Redefining the Role of the Elite in the 21st Century
This essay has been recognized as one of the top 100 essay entries in the 27th Wings of Excellence Award of the 45th St.Gallen Symposium in Switzerland in May 2015. The author, a Leader of Tomorrow in the said symposium, currently pursues a doctorate in International Development (emphasis on East Asia and the Pacific) at the Graduate School of International Development, Nagoya University, Japan.
In January 2015, less than a thousand so-called elite gathered in Davos, Switzerland for the annual World Economic Forum to discuss issues that may have terrible or tremendous impact on the global economy and society. As winter-chills covered the small town, precious wines sparkled in champagne glasses — coupes that interestingly resemble the prevailing state of extreme inequality — perhaps the most paramount issue that perfectly defines the global socio-economic landscape. Amidst this, a dominant assumption lingers: the global wealth inequality predicament is primarily caused by the prevailing power of the elite over the vast majority. I beg to disagree. Flawed presumptions do not only produce erratic answers, but also erratic questions.
Let’s bring in the facts. Recently, it has been reported that the bottom half of the global population own less than 1% of total wealth. In sharp contrast, the richest decile (10%) hold 87% of the world’s wealth, and the top percentile (1%) alone account for 48.2% of global assets.i If not responded to, this 1% will soon hold more net wealth than the other 99% put together.ii Global economic development institutions claim and agree that while extreme poverty has been generally decreasing globallyiii and regionallyiv, income inequality within countries has increased significantly.v Being at the forefront of this quandary, the elite is often the target of much blame.
The elite is a small but relatively superior group of people. They are often characterized as powerful — something that depicts great influence over a vast majority. From ancient societies to contemporary ones, the elite’s power has been based mainly on inheritance (social status, class, privilege), or merit. Classifications vary but corporate and political ones continue to dominate familiar notions of ‘eliteness’. Regardless of other factors, possession of power – by wealth and/or by influence – is considered the single most important feature of the elite.
Apparently, power as a concept carries greater weight than mere influence; It is the relative ability to influence. Accordingly, when x (person or entity) has power, it has the capability to control or manipulate, but only to a certain degree (inabsolute) because it is subject to the authority (global or national) that holds legitimate power. Well, ideally. Supposedly.
Power structure in and among states and societies is as complex as reality. As in most cases, in developed and developing regions, there exists collusion among political and corporate elites; or worse, the latter overpowers the former. The elite’s malevolent exercise of power, spurred by greed, is what drags the society into extreme inequality; It is not power per se that causes so. This is where the dynamics between power and responsibility can respond to how the elite can redefine their roles and agenda-setting. To ideally emerge and transform as significant players in the twenty-first century’s global society, the elite must align its power with responsibility in a way that sows goodwill to and yields opportunities for everyone.
“With great power comes great responsibility.”
There goes the axiom. While the first implies strength, the latter requires even greater. Responsibility carries a strong yet broad denotation. Liguistically though, the word may mean three things: a) being trustworthy or reliable (character); b) having one accountable to somebody (relational/ rule following); or c) holding one accountable for something (causal and/or consequential).vi It is imperative for the elite to recognize the essence of responsibility, as it applies to them. Insofar as elite’s possession of power and assumption of responsibility are concerned, all three definitions apply. More concretely, I have identified three action- points through which the elite’s role can be redefined by aligning power with responsibility; and through which they can ACT responsibly: Advocacy, Collaboration, and Transparency.
The business of business is business — Only?
“The pursuit of a (certain social) cause does not have to be the prerogative of charities …nor does a mission to improve the world makes business into a social agency”.vii Most enterprises, even social enterprises, desire profit. Money is an incentive that, when utilized with prudence, can yield tremendous outcomes. In this regard, I posit that while the philanthropic practice of corporate social responsibility (CSR) can be considered noble, it would be more relevant, sensible, and sustainable to advocate for initiatives that do not only contribute fleeting money but more importantly, create opportunities for long term growth. The elite can responsibly wield their power by investing their resources in advocacies that aim to a) reinforce human capital through social entrepeneurship; b) provide initial capital for microfinance and promote financial literacy; and most importantly, c) support social welfare areas particularly education and healthcare. For instance, financial company Bloomberg partnered with CodeNow, a nonprofit organization aimed at teaching technology skills to underprivileged kids; while animation giant Disney united with Code.org to teach kids the basics of programming syntax.
