Corporate Power in Global Governance

A neo-Gramscian perspective on Corporate Social Responsibility

Delphine Rabet
PhD candidate, School of Social and Political Sciences, Faculty of Arts, University of Sydney

delphine.rabet@usyd.edu.au

Abstract: This paper looks at global corporate actors and their quest for power. It will briefly present Multinational Corporations as global political actors and emphasize the importance of Foreign Direct Investment (FDI) in the making of specific rules of global governance, which protect corporate interests. Building on a Gramscian definition of hegemony, the paper will then argue that the CSR phenomenon constitutes an attempt to complete a corporate historical bloc, in which corporate actors consolidate their power through gaining consent from various other global actors and society at large. Such an approach should highlight power mechanisms otherwise often unexplored.

Key words: Corporate Social Responsibility, MNCs, FDI, global governance, historical bloc

Corporate Power in Global Governance

A Neo-Gramscian perspective on corporate social responsibility Introduction
If nation-states have traditionally been the object of study for political scientists, large economic entities, operating across countries, should as well be understood politically. This paper will focus on these global corporate actors and their quest for power. In the first half, it will briefly look at MNCs as political actors in global governance and argue that the profit-motive comes second to the will to survive and expand for these large economic entities. The importance of Foreign Direct Investment (FDI) in the making of specific rules of global governance will then illustrate further such a claim. In a second part, building on Antonio Gramscis thesis about the elements required for the constitution of an historical bloc, the paper will highlight the importance of the rhetoric of Corporate Social Responsibility (CSR), defined broadly as a hegemonic system necessary for corporations to maximize their chance of survival. While the term Global Governance has become an overused motto in studies of political, economic or social issues arising at the world level, definition is far from being agreed upon. Global governance has tended to be primarily conceptualized through a normative lens and has often been used to signify a range of potential organizing principles concerning global production. However, it is also possible to look at global governance as the existing structure and forces producing a particular world order through processes of credit, production, and distribution. Production refers here to the production of material goods, but also to the production of monetary wealth and to the production of ideas, encompassing the potential political, social, cultural and environmental dimensions of global governance. It is through this definition that the existence, purpose and functioning of large productive entities, multinational corporations (MNCs), will be conceptualized here. Such an approach should highlight power mechanisms otherwise often unexplored.

Political dimension of MNCs in global governance

It is only recently that the conceptualization of corporations as political actors has become a potential field of research in the discipline of political sciences. If scholarly work on the political dimension of the corporation has been available in the past (Berle and Means 1967, Mason 1961, Veblen 1904), the business corporation seemed to have then withdrawn again into the amorphous, supposedly apolitical realm of the market, itself narrowly conceived as a sphere of private agreement, rational profit seeking and economic efficiency (Zumansen 2009). Still, this retreat should not preclude a contemporaneous critical reading of the global firm through a political lens. As Earl Latham claimed some fifty years ago: The great corporations are political systems in which their market, social, and political influence go far beyond their functional efficiency in the economy.(Latham 1961, 218) At the global level, markets display oligopolistic tendencies (Hymer 1976, Milward 2003). This characteristic of modern capitalism is the result of various and distinct economic, political and legal processes which have been taking place, within and amongst nations, throughout the last five or six centuries, and have greatly accelerated in the late 20th century. At the same time, concerning the growth of corporations, instead of an organic evolution, the mergers and acquisitions explosion of the 1990s are shaping the fundamental features of the global business structure in this beginning of 21st century (Nolan et al. 2002, 94). This situation requires a better conceptualization than the traditional accounts offered by mainstream economic theories. The neo-classical concept of the market neglects social relations and structure, and underplays power and conflict; however, it has even influenced the historical analysis of earlier market societies (Lie 1993, 275). It is also inadequate to explain the rise of MNCs. A neglect or misrepresentation of the 3

