Power Politics in the Contemporary World: Governance, Institutions, The State

and Transnational Corporations

Jacob Mahlangu

University of Pretoria, Department of Political Sciences

Abstract

We live in an era whereby policy-orientation, formulation and implementation is

influenced by a certain disproportionate network of actors. In such an era, there

exists a penetration of a country’s infant industries, local economy, cheap labour and

resources by global corporations due to globalisation (borderless nations), trade

liberalisation and finance. It has been widely noted that what separates the State

from Transnational Corporations is the factor of sovereignty. This has however not

limited the influence (either through lobbying or autonomous actions) that certain

actors have on the direction of political and economic policy meant to be the

government’s responsibility to its constituency. An ideal democratic country has

strict ethical principles guiding the conduct of its public officials/servants and

politicians on values such as: transparency, accountability, commitment,

effectiveness and efficiency on their public service delivery. Agenda-setting,

prioritising, redistributing and concentrating the allocation of resources loses clarity in

the world of governance. Socio-economic issues cannot be addressed properly as

there exists two functioning models of economic systems, further exacerbating

inequalities within societies, and a constraint on the capacity of the government to

tackle societal needs. Although a mandate is presented to the public prior to

elections, and there is a high number of an engaged constituency; realising the

mandate and its goal is further impeded by a confused governance and rule of law
due to notable multiple actors with power levers to have the state acting in their

favour. This essay seeks to problematize the extent of the influence of autonomous

independent actors towards the policy-orientation of a State.

Introduction

As its introduction, the paper explains and elaborates further on the concepts to be

focused upon, such as: Governance, Institutions, The State and Transnational

Corporations. The introduction also delves on how these concepts are related to

policy-making and implementation, and their relationship with everyday reality and

status quo.

Governance

Kaufmann et al. (1999) describes governance as institutions and traditions that

exercise authority in a country. They further elaborate three aspects of governance

that their own research is based on, such as: facilitating how the government of a

country is selected, replaced and monitored, secondly, examining the capacity of the

government to ensure that sound policies are effectively formulated and

implemented, and lastly the respect that the citizens of the state have and also the

state itself has for the institutions that govern social and economic interactions

among them (Kauffmann et al. 1999). In short, governance as an activity can be

concluded to be the monitoring, facilitation and overview of the actions of the

government by institutions with the authority to enforce law upon misconduct. Not

only do these institutions hold the power levers of calling the government to account,

but they also seek respect from the citizens of the country and are also responsible

for social and economic activities that take place within a particular State. The

institutions that foster governance may or may not be borne of the country in which
they govern. For example, the paper selected by the author to define ‘governance’

emanates from a global multilateral institution called the ‘World Bank’. Therefore, the

behaviour and actions of the state and particularly its government should ensure that

they are in line with an external epistemic community’s guidelines. Such guidelines

seek to reform and reorient the way that the State operates as it deems its own

prescriptions to be of superior value due to its size, branches, signatory

memberships, partnerships with superpower hegemony states, and also possessing

a model of modernity applicable and workable in today’s reality. Most developing

countries’ economic systems, managerialism and administrations follow ideological

and paradigmatic path-dependence in order to be considered relevant by external

stakeholders and institutions. The State is forever entrapped in balancing its own

domestic affairs based on the perception of its citizens and the perceptions of actors

influencing it. There is always mounting pressure which is disproportionate

presented to the State by differing stakeholders and actors which the State ultimately

and sometimes unwillingly succumbs to. This displays a discrepancy in democratic

governance, as the will of the few trumps the will of the many. It also portrays Power

politics, where technocrats, intellectuals and the wealthy have their desires granted,

while poverty, underdevelopment and efficient service delivery is met with challenges

and constraints.

Institutions

According to Hodgson (2006: 1) in the social sciences the use of the term

‘Institutions’ has become widespread. To get into practical matters of the term

without defining its disputed definitions is to act out in haste (Hodgson 2006: 1).