While CSR matters, it is about time to shift toward corporate social innovation (CSI) where advocacy meets the opportunities associated with innovation and technology. IT revolution has to be seized in the twenty-first century. Since the 2000s, companies have begun to adopt a paradigm that recognizes “community needs as opportunities to develop ideas, find, and serve new markets”, and focus on “inventing sophisticated solutions through a hands-on approach.”viii While CSR, by and large, is anchored on charity/ social philanthropy, CSI focuses on R&D — a strategic business investment that aligns profits with social development. In addition, reverse innovation has also been taking ground. It’s a strategy to “develop entry-level, low-cost products for emerging markets, and then repackage them to flow uphill to developed, first-world markets.”ix Apparently, it has provided opportunities and services (General Electric’s healthcare machines, Microsoft’s phone app, among others) benefitting both developed and developing regions.x Indeed, “small-footprint” products and services have kindled a socio-tech revolution.
“Two are better than one, because they have a good return for their labor. If either of them falls down, one can help the other up.”xi
Responsibility is relational too, and is vital to the success of any collaborative undertaking. In collaboration, size doesn’t even matter — only responsible partnership. Collaboration matters — a lot. In fact, others presume that the future and success of businesses will be defined by “co-“ — anything that has to do with partnership. However, given the “big fish eats little fish” history of big-small encounters, small businesses can be understandably leery of powerful big ones.xii Fortunately, technological revolution has changed global trends. Now, even large IT corporations tend to run like startups, and consequently partner with them. Why? Startups have innovation engrained in their cultures.xiii These mostly young risk- takers know their generation’s salient features — socially connected, increasingly mobile, and infotech-driven. Nevertheless, they have to move forward fast without compromising quality; Otherwise, they will be overtaken by competitors. By collaborating with a big partner, they may have greater chances to sustain their competitive advantage. Partnerships between or among startups and large companies prosper because “the collaboration between two good ideas multiplies the result, the possibility of sharing resources and expertise enhances the product, and the combination of technologies, applications, or services increase a solution’s value.”xiv In addition, their needs and strengths are often opposite but complementary — that must be their most significant asset besides human capital. If the trend will prosper, this new big-small ecosystem will tremendously affect a global innovation roadmap. Such team-ups embody the essence of responsibility anchored on reciprocity.
Interestingly, public-private collaborations also abound — usually though, these are between big local companies and public institutions within states. Multinational corporations (MNCs) invest across states mainly for business profits; Development only comes along. But what can be more interesting than a collaboration among the public sector, MNCs, and startups? In order to encourage the creation of MNC-Startup partnerships, Israel’s Office of the Chief Scientist (OCS) has established a dedicated Global Enterprise Collaboration Program.xv This tripartite collaboration among the public sector, MNCs, and small players exemplifies industrial innovation and entrepreneurship that benefit all parties.
Transparency and Accountability
There’s no mote, sawdust, or speck that cannot cumber the eye.
Another way to align power with responsibility is by recognizing transparency and accountability. Basically, transparency is the clear disclosure of information, rules, plans, processes and actions.xvi While promoting transparency is important, it has to be coupled with accountability in order to trace the causes of actions, identify the culpable, and impose punishment.
An enormous challenge in upholding transparency is the prevalence of a corrupt system where political and capitalist elites collude. When a supposedly legitimate authority conspires with private entities, it does not only betray its citizens but also drag the society to moral fragmentation and trust deficit. Tax avoidance, while considered legal, is very much open to abuse. Tax evaders, on the other hand, can be held accountable under pertinent laws. In either situation or context, a question of morality hovers.
Apparently, a review of global tax rules is imperative. Oxfam suggests that cracking down on tax avoidance and tax evasion (must go) hand in hand with more progressive taxation.xvii Tax avoidance, in particular, often requires closing the seemingly endless number of loopholes in tax treaties and tax laws one at a time. Accordingly, the G20, as an influential bloc, must be willing to go beyond the OECD-led Base Erosion and Profit Shifting (BEPS) plans, and work with all countries to fundamentally rewrite global tax rules, tackling the tough issues that especially matter to developing countries.xviii If the moneyed elite yields to progressive taxation efforts anchored on wealth redistribution, they can better prove their sincerity to respond to inequality.
Ideally, stitching integrity and honesty into the system’s fabric is a key response. In reality, it’s been put to the test. A good example is the Norway-based Extractive Industries Transparency Initiative (EITI), an international standard for openness around the management of revenues from natural resources. Governments disclose how much they receive from extractive companies operating in their country and these companies disclose how much they pay. With 48 countries, the organization epitomizes that a coalition of governments, companies and civil society can responsibly work together in spite of relatively small size.xix
Reforming the rules of the game will not suffice. Moral philosophy also has a role to play in changing the inequality landscape. Crucial is an understanding, recognition, and practice of integrity (telling the truth to oneself) and honesty, (being true to others). One without the other will be deemed futile.