fundamental characteristics and values present within institutions such as markets result in a wrong analysis of actors such as corporations. The distributive process is not characterized by the maximal efficiency of markets governed by the logics of the invisible hand, but by needs and power (Lenski 1966). It is in this light that the corporation has to be defined as a market actor in quest of power. Across most global business activities, leading corporations increasingly compete with the identified firms that have occupied the commanding heights in a wide range of business activities (Nolan et al. 2002, 102). Oligopolistic markets mean that certain goods, many essential to human life, are produced and distributed by a small number of large economic entities. These organizations hold a tremendous amount of power over the way these goods or services are produced, priced, and exchanged. Thus MNCs appear to have a strong influence in the rule-making processes happening at the global level (Korten 1995). The constitution of global markets as institution, and the nationality of the few large corporations operating on these markets, reflects a certain continuity in the distribution of power amongst state actors at a particular time in history. Global markets have grown continuously (if irregularly) but the way they are structured have their roots in history. In the 1990s, there occurred an unprecedented concentration of business power in large corporations with headquarters in high-income countries (Nolan et al. 2002, 1). This happened due to the pre-existing structures of global institutions, which materialized in global markets dominated by the economic interests of leading states, mainly countries from Western Europe, the United States and Japan. If MNCs are connected to specific states, a brief mention of what is at stake at the sub-firm level is still necessary. In term of control of the corporation, it is possible to see that the realization of profits, transformed in dividends for shareholders, becomes a means to ensure the expansion and therefore the survival of the firm, which is the ultimate end. Through the realization of profits, the firm actually attempts to gain power and protect its raison dtre. Thus, in the global realm, without denying its economic purpose, the corporation becomes primarily a power-maximizer and a political analysis of the corporation is even more indispensable. The corporate sector itself in the early 1970s has been advocating the adoption of a more comprehensive conception of profit as it has been outlined in a statement by the Committee on Economic Development, a group composed of major American corporate leaders (1971, 22 cited in Barkenov and Rich 1972, 752 [emphasis added]): The large corporation is developing long-term goals such as survival, growth, and increasing respect and acceptance by the public. Current profitability, once regarded as the dominant if not exclusive objective, is now often seen more as a vital means and powerful motivating force for achieving broader ends, rather than as an end in itself. Thus, modern managers are prepared to trade off short-run profits to achieve qualitative improvements in the institution which can be expected to contribute to the long-run profitable growth of the corporation. Such a statement tends to show that, while some shareholders may be interested in maximizing their return on investment in the short term, corporate leaders may have a distinctive view about the role of the firm and they emphasize the importance of survival and growth. Thus linked to survival, it is the quest for power that motivates corporate actors. If economic entities shape institutions to remain powerful in the long run, their role is not only economic but definitely political. The dominant position of leading states in global governance, along with their connection to their national champions, is also relevant to confirm the power-seeking dimension of global corporate actors. As stated earlier, historically, trade has been used to advance a countrys interests. There are strategic reasons for a state to support large domestic corporations in their foreign endeavours in particular industries, and these reasons do not necessarily have economic justifications. The relationship between high-income states and MNCs is of a complex nature but their interests conflate at times.

It can be advantageous for a state to indirectly have a strong presence in key economic sectors of another state by supporting particular firms in order to maintain an asymmetrical power relation (Hoogvelt 1997). In this context, the profit motive or an economic rationale is insufficient to explain the behaviour of a given MNC operating on foreign territory. Corporations are political actors because they carry with them the values and interests of their home base within the structure of global governance. If they are formally granted with an independent legal personality, they also have a more subjective identity, itself strongly related to the identity of their home base and the interests and institutions which prevail in this state (Hirst and Thompson 1996). MNCs, like any political entity, are firstly motivated by gaining and exerting enough power to secure their existence and domination. Stephen Hymer (1976, 57) stated prophetically a few decades ago that in a near future, the real interest of the MNC would be to foreclose competition, to restrict the choices offered, and to ensure the survival of their own organization. A change in the basic assumptions which define corporations existence is required from a profit to power- maximization rationale as this would open more possibilities for political analysis. A mature political conception of the corporation must view it as an organization or a system for the accumulation, control and administration of power. Any MNC is a body politics which exhibits describable characteristics common to all body politics (Latham 1961, 220). The profit motive is wrongly understood as paramount for the corporation; it is an essential but not an exclusive feature of such an organization. If the political dimension of the MNC is to be recognised in global governance, there is a need to analyse the manifestations of its power. When corporations invest and operate in a foreign country, which differs institutionally from the firms home base, a window then opens for the researcher to understand and confirm this political activity. Foreign Direct Investment is an illustration of the quest for power of the corporation. The next part will therefore argue that FDI is about progressively gaining power at the global level more than increasing profits per se. It is conceived here as the coercive aspect of the Gramscian approach to power which will be developed subsequently.

