A defining time for business, globalisation and the legitimacy of power.
There has been a global implosion of trust. The latest Edelman Trust Barometer just released at the World Economic Forum in Davos shows “the largest-ever drop in trust across the institutions of government, business, media and NGOs.”
Trust in media (43 percent) is at all-time lows in 17 countries.
At 41 percent, Government is the least trusted institution.
CEO credibility has dropped 12 points to an all-time low of 37 percent.
Government leaders (29 percent) remain least credible.
In the many years that I have covered this report for Moneyweb, I have never seen such a dramatic swing in sentiment with well over half of the respondents believing that the “establishment” has failed them. I will come back to this and the South African context in a future column.
The “establishment” has become a buzz-word in global politics. It is a metamorphic concept that in the broadest sense means simply the relationship between power and its subjects. Power manifests in bodies such as global institutions, governments, political parties, courts, religious and social institutions, corporates and companies; or even in sectors and lobbies such as banks, financial services, pharmaceuticals, agriculture, labour, and others. In this understanding we are all part of and subject to the establishment, much like being either a motorist or a pedestrian at different times.
If the establishment is about exercising power, then its legitimacy will be tested against having the interest of its subjects at heart; whether they are citizens, clients, customers, patients, learners and all others dependent upon a service. And if the Trust Barometer; the widespread anti-establishment rhetoric and the current W.E.F introspection at Davos on responsive leadership are anything to go by, then clearly it is losing that legitimacy.
The intensity of the anti-establishment sentiment is the only logical explanation for the surprising choice of Donald Trump as President of the United States. It also explains the swing In Europe to nationalist sentiment and Brexit, where the dictates of an even bigger establishment, the European Union, on migration and economic prescriptions were proving to be unpalatable to the British people. The bureaucratic power of the E.U. was demonstrated earlier in its ability to ride roughshod over the will of the Greek people and get a government to renege on promises made to get them into power. That magnificent institution that held so much promise, now faces potential disintegration.
The same challenges face globalization. It held much promise and indeed brought many benefits in the spreading of products, knowledge, technology, innovation, medicines and much else. But it has clearly failed in a key expectation: that of spreading global harmony. Because that takes greater regulation and trustworthy political and economic global institutions. This creates an inherent paradox: the more power is concentrated and the broader its effect, the more it loses touch with the people and the less it is seen to represent their individual interests.
Globalization has another inherent flaw. It has encouraged the free movement of capital, goods and services; but not the free movement of people. The latter has not only created imbalanced human development with large numbers excluded from meaningful participation in economies, but where experimentation with free people movement has been tried, it has led to regression to national isolationism; albeit under the severe test of a refugee crisis.
The free movement of capital has on balance also had unfortunate outcomes. It has exacerbated inequality and put the world at the mercy of a new force in the form of the financial sector, where national policies can be totally negated and, more ominously, national destinies can be affected by the actions of a few speculators. Indeed, as we saw in 2007, the world economy can be brought to its knees by behaviour in this sector.
Corporates and companies have been under pressure to become more inclusive and redefine their purpose to creating value for all. Where capital is concentrated in the hands of the few and focuses mainly on returns, shareholder value and capital growth, sometimes to the point of even damaging its own consumer brand names, then it becomes a highly distrusted feature of the establishment. This is a global phenomenon, giving some credence to the “monopoly capital” slogan we hear every day. Linking it to ethnicity, such as branding it “white monopoly capital” however, is deflective politics, expedient and disingenuous and unfairly puts blame on an identifiable group of individuals; thereby becoming a greater threat to racial harmony than tweets from a beach.
The free movement of goods and services is also anomalous. It is increasingly being subjected to trade deals and regulation that more often than not would run fowl of domestic anti-competitive laws, and represents not the people of the signatories, but lobby groups and vested interests of big corporations and sectors. Barriers to trade, such as import tariffs and duties are constantly being used to protect domestic interests – again often in the interest of a specific sector or lobby group, and not necessarily in the public interest.
One bizarre outcome of the anti-establishment furore is the effect it has had on the media. Coupled with the decline of print media, the proliferation of on-line alternatives and the growth of social media, there has been an intense attack on the “mainstream media”. I’m not quite sure what this means, apart from the assumption that it is “pro-establishment”. But it seems that for a significant part at least, the real victim of this bare knuckle fight has been journalistic integrity. “Fake” or “false” news, and rumour mongering is spreading to the point where trust in all information sources is declining.
We are all part of the establishment, and at various levels of activity can do much to make it more trustworthy, or challenge misbehaviour by others. Without that, we simply sow seeds of social discord.