Hodgson (2006: 2) defines institutions as: systems of prevalent and established

social rules that deal with the structures of social interactions. Hodgson (2006)
acknowledges that institutions structure the way we interact socially, and that they

‘impose’ form and consistency on activities of humans so that they can order

expectation, action, and thought. However, utilising institutions as an epistemic

community, we are left to question the moral foundation, principles and doctrines that

institutions subscribe to when they impose their structures. This helps in determining

institutions’ underlying beliefs, norms, values, and cultures that the institutions

consider as their status quo, their origins and the agenda of the intentions that

institutions have to model society towards. It is further important to note that there

exist domestic and international institutions, their relationship should also be closely

examined, in terms of how they find common ground to continue functioning

simultaneously with their differences. According to Rodríguez-Pose (2013) it is very

important to distinguish ‘institutional arrangements’ and the ‘institutional environment’

as the consequences of such lead in assumptions of tailoring the goal of economic

development into a one-size-fits-all. International institutions rather focus more on

the rationalising individual, entrepreneurship and investments while domestic

institutions (in most African countries) focus more on a nanny-state that provides

welfare for its poor citizens on a budgetary basis instead of individual investments on

a top-down level type of hierarchy (Pike et al. 2006: Rodríguez-Pose 2014).

Although international institutions and domestic institutions differ in their approach,

developing countries have hybridized their functioning. While not alienating or

abandoning rational-theory as a global standard of good practice for applying

institutional rules that cater by maximising individual profits with a social externality

that benefits the public at large; their governments utilise domestic institutions

through a normative, interpretivist and subjective approach so that where rationality

falls short or produces negative spill-over effects to the public, its own domestic
institutions protects, secures, caters and takes care of the vulnerable. The theories

that guide institutional conduct and operations differ between international

institutions and domestic institutions, however, a question arises as to which

between the two is more essential and should be prioritised more than the other on

an ethical and moral basis, without causing a negative reaction from actors that the

State depends on to remain stable.

The State

O’leary & Dunleavy (1987: 1) describe the State in two ways of abstractions; the first

is the organisational definition followed by functional definitions. In terms of the

organisational definition, the State is thought of to be a set of institutions which are

governmental, and they seek to produce outcomes intended for them by the

government (O’leary & Dunleavy 1987: 1). O’leary & Dunleavy (1987: 1) describe

government as the process of controlling, regulating, guiding and making rules. The

five characteristics to define a State in an organisational manner are: The State is

sovereign and supreme, the State is a separate institution from society so as to

identify the public and private spheres, the State’s sovereignty allows its rule-making

to apply to everyone equally, the State’s personnel are recruited in a bureaucratic

manner, and lastly, the state has a capacity to extract revenue through taxation from

its subject population. This definition of the State raises a variety of questions of

course, such as: if the State is all encompassing and imposes itself on its subject

population, how can the individual protect him or herself from the State? How does

the population become subject to the State? Are they automatically subjected to the

State from simply dwelling in its territorial boundaries? O’leary and Dunleavy (1987:

1) cite Edelman (1964: 1) to elaborate that, the State threatens and at the same time

it benefits. In order for there to be a suitable social contract between the citizens of
the State and the State itself, the conception of the State needs to be revisited. In

liberal democracies, citizens take centre-stage while the State becomes the servant

of the public to ensure that their needs are met. When a State is left to act on its own

or go rogue, it is bound to affect its subject population negatively, as it possesses

authorities such as the police force, the courts, and the military at its discretion. This

means that trust alone is not enough between the citizenry and the State. Even the

channels of communications used to ensure transparency can be manipulated such

as news articles and the media in general that can supply the public with

propaganda information. This necessitates the facilitation, monitoring and examining

of the State’s actions towards its citizens by an independent body or commission,

either domestically (the office of the public protector) or internationally (through

Multilateral institutions). The problem lies not with outside intervention guiding the

behaviour and actions of the State but rather when such actors seek to dominate

domestic agenda-setting in political and economic policy-making to be in favour of

their member-states within their multilateral institutions. Such causes their

interventions to be perceived as subordination and subjugation of the

underdeveloped and poor countries to their will, fostering economic competition on

the grounds of knowledge, skills, training, innovation and technology; furthermore, it

perpetuates the perception of the global economy to be intended at the exploitation

of developing countries to maximise profits while domestic citizens with no technical-

know-how are left to the mercy of a Nanny-State. As much as the power levers of the

State should be met with due diligence, so are International Conventions, Rules and

Institutions. Checks and Balances should exist on all spheres while priority is given

to the total satisfaction, protection, security, stability of the society without any State
or Non-state actor having an influence which surpasses that of a collective society or

having a negative effect on it.