FDI and corporate power

What happened in the economic sphere at the global level has consequences on the political position of state or corporate actors in the international system. The way that corporations act and behave on foreign grounds offers special insights about their interests, motivations and end goals. Through FDI, foreign corporations are capable of exercising their coercive capacity over developing states. In order to highlight the importance of FDI in institutionalizing forms of corporate authority, this section will develop briefly the ways in which the political impact of FDI consolidates the power of MNCs in global governance. The large majority of FDI flows occur amongst industrialized countries (UNCTAD 2007). However, the end of the Cold War, the needs to access the natural resources available in these countries and the various waves of merger and acquisition have largely contributed to drastically increase inward FDI in developing countries (UNCTAD 2007). Considering the relatively small size of most developing countries economies, FDI in these states often represents an essential share of their national economic activity. By 1991, private capital investment exceeded official development assistance as the primary source of financial transfers from richer to poorer countries (World Bank 2001). A decade later, private flows of capital accounted for 87 percent of the nearly US$296 billion transferred from richer to poorer countries whereas official development assistance comprised less than 13 percent (Rondinelli 2002, 394). This means that although developed countries are still the biggest receivers of FDI, developing countries increasingly grew reliant on such investment. Therefore it matters greatly what rules pertain for FDI. Hence, the rules themselves are a key battleground and the way they are established reflect, to an extent, the dynamic of the world order. 5

FDI has taken various forms through history; its modern version is, at the same time, a reflection of past practices at the global level and also displays particularities proper to the present era. For Antonio Gramsci, every historical phenomenon had to be studied within the context of its own peculiar characteristics rather than conflated with other forms of historical phenomena (Gramsci 1977, 330-1). Yet, Gramsci also maintained that similar situations would almost always arise in every historical development that might lead to the possibility of developing some general principles of political science (Gramsci 1971, 108-109, 201). Arguably, the Western colonial era that started in the 16th century in the Americas planted the seeds of the mechanisms of modern FDI. Economic entities were formed to operate on these foreign territories, often through the direct ownership by the colons of the modes of production, of the land and of the people. These economic organizations were however subjugated to the authority of Europeans kingdoms where precious minerals were repatriated. In the post-colonial era, similarly to flows of FDI, trade between developed and developing countries appear minor quantitatively when compared with trade among developed countries (UNCTAD 2007). Still, in proportion, it remains a very important share of the economy for developing states and it is essential for these countries to get access to global markets through establishing trade agreements. In the last 20 years, multilateral and bilateral trade agreements, protecting mostly corporate interests, have become the norm in global governance (Milward 2003, 21). These multilateral or bilateral trade agreements have progressively included clauses related to foreign direct investment, a characteristic absent from most bilateral agreements between developed states (Van Harten 2005, 614). To get access to developed countries markets, developing countries came to accept to grant certain legal powers, which go beyond their domestic law and considerably restrain their sovereignty, to foreign firms operating on their territory. Through the spreading of trade agreements to all corners of the planet, developed states have also sought to protect the interests of large firms in the international system by ensuring that their investments could not be threatened in any way (Van Harten 2005,612). In short, modern FDI has taken shape through global trade and developed states have used their political leverage to further private economic and financial interests. Thus, the international legal framework confirms the coercive legal capacity that MNCs have over developing states. The dispute settlement and arbitration mechanisms, found in most investmentrelated clause of trade agreements, have increased corporate authority over developing states. A firm is entitled to take legal action against a nation-state outside of any national jurisdiction. The widespread preference for private arbitration over adjudication in national courts (Cutler 2001, 144) reflects the expansion of private authority as a method of regulation at the global level (Cutler et al. 1999). International investment law generally provides a very high level of protection for international investors along with exceptionally powerful means for investors to enforce that protection through the previously mentioned investor-state arbitration tribunals (Van Harten 2005, 603). Although these treaties represent reciprocal set of agreements between states, the fact that 97% of the largest MNCs in the world originate from developed countries (UNCTAD 2007) highlights the asymmetry of the MNCs / developing states relationship. In addition to Trade agreements, the widespread proliferation of investment treaties during the 1990s marks the emergence of the international system of investor protection. Since the 1990s, there has been an explosion of bilateral investment treaties which numbered more than 2,200 in 2005 (Van Harten 2005, 608). FDI then becomes, through such a supranational binding mechanism an opportunity for MNCs to legally coerce states. As noted above, the national identity of these MNCs leaves little doubt about the protection that leading states provide to their largest economic entities through international investment law. From a power perspective, it represents a particularly successful way for corporations to ensure their survival independently of realizing profits or performing distributive functions. Their legal capacity grants them legitimacy outside of the economic sphere.

