Business as Usual--or a Lever for Change?
What a fascinating conversation to walk into halfway through! I thoroughly enjoyed Josh's magisterial new look at China, and how it is already undermining shared liberal values abroad through its aid and trade patterns, largely driven by its mercantalist trade patterns and demand for energy, raw materials, and arms markets--though (probably) not through a conscious decision to build an alternative model. I had not expected to be forced to comment on it with perhaps the best group of new, original China experts in the country!
So far, we've discussed whether this is likely to change due to African backlash, pressure from the Chinese people, or a demand for respect by the people of Southeast Asia.
But we haven't discussed another lever for change: the foreign business community working in China, who could (perhaps) be a small but real source that could affect the way China is doing business from the inside: either by requesting more liberal values, or by modelling and demonstrating the attractiveness of liberal values to Chinese, and providing a new internal model for them to consider.
Unfortunately, to this layperson's eye, it doesn't seem as if foreign companies are serving this goal--they are too worried about getting shunted out of China's huge market by others baying at the gate if they raise their voice. Such seems to be what has occurred with Google and Yahoo, at least, who could have tried to make the case and rally Chinese behind liberal values of openness and free speech, but did not.
Other countries, far from seeing their business communities as sources to leverage liberal values, are worried about fifth columns in the other direction. In Taiwan, the traditional fear of a Chinese military takeover has had to step aside to make room for the new fear that with so many Taiwanese businessmen living in China with their families, there will form a domestic, voting force that will press for China's policies within Taiwan.
I can't say I am expecting much in this direction--when I worked for a private firm, their lack of desire to own the power that they naturally had was stunning--by refusing to admit they were cultural as well as economic forces, they were blinded to both the good and harm they were implicitly causing.
I'm no China expert, but others on this book chat are. What are your thoughts on the business community IN China, and whether they might serve as a model for change, an enmeshing force that would bring more Chinese into a more liberal form of doing business, or a force for political leverage and change?
Seems a little naive. Multinational businesses in China are sucking up to the Chinese government in exchange for a crack at billions of customers. They aren't liberalizing China, they're sycophants to the Chinese government. That includes not only telecom, energy, construction companies and retailers who need facilities on the ground there but investment banks who can only invest in mainland Chinese stocks with government consent and search engines like Google that have aided the government's censorship policies.
I'm frankly flabbergasted that you see the multinationals as a force for good here. You're ignoring reality and putting way too much faith in these companies.
thosethingswesay.blogspot.com
June 28, 2007 8:15 AM | Reply | Permalink
Corporations don't get into human rights issues, but they do get into rule of law issues. Foreign corporations in authoritarian countries can be among the most powerful forces pushing for transparency in the legal system to make it clear beforehand what you are and are not allowed to do, and to ensure legal penalties are not imposed on people or businesses which haven't actually broken any law. Those kinds of shifts in legal culture do have great benefits, ultimately, for ordinary people as well.
The business community in Vietnam, for instance, has been pressing tenaciously for many years now to have the principle enshrined in law that "anything which is not (explicitly) illegal is legal". In Communist legal systems like those in China and Vietnam (owing a great deal to feudal/imperial legacies), it's often instead the case that any activity which is not explicitly authorized by an appropriate government-approved body is in a legal grey zone, and the government may arbitrarily decide that you've broken the law by doing it. This, obviously, drives businesspeople nuts, and they can be effective levers for change in this area.
A good recent example is the ABN-AMRO case in Vietnam, in which several employees of the Dutch bank were jailed for engaging in routinely accepted, though technically unlicensed, currency trading practices. (They were arrested because a state bank employee had lost millions of government dollars on currency speculation through ABN-AMRO, and wanted to pressure the bank to recoup her losses.) Ultimately, ABN-AMRO agreed to pay the funds, as they knew they would lose the case in court; but the brouhaha was embarrassing for the government and provoked angry responses from the banking community. The upshot is that the licensing procedures for currency trading, which used to be impossibly complicated and bureaucratic, have been cleaned up and the government will actually observe them, to avoid this kind of thing happening again. This is part of a long, slow change in Vietnamese business culture towards greater transparency, and pressure by foreign companies is playing a positive role -- and already has played a huge positive role in the last 15 years.
Accumulating Peripherals
June 28, 2007 9:28 AM | Reply | Permalink
I can't say I am expecting much in this direction--when I worked for a private firm, their lack of desire to own the power that they naturally had was stunning--by refusing to admit they were cultural as well as economic forces, they were blinded to both the good and harm they were implicitly causing.
It was my understanding that companies, at least public ones, are bound by their fiduciary responsibilities to make money for their shareholders, within the limits of the law, and have very little freedom of action to use their power just to do good, unless they can make a clear case for long term bottom line benefits of the do-gooding. And private companies, no matter how public spirited, are forced to compete with other private companies who are not so public spirited.
Free market capitalism has built-in limits in its ability to effect progressive change. If you want companies to work together as a more progressive force, then you need to impose laws on them that require them all to work on that way. You can't expect just to whip up some sort of spirit of liberal volunteerism and expect that to do the trick.
June 28, 2007 10:35 AM | Reply | Permalink
"Rachel served as a Senior Consultant to Booz Allen Hamilton, where she worked on information-sharing across the military, intelligence, and law enforcement communities, homeland security, and trade and security issues."
-- author's bio, above
"The project started in 2003 with a $2 million contract to help the new Department of Homeland Security quickly get an intelligence operation up and running.
"Over the next year, the cost of the no-bid arrangement with consultant Booz Allen Hamilton soared by millions of dollars per month, as the firm provided analysts, administrators and other contract employees to the department's Information Analysis and Infrastructure Protection offices.
"By December 2004, payments to Booz Allen had exceeded $30 million -- 15 times the contract's original value. When department lawyers examined the deal, they found it was "grossly beyond the scope" of the original contract, and they said the arrangement violated government procurement rules. The lawyers advised the department to immediately stop making payments through the contract and allow other companies to compete for the work.
"But the competition did not take place for more than a year. During that time, the payments to Booz Allen more than doubled again under a second no-bid arrangement, to $73 million, according to internal documents, e-mail and interviews.
"The arrangements with the McLean consulting firm, one of the nation's largest government contractors, illustrate a transformation in the way the federal government often gets its work done: by relying on private, sometimes costly consultants to fill staffing shortfalls in federal agencies . . ."
-- Washington Post, today
June 28, 2007 4:50 PM | Reply | Permalink
Booz Allen has a lot to answer for. Thanks for pointing it out, especially when one of its former employees talks about the good and bad that the company has wrought.
thosethingswesay.blogspot.com
June 28, 2007 6:32 PM | Reply | Permalink
The role of the foreign business community is ambiguous, to say the least. It is more likely to pressure for the protection of intellectual property than for individual liberties and rights, as the lobby of foreign investors to water down the recent Chinese labor reform indicates. Moreover, although Western consumers can play a role, I doubt that they represent "the most important lever of influence on Chinese economic behavior," as Daniel Drezner contends. The PlayFair 2008 campaign to pressure China to respect core labor standards during the 2008 Olympic Games shows that it is very difficult to pressure foreign capital to set an example in China.
In any case, both Rachel Kleinfeld and Daniel Drezner seem to neglect internal or endogenous sources of change in China, be it the risk of labor unrest or struggles between competing factions of the Chinese Communist Party. I'm not an expert on China (I work on French politics) but change is generally more accepted and legitimate if it is driven by local rather than foreign actors.
Marcos Ancelovici
http://mancelovici.wordpress.com/
July 1, 2007 9:23 AM | Reply | Permalink