Small does and will matter: an affirmative conclusion
In 1973, when affinity with anything big overshadowed the beauty of small, scholar E.F. Schumacher posited that “if structures – economic, political, or social – became too large, they become impersonal and unresponsive to human needs and aspirations.”xx Over forty years later, his assumption has been proven outrightly valid. From innovation to collaboration, microfinance to start-ups, the value of “small” is now being deliberately redefined. Society has also begun to appreciate the beauty of smallness. However, will the small “elite” be also appreciated? Yes — if they choose to have their roles redefined by redefining their agenda-setting.
In this essay, I have defied the notion that elite’s prevalent power is the primary cause of inequality. It is the inappropriate utilization of power, fueled by greed, that causes so. Power can be used otherwise – responsibly, to narrow down inequality by espousing the spread of opportunities. This can be done by advocating programs that can have long term socio- economic impact; collaborating with the public sector and startups to gain mutual/ collective benefits; fostering transparency, and upholding accountability.
Nevertheless, rising over the inequality conundrum is also everybody’s responsibility. Sometimes, one forgets how much he actually has and how little he has to do to make a difference, which in fact is a small step toward big changes. Great things start from small beginnings. There lies the beauty of smallness.
Regardless of size, with collaboration and sharing, what can go wrong? To end, let me rephrase a line from a popular children’s rhyme: “There’s so much that we (can) share; And it’s time we’re aware. It’s a small world after all.”
i Credit Suisse. 2014. Global Wealth Report and Global Wealth Databook. ii Oxfam. 2015. Wealth: Having it all and wanting more. Issue Briefing
iii World Bank. 2015. Policy Research Report 2014: A Measured Approach to Ending Poverty and Boosting Shared Prosperity: Concepts, Data, and the Twin Goals. Washington, DC, United States. Decrease in poverty rate: covered period was between 1990-2011. ! https://openknowledge.worldbank.org/bitstream/handle/10986/20384/9781464803611.pdf
iv Asian Development Bank. January 23, 2015. Asia and the Pacific Lie at the Epicenter of the Economic Inequality Debate. Accessed on January 28, 2015. Decrease in poverty rate: covered period was between 1990-2010. http://www.adb.org/news/features/asia-and-pacific-lie-epicenter- economic-inequality-debate
v International Labor Organization. 2015. Global Wage Report 2014/15: Wages and income inequality. Geneva. p.19
vi Goodpaster, Kenneth and John Matthews, Jr. 2003. Can a Corporation Have a Conscience. In Harvard Business Review on Corporate Social Responsibility. Harvard Business School Publishing.
vii Handy, Charles. 2003. What’s a Business For? In Harvard Business Review on Corporate Social Responsibility. Harvard Business School Publishing.
viii Kanter, Rosabeth. 2003. From Spare Change to Real Change: The Social Sector as Beta Site for Business Innovation. In Harvard Business Review on Corporate Social Responsibility. Harvard Business School Publishing.
ix Duffy, Jade. 2012. Poverty Profits. In Poverty and Profits: How the private sector is helping to change the fortunes of Asia’s poor. Development Asia. April-June issue. Asian Development Bank
x Jana, Reena. March 11, 2009. Innovation Trickles in a New Direction. http://www.bloomberg.com/
xi Ecclesiastes 4:9-10. New International Version
xii Botkin, James and Jana Matthews. 1992. Winning Combinations: The Coming Wave of Entrepreneurial Partnerships Between Large and Small Companies. John Wiley & Sons, New York
xiii 5 big companies that run like start-ups. February 12, 2014. http://www.innocentive.com/blog/
xiv Turiera, Teresa and Susanna Cros. 2013. Co-business: 50 examples of business collaboration. Co-Society.
xv MATIMOP – The Israel Industry Center for R&D: Your Gateway to International Cooperation. http://www.matimop.org.il/about_matimop.html
xvi Transparency International. Global Coalition Against Corruption. http://www.transparency.org xvii Oxfam. 2013. The cost of inequality: how wealth and income extremes hurt us all
xviiiOxfam. 2014 (a). G20 must turn the tide on rising inequality and tackle tax dodging. November xix Please see website for more details: https://eiti.org
xx Schumacher, Ernest. 1973. Small Is Beautiful: A Study of Economics as if People Mattered. (“The title “Small is Beautiful” came from a phrase by his teacher Leopold Kohr).