The second definition that O’Leary and Dunleavy (1987: 3) provide for a State, is the

functional definition, which states that: there are two forms that the State can take.

The first is that a State constitutes of a set of institutions carrying out particular

objectives, goals and purposes (O’Leary & Dunleavy 1987: 3-4). In such a case, any

goals that overlap and match with that of the State but are from a particular

organisation become part of the State automatically (O’leary & Dunleavy 1987: 3-4).

In this manner, Non-Governmental Organisations, Civil Society, Activism and

Interest groups campaigning for different causes such as health, education, equality,

human rights, environmental protection, global cooperation, inclusiveness or any

other goal which is in line with a State’s national interest, objectives and legislation,

automatically also become part of the State’s responsibility to fulfil and to ensure

their realisation. This second definition better clarifies how the State can deal with

the issue of actors that seek to influence its agenda during policy-making, as there is

a parallel continuity to strive for the same goals intended for the betterment of the

society. Such an alignment is in a positive direction, as actors are treated in the

same manner and their main objectives are based on realising values that are

essential for the public at large and also for strengthening liberal democracy. There

can be no tyranny of the majority as Zacharia Fareed described in his article on

liberal democracies, neither can there be the will of the few outweighing the will of

the many. If the goals of the public, private and non-state actors are synchronised to

seek the same end then cooperation can be established, inequality can be reduced,

socio-economic issues can be resolved and proper economic development can be

obtained. The problem that the contemporary world faces is the constant conflict and
economic competition instead of collaboration. This paper seeks to find a solution to

obtain a balanced form of governance which is not based on power, where the

Agenda-setting is not located from a particular source or institution, where citizens

and their well-being take centre stage and where policy-making and orientation is not

spearheaded towards a particular direction that serves a particular class, a particular

institution, even an interest group, organisation or any Transnational Corporation.

Transnational Corporations

According to Jenkins (1987) transnational corporations have been portrayed as the

growth engine for developing countries with the capability to eradicate international

economic inequality so as not to leave it as a major obstacle to development.

However, transnational corporations are not seen in this light of only influencing

productivity and industrialisation in a country but also negatively, in terms of: being a

major cause for underdevelopment through huge amounts of surplus drained from

the country where their operations have expanded to, to their home capitalist

countries (Jenkins 1987: 1). According to Stephens (2019) there has always been

human right problems presented by Transnational Corporations. There is also a

challenge when it comes to transnational corporations being regulated by the State

and domestic legal systems (Stephens 2019). Such regulation is crucial to safeguard

human rights so as to ensure that transnational corporations do not exploit domestic

employees of the country of their expanded operations, neither engage in abusive

behaviour (Stephens 2019). The state in this manner, should act as protection and

should also act for the interest of its constituency which put the government (agent of

the State) into power. There is of course a blurred line between the public sphere

and the private sphere when it comes to regulation. For instance, as aforementioned,

the State is responsible in ensuring that everyone is treated equally, meaning that as
it privileges the rights of the poor, it also should preserve the rights of the rich. This is

why there is not only corporate tax, but income tax and also Value Added Tax in the

State’s attempt to generate monetary revenue from the public. This should however

not blindside the State to assume that through such treatment, the interactions

between the lower working class and the elite monopolist capitalist class are to be on

equal ground and that their behaviour and actions towards each other would be fair.

