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Corporations should support the rule of law – analysis


I have often talked about the continuum of sarkaar (government), samaaj (society), and bazaar (markets), and why, for a successful society, these three must work together. Ideally, sarkaar should not grab too much power; bazaar, should not flout the rule of law or appropriate public resources; and vigilantes from the samaaj should not take the law into their own hands. This requires awareness and active participation from citizens. After all, we are citizens first; our primary identity is not as a subject of the State or as a consumer for the market. As citizens, how do we then help build a good society? There are many interests between samaaj and sarkaar; bazaar and sarkaar; as well as between samaaj and bazaar. For the purpose of this article, we will examine the congruence of interest between samaaj and bazaar.

We all want and need the rule of law to be upheld. In fact the bazaar — or at least the modern corporation as we know it would not exist if the rule of law had not created the limited liability company 300 years ago. This allowed innovation to flourish, and also provided for the absorption of failure, because wherever there is innovation, there is failure. It is because of the rule of law that companies can fail without going under themselves; and for their own sake, therefore, corporations have a great stake in upholding it. They need the enforceability of contracts, protection of property, availability of fair competition and so on; otherwise they simply cannot function. But even beyond this, they need the law to be upheld by society, because no business can thrive without social stability outside its gates.

Civil society and business, therefore, have more in common than either believe. Sure, in some cases, civil society has to position itself against business interests, when those interests are being deployed unfairly on the ground . For instance, in the case of public goods like water and land commons, or with environmental issues like pollution and contamination, civil society and business knock up against each other. But they also have a common concern — to keep the sarkaar in check.

State power worldwide tends to accumulate, and it is to the advantage of both business and civil society, to make sure that the State does not abuse its own power. Many corporations have been subject to the vagaries of State power while running their businesses; excessive discretionary power also adversely affects the climate in which businesses operate. If the alignment of samaaj and bazaar is understood and worked on, it helps restrain the State. For example, civil society institutions and business corporations might together or separately appeal to the State on poorly framed laws. In the recent proposal to criminalise non-compliance of Corporate Social Responsibility, both samaaj and bazaar would have been adversely affected. Both successfully voiced strong reservations against it and it was rolled back.

We all need good laws, and an independent, impartial, and efficient judiciary to verify the constitutionality of those laws. We all require equal access to the justice system.We also need effective public institutions that help uphold the rule of law. It is the only way to both empower the bazaar, and uphold the rights of the country’s citizens.

The samaaj has an interest in the rule of law as well, as it is critical for addressing access issues, especially for the poor. Civil society organisations (CSOs) representing samaaj are often driven by passion and a commitment to rights and freedoms. Sometimes, at great personal risk, they go up against the power of the State and corporations, to create campaigns, build institutions, and push for more agency for people who are left out. Civil society must, however, learn to communicate better the long-term benefits of such work to business.

The bazaar itself cannot do this work. Though they benefit indirectly, corporations cannot support or implement politically sensitive programs, and risk the fallout of such action. It would make them vulnerable to all sorts of state action. But they can certainly do more than what they’re doing at the moment. With the civil society institutions that they trust and already have a relationship with, they can, and should, give core institutional support to continue work beyond project-based funding. Even if they do just this, it strengthens civil society capacity to take on issues of rights and exclusions that are adjacent to their work on service delivery.

Indian philanthropy doesn’t take enough risk. It’s good to keep honouring service delivery improvements, but it’s time to look at our society, and for the philanthropic sector to step up and get into more important areas such as access to justice. And the congruent interest of samaaj and bazaar is exactly why. Can we — as corporations and philanthropists — pledge that we will no longer do only incremental work, but will try something transformational? The time has come to align self-interest and the public interest in support of the rule of law and constitutional values. It doesn’t have to be the State versus civil society, or business versus civil society, or the State versus business. They are not neccessarily antithetical to each other. Society is successful when it reduces the friction for the three to co-create solutions. And it’s important for all the three sectors to recognise that — to discover the common within the uncommon ground.

But it is an especially opportune time for business and civil society to act more creatively from their own, unrecognised common ground. Poised at a new decade, we can ensure that this country’s solemn promise to itself — to secure liberty and justice — social, economic and political — for all its citizens, will be met, and met in abundance.

Rohini Nilekani is founder-chairperson, Arghyam, a foundation for sustainable water and sanitation

The views expressed are personal

(This article was originally published on India Development Review)

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