Regulating Multinational Corporations: Trends, Challenges, and Opportunities

By Backer, Larry Catá | The Brown Journal of World Affairs, Fall 2015 | Go to article overview

Regulating Multinational Corporations: Trends, Challenges, and Opportunities


Backer, Larry Catá, The Brown Journal of World Affairs


"And there was war in heaven."1

The once orderly arrangement public and private power, of domestic and international law, and of the institutions through which these arrangements were realized has been upended by the very same structures legitimated in political, economic, and legal theory.2 In place of the state, the production chain increasingly serves as a basis for collective governance.3 Domestic and institutional actors-individuals, economic enterprises, civil society actors, public international organizations, and hybrids that emerge from couplings of these actors-along with states, now engage in a world order marked by fracture, fluidity, permeability, and polycentricity.4 This world governance order is characterized by a stable universe of objects of regulation around which governance systems multiply and in which law is one of several systems of governance that has an impact on the organization of human and communal activity.5 It is a governance order in which regional integration might well supplant both the state and global integration.6

And yet, much of the current discourse and premises of public policy continue to indulge beliefs solidi5ed after 1945.7 4is post-1945 system presumes a dynamic population bound to static and stable states, which re3ect the communal consensus of their populations through democratic representative institutions. States operate and speak most forcefully through law, which constrains both the actions of states and the direction and scope of policy. Policy discourse is centered on these traditional presumptions in ways that sometimes ignore or diminish the reality of the governance frameworks of globalization that are growing up around the state or seek to preserve it in the face of change.8 But these emerging governance systems, which appear all around the state in order to support activities that cross borders and thus cannot be regulated in their entirety through the application any one state's law, contradict this discourse.9 At the base of this contradiction are two distinct approaches to regulation-one is legal and tied to the traditional structures of the state; the other focuses on social norms and is tied to the governance power of public and private institutions operating between, within, and around states.10

These contradictions lie at the heart of the subject of this essay-the challenges and opportunities, and the legal and public policy context of multinational corporation or enterprise (MNE) regulation. 11 MNEs "have transcended their traditional limitation for lobbying on the national level, and have begun to involve themselves directly within global economic regulations, either by acting as transnational lobbies or by setting up rules themselves."12 And yet, policy discussion tends to focus on the use of law to regulate MNEs whose operations extend beyond the reach of any one state or on the structures of international law that by their nature and implementation lack coherence and remedial structures. This contradiction is especially discernible in recent efforts to legally institutionalize an architecture for the regulation of the economic, social, cultural, and human rights effects of economic activity.13 Public institutions and civil society invest substantial effort in the construction of an international legal framework for regulating multinational enterprises.14 Private governance and self-regulation are viewed as threats to the social and political order; at the same time, private actors have increasingly turned to a variety of self-regulatory and private governance structures, some of which are recognized in international norms, in order to manage significant aspects of their operations.15 Public actors have also sought to manage private regulatory governance by intervening in private markets.16 In some cases, private actors have been recruited to serve as governmental substitutes in weak governance or conflict zones.17 From a regulatory perspective, the object of each such intervention is the international business enterprise. …

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