Rethinking the division of labour between business and government

We liked this interview with Richard Haass in the McKinsey Quarterly where he talks about the implications of the new division of labour between and government. As he says, "the lines between what is government and what is the private sector of business will get blurred.... CEOs, when they get up in the morning and look out through their window or across their desk, they are dealing with a range of constituencies that looks an awful lot like what a cabinet member might look at." The basic ideas align pretty much with our own work on corporate citizenship and global governance, but seeing them getting such prominence from McKinsey shows just how much the whole agenda is starting to be taken seriously by the business community.

We were particularly interested in his thoughts on how companies should adapt to this 'new normal', as McKinsey likes to put it. Haass promotes a new way of thinking about business-government relations - an expanded perspective that not only thinks in terms of lobbying and political action committees, but about what the changing division of labour means for the company as a whole. As he says, we need to, "think about government and government-related issues not as something that you have a small side office [for], some vice president for government relations who maybe calls a congressional staffer when he’s got an issue. But it’s something now much more intrinsic, and every person in the company—certainly the upper echelon of leadership—needs to take this into account, needs to think very hard about what is the proper, desirable role of government for that company. ... the entire issue of government, and the division of labor between the company and government, needs to be something that is thought through from the outset."

Haass is short on specifics in the interview, but it certainly sends a clear message that we need to go further in working through what the expanded set of political responsibilities might look like. And it definitely crashes a rather large plank over the heads of most of our colleagues doing research on corporate political action who seem to simply be blind to the bigger picture of what's happening around business and politics. Dirk's article reviewing recent books by Robert Reich and Naomi Klein explains a little more where we think some of the problems are in this respect. If even the McKinsey Quarterly is getting it, surely our fellow management researchers won't be too far behind. We live in hope.

Iraq, five years later

We don’t know how you feel, but it’s somewhat hard to even properly listen when news from Iraq are coming up. So numbed and used to bombs, casualties and barbarian acts have we become that it really takes a ‘jubilee’ to make us remember, that: yes, of course, there is still a war going on in Iraq!

So here we were last week, five years since the ‘liberation’ of Iraq. Ah, and there was another ‘newsworthy’ item: the 4,000th US casualty was reported – no scores on Iraqi civilians though, they don’t ‘count’…

Not only have the news been basically all the same for the last five years, but so have been the interpretations. Pretty much "Bush’s incompetence, Oil and Halliburton" is what it mainly boils down to. In our view, there is one exception though: Naomi Klein’s recent book ‘The Shock Doctrine’.

OK – lets get this out of the way straight upfront: Klein is an activist, writes with a certain angle and probably some of her theses might be closer to legend building than to solid interpretation. This aside, the book is a fascinating read for everybody attempting at understanding the contemporary role of business and politics in society.

Starting in the 1970s Klein provides an excellently researched overview over the link between introduction of liberal, free market economic policies and the use of ‘shock’ in the form of violence, terror and intimidation by governments or powerful elites to achieve this end. Examples range from Chile, Bolivia, Poland, China, Russia, Indonesia, South Africa up to - post 9/11 - the US and other Western democracies.

The book provides a stunning analysis of the driving agents, forces and ideas behind the spread of global capitalism. It is a gripping read to anyone interested in business ethics for at least three reasons:

• Ever wondered why CSR, business ethics, corporate citizenship etc. has risen so sharply on corporate agendas recently? Klein provides a systematic account of how frameworks for economic activity have been changed towards less regulation and more discretion – and thus responsibility - of private actors (corporations that is).
  
• So, academic research and ‘ideas’ are just for filling the shelves of the ‘ivory towers’? Klein’s book provides a different story: Milton Friedman’s love affair with dictators of the likes of Pinochet or Deng Xiao Ping or with CEOs-cum-politicians such as Cheney and Rumsfeld had a significant influence on how billions of lives are shaped today. As a young economics professor, Jeffrey Sachs’ ideas – according to Klein – had disastrous effects on countries like Bolivia or Poland. So the book makes a strong case that studying and applying academic research in fact is tremendously powerful.
  
• Where are we heading? Klein shows that the systematic privatization of utilities, public transport, health care, correction facilities (i.e. prisons) and education in the last 20 years were just the beginning. The Iraq war is probably the first attempt by a government to fight a war where everything other than core strategic directions is privatized and run by for-profit corporations. Love it or hate it - corporations will face more and more claims for transparency, accountability and commitment to the public interest – all core topics for business ethics.
  

In short – looking for an inspiring read? Klein’s book won’t disappoint even if you don’t agree with everything.