Constitution of a corporate historical bloc

A power analysis of corporate behavior in global governance requires us to develop further the ways in which corporate authority is exercised. This paper has argued so far that MNCs are primarily power-seekers and that, ontologically, to consider the quest for profits as the exclusive firms rationale is a misleading conception. Power in itself, necessary to dominate and expand, is what ultimately motivates global economic entities to act. The development of an international legal framework to protect corporate interests over states sovereignty has moved the firm into the global political sphere and supports this claim. Still, to consolidate their power, MNCS need to develop the ideological justification for their political existence. The corporate social responsibility phenomenon appears actually as an almost natural element of the ideological dimension of corporate discourse as the first section of this next part will develop. A neoGramscian approach to hegemony will then be transposed to the manifestations of the CSR phenomenon. Finally, the discussion will conclude that global governance represents the advent of a corporate historical bloc, in which an aggregate of leading corporate actors frame the current world order to maintain the present status quo. There is no benevolence in CSR but the expression of the corporate quest for power.

Ideological dimension of the CSR discourse

Gramsci extended Marxist thinking on ideology in that he gave to it a more preeminent role in politics and history than previously conceived. Ideology is one of the most persistent, omnipresent and controversial concepts of modern political thought. This reflects the absence of any other term to link political theory and human behavior in a more satisfactory way (Mullins 1972, 498). Hannah Arendt beautifully defined ideology as the right to retreat into our own worlds of meaning, and demand only that each of us remain consistent within his own private terminology (Arendt 1963, 96). Understanding global governance, however, requires a definition that focuses more explicitly on global actors than on individuals behavior. This paper argues that CSR contributes to the construction of an ideological system which consolidates the power of particular actors in the international realm. Thus let us start by locating the CSR phenomenon in the context of global governance, before highlighting its ideological dimension and qualifying it as a tool for global corporate actors to develop their cultural and intellectual leadership in a Gramscian sense. CSR is a multi-faceted phenomenon, but one of its essential characteristics is the advocacy of voluntary codes of conduct, norms, conventions, standards and rules of behavior by corporations and other actors which go beyond, or complement existing public legislations or customary business behaviors (Clarke 2007; Moon 2002). It is based on the idea that business units, such as corporations, voluntarily engage in activities related to issues of sustainability, environmental protection, social change, human rights, global citizenship, and many other areas of great importance for humanity and its ecosystem. All global firms communicate on, and implement CSR programs (Clarke 2007). Still, a recurrent criticism of the CSR phenomenon is that it has no reality beyond being talked of. However, the large resources that MNCs dedicate to CSR activities, either discursively or materially, contradicts such a claim (Banerjee 2007, Crane et al. 2008, Moon 2002).Moreover, Gramsci reminds us that popular beliefs, or beliefs of the same kind as popular beliefs such as MNCs appropriately qualified to address specific social issues , have the validity of material forces (2005, 158). The omnipresence of CSR, in its various forms, (Shergolt 2009) is a sign that it is progressively becoming such a kind of popular belief. This normative approach to corporate action, which grants large private economic entities with a range of responsibilities involving but going beyond their duties toward workers, customers, investors or suppliers, is not a new phenomenon. The history of corporate social responsibility as an ideal, concept, ideology, or illusion cannot be detached from the larger political economy of capitalist development 7