According to Kozul-Wright (2000: 135) the rise of Transnational Corporations has

turned their role to be based on transforming the global economy by new

technologies and as Jenkins (1987) stated, the relaxation of control and regulation

by the State. However, Kozul-Wright (2000: 135) further elaborates on this latter

point to make it clear that the relaxation of their regulation means that they gain

autonomy and freedom from their natural-setting. They are also profit-seeking, and

are focused on different strategies of marketing and production (Kozul-Wright 2000:

135). This of course means that their existence and operations, regardless of

automation, thrive on the hard-work of the citizens they employ. The State finds itself

in a dilemma where it is faced with conflicting interests whereas those with political

power cannot invest their attention to their citizens due to the obligations imposed by

Transnational Corporations. Transnational Corporations usually operate in obscured

lines of governance, and manipulate political leaders through funding their projects

and campaigns. To protect its citizens from such, developing countries like South

Africa made laws, acts and by-laws such as ‘affirmative action’ also known as

‘Employment equity’, ‘The Basic Condition for Employment Act’, ‘Labour Relations

Act’ and the ‘Commission for Conciliation, Mediation and Arbitration’. However, with

an uneducated citizenry, these measures of control and institutions do not produce a

positive effect as they are rarely utilised. Furthermore, when we examine

inequalities, social justice suggests that the well-off is more likely to win a case than

a worse-off due to expensive representation and also the zone of influence that the

individual has.

After having examined these concepts and their relationship with each other in an

attempt to stress the point that there exists power politics in the contemporary world,

the essay seeks to touch on how these actors influence Agenda-Setting in Policy,

how they act as epistemic communities and how they deal with the challenge of

public participation and lastly the author shall conclude with remarks derived from

the information collected.

How Institutions Influence Agenda-setting in Policy-making

Institutions such as universities and other academic forums within a country usually

seek to widen their zone of power and influence through bending the will of the State

and Government in their favour. Due to research, and evidence-based practise, such

institutions utilise the fact that they are more equipped and knowledgeable than the

fellow citizens of the State and the elected political leaders and appointed public

officials at large. Such institutions claim to be capable of making sound decisions

and value their opinions as intellectuals to be superior, further undermining the

parliamentary, and participatory process of devising a policy. Such institutions turn a

blind eye to the power they exercise upon the State. Trostle et al. (1999: 1-2)

mentions that researchers in universities signify their authority over the policy making

process by demonstrating how their opinions are based on a ‘considered decision’,

‘rational policy’, and ‘informed choice’. The government does look to the institutions

for more information about a particular subject matter when devising a policy to

better understand it, however, Trostle et al. (1999: 1-2) mentions that a bridge should
be built when institutions and researchers seek to spearhead the Agenda-setting in a

certain policy. This could be because the knowledge that these institutions could

provide would not be trusted as reliable, and that such knowledge could be intended

at a certain direction that benefits the institution in question. Therefore, although

institutions could research on a certain subject matter and deliberate on it with policy

makers, offering solutions where applicable, the final decision as to which step or

direction the policy goes towards should be solely made by the policy makers in

question.

Other institutions include the international or multilateral institutions such as the

International Monetary Fund, the World Bank, and the World Trade Organisation. It

is often argued that when a developing country is a member to these institutions, it

should consider them as its epistemic communities. This is due to neo-colonial and

neo-imperial actions that take place on a global stage. These institutions utilise what

they call ‘conditionality development policy lending’, in which case they lend money

to developing countries which is accompanied by policy prescriptions, preconditions

and ideas of reform (The World Bank 2007: 4). These preconditions are mostly

oriented at generating income which will be directed at repaying the loan instead of

benefitting the country in question. To support the previous statement Shah (2017: 7)

does indeed confirm that the first priority of ‘conditionality’ is to minimise the risk for

the loan to be repaid. They are mostly not in line with the intentions, objectives and

goals of the government of that certain country. Where ever these goals are in line

such as combating poverty, promoting growth, good governance, efficiency and

equity; they come are presented with a specific strategy and ideology chosen by

these institutions themselves, regardless of how the country in question is structured

(Shah 2017: 7). Therefore, these institutions apply a one-size-fits-all. In fact, the
government sometimes has to first accomplish these conditions first before even

receiving the loan. According to The World Bank (2007) loans that are policy-based

only become available to the borrower when loan conditions, institutional actions, or

critical policy actions are accomplished. The end result is that the sovereignty of the

State is undermined, the balance of power in the international scale favours the

already developed countries, domestic policies of recipient countries do not form

policies according to societal needs but rather according to the instructions received

from these institutions, and last but not least, the social contract between the citizens

and the government is weakened.

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