superficially brought into the policy formation dialogue without really conceding power and can also when necessary be more easily dismissed as unrepresentative should they continue to be too exacting and critical.
The great campaigning issue (and successes) of morality in economics have always come about from a combination of Parliamentary and extra-Parliamentary action - we are back to our earlier mention of the Abolition of the Slave trade.
Where does this then leave the professsional purveyors of morality - the Churches and organised religion ?
It remains a convenient myth among many would be influencers of the public opinion that religion is the sole base for morality.
A view which as a non-believer who values the ideals of the humanitarian enlightenment, I have always resented.
At best the record of religion is public and political morality is mixed. For every Christian who believed slavery was morally wrong there was a Churchman who could justify slavery on biblical texts. As a young child, I showed some early poltical acumen by wondering why Jesus drove the money-lenders out of the temple when the local bank in my village seemed to be doing good business. The answer of sorts comes also in the Bible where the landlord gives his tenants "talents" as a kind of test and scolds the one who buries it safely and prasies the one who has clearly speculated to accumulate.
St Thomas believed a good deal was one in which both parties gained equally - a discussion point which would cause happy havoc on any MBA programme.
The Churches are a powerful source of moral guidance, however, they are overwhelmingly hierarchical, male dominated and in the last resort primarily concerned with their own survival which leaves them vulnerable to claims of hypocrisy and double-standards.
The curate's egg is like the curate himself and the Church - "good in parts".
I am grateful for the invitation to this seminar for in my preparation I returned to the excellent but nowadays largely ignored writings of R.H.Tawney, particularly his ground breaking "Religion and the Rise of Capitalism". Organised religions' dilema remains as he described:
"Can religion admit the existence of a sharp antithesis between personal morality and the practices which are permissible in business ?"
With globalisation has come a revival of the notion of self-regulation for business. This notion seems a curious - to some extent willful and to some extent purposeful - ignorance and denial of history. In reality governments started regulating business because popular opinion and moral conviction forced them to, because the public had no confidence in business regulating itself.
The traditional demand for "laws" has been replaced by the acceptance of "codes" in what has been a retreat of governments from regulation, national and internationally. In encouraging better behaviour codes are better than free-for-all anarchy. But to adapt a beautiful mixed metaphor of Sam Goldwyn's "codes are like verbal promises - not worth the paper they are written on".
I am intrigued by the concept of "the good company" A tour of the present horizen seems to offer no evidence to justify the aspiration of the EC Commission that ethically "good" companies are and can be more successful economically.
"Good" companies have found it difficult to compete in the globalised economy, witness the demise of Cadbury’s and Rowntree’s as caring capitalist concerns based on Quaker principals.
I would be interested to see a historical exploration of the fate of "good companies". The nineteenth century offers a plethora of "caring capitalists" - charismatic figures like Robert Owen - whose intiatives died with them.
I truly welcome the engagement of more activists in the trade and economics debate - not least and perhaps most, the growing power and confidence shown by the developing world in forcing its views onto the debate. I remain optimistic, there are now more countries influencing the trade agenda then the old Imperial powers. The NGOs undemocratic and unaccountable though they often are bring a freshness and daring to the debate.
Moral judgements must play a part, though it is not the exclusive preserve of organised religion to make such judgements.
My conclusion, simply as it is, is that Parliaments remain the most accurate weather-vane for public opinion, but also the most effective and reliable tool for resolving conflicts of vested interests and for making moral and ethical judgements on economic matters.
Michael Hindley Member of European Parliament 1984-1999.
Vice-President of Trade Committee