(Zumbansen 2008, 1). Philanthropic actions have been observed throughout corporate history, and more specifically, originating in the United States at the turn of the 20th century, the notion of business social responsibility dominates American social reform efforts in the 1920 (Mitchell 1989, 140). However, it is really in the last 15 years that it seems to have definitely become part of the global corporate landscape (Clarke 2007; Moon 2002). The novelty of the CSR phenomenon is that is has moved from a peripheral and controversial function of the firm (Friedmam 1970,32-3) toward a more central and widely accepted one by businesses themselves (Holmes and Watts 2000). The prolific literature on CSR though, is unable to empirically demonstrate any link between the socially responsible behaviors of certain corporations and any increase in profitability (Vogel 2005). On an anecdotal touch, it is interesting to remember that some of the most profitable industries, such as tobacco, alcohol, pornography, armament or gambling, are based on principles diametrically opposite to CSR. On the short-term, CSR contravenes the interests of shareholders by arbitrarily misusing their investments and precludes the maximization of their return on investment. In the longterm, it also potentially damages the firm, economically speaking, as if its competitors do not engage in similar practices, the firm will have to deal with what will have become higher structural costs of functioning. Interestingly, even despite the current economic crisis, most leading corporations have maintained their CSR programs (Shergolt 2009). In a pure economic sense, this strategy appears nonsensical. However, if one understands the corporation as an entity fighting for survival and expansion, and attempting to establish the maximal conditions for this survival, then the CSR phenomenon become intelligible. The weakness of the economic argument for CSR suggests actually its political character. The importance of ideology for politics comes from its ability to communicate cognitions, evaluations, ideals, and purposes among members of a group (Mullins 1972, 508). Through this process, ideology ensures that the meaning of political action becomes comprehensible and coherent to oneself and others. More practically, opinion is shaped, and legitimacy is provided by ideology (Mitchell 1989, 7). A political system is inexorably informed by a particular ideology. Drawing on Connollys definition of ideology (2006, 2), CSR, broadly defined as any commitment by corporate actors to address social and environmental issues, is becoming an integrated set of beliefs about the global social and political environment. CSR plays a consolidating role for corporate power through confirming the imperatives to protect the wealth generation processes in order to allow corporations to be socially responsible. It explains which desired goals can be promoted by deciding to tackle particular social and environmental problems. It also informs us about which agencies and channels can most effectively be employed to forward these goals in the given setting through, for instance, building up specific partnerships with governmental but also non-governmental organizations (Shenkar and Reuer 2005). Finally, it even plans what the required actions will cost various groups in the short and long run in terms of status, power, happiness, wealth, and so on by asking individuals to modify their consumption patterns, developing countries to grow economically through different means, or governments to modify fiscal and accounting policies to accommodate CSR endeavors. CSR should be understood as the political and ideological voice of corporate power. In establishing the importance of ideology as a cultural phenomenon, Gramsci has provided us with some insights regarding its development through explaining that it is not merely a system of beliefs that reflects specific class interests (Jackson Lears 1985, 570) but more a sort of spontaneous philosophy proper to everybody (Gramsci 1971, 323) which develops overtime. In his words: This philosophy is contained in: 1. Language itself, which is a totality of determined notions and concepts and not just of words grammatically devoid of content; 2. Common sense and good sense; 3. Popular religion and, therefore, also in the entire system of beliefs, superstitions, opinions, ways of seeing things and of acting, which are collectively bundled together under the name of folklore.(Gramsci 1971, 323)

CSR presents elements of this spontaneous philosophy adopted by global corporate actors. In terms of language, CSR refers extensively to concepts (re)defined in specific ways such as sustainability, environment, corporate citizenship, development, but also the concepts of enlightened self-interest, social capital or triple bottom line. This language shapes the way corporations represent themselves reflectively and to society. CSR is also built on common sense or conventional wisdom understood, for instance, as the inherently positive economic and social values associated with consumerism and good sense or empirical knowledge corporate reports and/or advertisements use empirical evidence to communicate on the material effect of CSR. Finally, folklore, if one accepts to stretch its meaning a little, would encompass the reliance of the population and of global actors to organize global governance through global meetings between states officials, corporate representatives, and civil society members. Folklore can also refer to publicized corporate actions, such as advertising campaigns and any visible commitments focusing on CSR. The progressive development of CSR as a potentially dominant ideology grants MNCs and the individuals within them, with a position of cultural and intellectual leadership in global governance. Developing states are invited to believe that their interests coincide with the interests of large private foreign entities when the latter claim that they will follow social and environmental standards higher than existing norms through their CSR policies without the need to enact any particular regulations. Through their leadership, MNCs enhance their ability to persuade or to create belief (Galbraith 1984, 4). Herein resides the problem of the role of leadership and ideology, such as what CSR represents: a system of accepted beliefs, often needed to orient political activity, tends to be organized in ways which protect the higher level commitments of its supporters (Connolly 2006, 3). Global corporate actors are therefore most protected through the ideological dimension of CSR.

Gramscis approach to hegemony

Defining CSR as the ideological tool of global corporate actors to maximize their power over other actors in global governance, without any use of force, allows us to locate such a phenomenon in the construction of a neo-gramscian hegemonic order. Gramsci (1971, 12) defines hegemony as: the spontaneous consent given by the great masses of the population to the general direction imposed on social life by the dominant fundamental group; this consent is historically caused by the prestige (and consequence confidence) which the dominant group enjoys because of its position and function in the world of production. In this context, the ideological dimension of CSR becomes then the source of the consent necessary for the establishment of a hegemonic corporate order. Gramscis concept of hegemony has to be understood in contrast to the concept of domination; a notion that has been developed earlier and illustrated through the mechanisms of FDI with regards to the relational and structural power of MNCs over developing countries. However, he stresses that only weak political actors need to rely very often on the threat or use of force of an economic kind in this context implied in their domination (Adamson 1980, 170). Strong political actors rule mostly through hegemony, understood as consent of subaltern groups. Thus hegemony can be thought of as the additional power of a dominant group through its capacity to lead society in a direction that not only serves the dominant groups interests but is also perceived by subordinate groups as serving a more general interest (Arrighi 2005, 1932). The appropriation by MNCs of discourses on sustainability, environmental concerns, social issues as encompassed by the CSR ideology, reflects in reality such an attempt to protect corporate interests by defining in a particular way the meaning of these concepts. These (re)definitions mostly support the pursuit of the corporate quest for power in order to ensure the survival of large international firms. A strict definition of sustainable processes of production, ensuring the full replenishing of any natural 9

resources used, and the internalization of all externalities would require dismantling all corporate actors. It is therefore important for MNCs to have the authority to give meaning to these concepts on their terms. CSR achieves this goal. At the same time, CSR leads developing states and society at large, to accept the authority of corporate actors as being in their interest as well. If MNCs, through CSR, can present their global rules as credibly benefiting not just themselves, but other actors in global governance, they do not need to exercise their coercive power. It is when this credibility or legitimacy is lacking that hegemony falls back into mere domination or dominance without hegemony.(Guha 1992, 231-2)

CSR, hegemony and historical bloc

The global financial and economic regime combined with the advent of the CSR phenomenon is creating an unprecedented moment in world history. In other words, when a group such as MNCs develops its own particular world view which possesses both cultural and economic solidarity in a specific historical context, then, this moment constitutes an historical bloc (Jackson Lears 1985, 571). A broader definition would be that within an historical bloc, coercion is balanced by consensus, structure by superstructure and materialism by idealism (Howson and Smith 2008, 9). Let us now consider some of the key elements of such a concept, mainly the role of organic intellectuals which ensure its development, and the horizontal and vertical linkages that support its constitution and hegemonic nature. As a new class develops within the world of economic production, it tends to create organically, one or more strata of intellectuals which give its homogeneity and an awareness of its own function not only in the economic but also in the social and political fields (Gramsci 1971, 5). These are Gramscis organic intellectuals and his definition is much broader than what is usually understood when one thinks of intellectuals. Normatively, this group ought to lead society to a reflexive understanding of its existence and to offer directions to emancipate itself. However, such a concept may also be used in a more pragmatic sense to understand the present moment. In global governance, these organic intellectuals are the specialists in management and industrial organization, the Public Relations staff, the economists, the lawyers, the scientists, sometimes the human right and environmental activists, but also anyone associated with what is sometimes called the culture industry. Their function is to serve as a transmitter of ideas within civil society and between government and civil society (Adamson 1980, 143). Their work ensures the conformity between the economic structure and the dominant ideology. The CSR discourse is becoming a pivotal element of the formation of these organic intellectuals and of their participation to reproducing such a discourse. The dissemination of information about CSR values, potentiality, measurement, reach, and implementation, occur through the production of a specific form of knowledge by these organic intellectuals. This development of the CSR discourse actually calls for a Foucauldian analysis of the nexus power/knowledge and its disciplinary capacity over social groups (Foucault 1976). When organic intellectuals (re)define, through a CSR prism, social and environmental concerns, diagnostics and remedies for particular issues, it creates particular power ramifications which participate to the creation of an historical bloc. In order to complete a corporate historical bloc, corporate global actors need the voluntary support of the other actors with which their existence is connected. These alliances may vary and happen at different levels but they are indispensable. Although both dimensions are themselves interrelated, and their distinction mostly an analytical devise, it is possible to identify horizontal and vertical linkages in the development of a corporate historical bloc (Adamson 1980, 177). Global corporate actors attach themselves to other political groups as joint-power-seeker, potential power-shapers, and the social forces behind new cultural expressions (Adamson 1980, 177). Governments of leading states in global governance constitute such a group. The redaction of the Guidelines for Multinational Enterprises in Developing Countries by the OECD in 1976 has been a 10

keystone of the CSR phenomenon. OECD countries created such a document upon requests from MNCs to favor a voluntary agreement about socially responsible corporate behavior instead of a legally binding convention as required by developing countries at the time (Rowe 2005). More recently, International Institutions and Non-Governmental Organizations (NGOs), engaged in environmental and social activities, have also fostered specific partnerships which qualify as CSRoriented endeavors. The United Nations Global Compact is a particularly illustrative example of such an attempt. It is a platform constituted by business actors, NGOs, Academics and States, within the UN, which seeks to legitimize market-led, voluntary forms of CSR as the only viable alternative to address most efficiently certain social and environmental issues (Soederberg 2007). It promotes the view that common sense dictates states and societies to enter a compromise with MNCs. The vertical linkage within an historical bloc relates to the social and cultural mechanisms mentioned earlier, which ensure that subaltern groups will see in a particular political and economic order, an organizational structure which serves their interests. In the corporate historical bloc, the widespread and unchallenged acceptance of notions such as industrialization, urbanization and aggregate economic growth to define development and progress, integrated implicitly in CSR, play such a role. On a more practical level, the values promoted come, for instance, from the corporations advertising strategies which disseminate consumerist values. Specific but always increased consumption enables individuals to provide the corporation with the necessary resources to do good socially and environmentally. Norms such as the scientific management of work seem also unchallengeable and widely accepted or at least tolerated by workers. An analogy with the values and beliefs associated with the Gross Domestic Product and international division of labor can be drawn in terms of the acceptance by developing countries of such concepts indistinctively. Perceptions and beliefs resonate with the dogma of economic growth and the CSR movement which both call to have faith in the good-will of the foreign corporation.

Conclusion
This paper has considered the importance of large economic entities as subject of analysis in global governance. A political reading of the behavior of MNCs in the international sphere is necessary in order to grasp a better understanding of the dynamics between state and non-states actors in establishing global rules. The development of international investment law and the ideological strength of the CSR movement are some of the ways in which MNCs establish and maintain their power by framing the functioning mechanisms of global governance. Granting firms with the ability to fix social and environmental issues implies that subaltern groups such as developing countries need to develop preferences and interests compatible with MNCs endeavors and goals. This emerging hegemonic culture, nevertheless, is not merely an ideological mystification but happens to serve the interests of ruling groups at the expense of subordinate ones. Moreover, what is confusing about the CSR phenomenon, which ought to be a global and apparently anti-statist project is that its primary vehicles are Northern states, and international economic institutions dominated by Northern governments (Rowe 2005, 17). Such a global structure and dynamic forces create favorable conditions for the institutionalization of corporate power in global governance. No other period in human history has witnessed such a concentration of economic but also social and political power in the hands of a limited numbers of large economic entities. In sum, the corporate hegemonic order, through increasingly potent vertical and horizontal linkages, has the potential to establish itself as a viable historical bloc exercising hegemonic influence in large sections of global society.

11

Bibliography
Adamson, W.L. 1980. Hegemony and Revolution, A Study of Antonio Gramscis Political and Cultural Theory. Berkeley: University of California Press Arendt, H. 1963. Between Past and Future: Six Exercises of Political Thoughts. Cleveland: Meridian Arrighi, G. 2005. Hegemony Unravelling. New Left Review 32:23-80 Barnekov, T. K. and D. Rich. 1972. The Corporation as a Social Welfare Institution. American Behavioral Scientist, 15:749-764 Berle, A. A. and G. C. Means. 1967. The Modern Corporation and Private Property. New York: Harcourt Brace Clarke, T. 2007. International Corporate Governance: A Comparative Approach. New York: Routledge Connolly, W. E. 2006. Political Science and Ideology. New York: Aldine Transaction Crane, A., A. McWilliams, D. Matten, J. Moon and D. Siegel, eds. 2008. The Oxford Handbook of CSR. Oxford: Oxford University Press Cutler, C., V. Haufler and T. Porter, eds. 1999. Private Authority and International Affairs, Albany: State University of New York Press Cutler, C. 2001. Critical Reflections on the Westphalian Assumptions of International Law and Organization: a Crisis of Legitimacy. Review of International Studies 27:133150 Foucault, M. 1976. Power/Knowledge : Selected Interviews and Other Writings 1972-1977. Trans and ed. by C. Gordon, New York: Pantheon books Friedman, M. 1970. The Social Responsibility of Business is to increase profits. The New York Times magazine, 13 September 1970 Galbraith, J.K. 1984. The Anatomy of Power: An Overview. London:Hamish hamilton Gramsci, A. 1971. Selections from the Prison Notebooks of Antonio Gramsci. Trans. and ed. Q. Hoare and G. Nowell Smith. New York: International Publishers Gramsci, A. [1957]1972. The Modern Prince and Other Writings. Reprint. New York: International Publishers Gramsci, A. [1910-20] 1977. Selections from Political Writings, 1910-1920. Trans. and ed. Q. Hoare. New York: International Publishers Guha, R. 1992. Dominance Without Hegemony and its Historiography. In R. Guha, ed. Subaltern Studies vi. New Delhi Hirst, P. Q. and G. Thomson 1996. Globalization in question: The International Economy and the Possibility of Governance. Cambridge: Polity Press Homes, R. and P. Watts 2000. Corporate Social Responsibility: Making Good Business Sense. Geneva: World Business Council for Sustainable Development. 12

Hoogvelt, A. 1997. Globalisation and the Postcolonial World, the new political economy of Development. Houndmills, Basingstoke: Macmillan Press Ltd Howson, R. and K. Smith, eds. 2008. Hegemony, Studies in Consensus and Coercion. New York and London: Routledge Hymer, S. H. 1976. The International Operations of National Firms, A Study of Foreign Direct Investment. Cambridge: MIT Press Jackson Lears, T. J. 1985. The Concept of Cultural hegemony: Problems and Possibilities. The American Historical Review 90:567-593 Korten, D. C. 1995. When Corporations Rule the World. Bloomfield: Kumarian Press Latham, E. 1961. The Body Politic of the Corporation. In The Corporation in Modern Society. ed E. S. Mason. Cambridge:Harvard University Press Lenski, G. 1966. Power and Privilege: A Theory of Social stratification. New York: MacGraw Hill Lie, J. 1993. Visualizing the Invisible Hand: The Social Origins of Market Society in England, 1550-1750. Politics and Society 21:275-305 Mason , E. S. ed. 1961. The Corporation in Modern Society. Cambridge: Harvard University Press Milward, B. 2003. Globalization? Internationalization and Monopoly Capitalism, Historical Processes and Capitalist Dynamics. Cheltenham: Edward Edgar Mitchell, N. J. 1989. The Generous Corporation: A Political Analysis of Economic Power. New Haven and London: Yale University Press Moon, J. 2002. Confronting the Critics: The Governance of Corporate Social Responsibility. New Academy Review, 1:23-32 Mullins, W. 1972. On the Concept of Ideology in Political science. The American Political Science Review 6:498-510 Nolan, P., D. Sutherland and J. Zhang. 2002. The Challenge of the Global Business revolution. Contributions to Political Economy 21:91-110 OECD 2000. Guidelines for Multinational Enterprises. Paris: OECD Rondinelli, D. A. 2002. Transnational Corporations: International Citizens or New Sovereigns?. Business and Society Review 107:391413 Rowe, J. K. 2005. CSR as Business Strategy. In R. D. Lipschutz. Globalization, Governmentality and Global Politics, Regulation for the Rest of Us. London: Routledge

Shenkar, O. and J. J. Reuer, eds. 2005. Handbook of Strategic Alliances, Thousand Oaks: Sage Publications
Shergolt, P. 2009. Global Financial Crisis and Economic Downturn: Implications for Corporate Social Responsibility. The Center for Social Impact. Issue Paper 1 Soederberg, S. 2007. Taming Corporations or Buttressing Market-Led Development? A Critical Assessment of the Global Compact. Globalizations 4:500-513 UNCTAD 2007 World Investment Report. Geneva: UNCTAD

13

Van Harten, G. 2005. Private Authority and Global Governance: The Contours of the International System of Investor Protection. Review of International Political Economy 12:600-623 Veblen, T. [1904] 2005. The Theory of the Business Enterprise. reprint New York: Cosimo Vogel, D. 2005. The Market for Virtue, The Potential and Limits of Corporate Social Responsibility. Washington DC: Brookings Institution Press World Bank. 2001. Global Development Finance 2000. Washington, DC: World Bank Zumbansen, P. 2009. The Evolution of the Corporation, Organization, Finance, Knowledge and Corporate Social Responsibility. Comparative Research in Law and political Economy 5:1-40

14