Over the last 25 years, globalization and technological change has created a new playing field for government and business. 40 of the top 100 economies in the world are now businesses, and international companies are arguably some of the most powerful actors on the global stage, profoundly impacting societies around the world. In this environment, our current governance systems and a social contract that proved remarkably effective during the 20th century is increasingly unable to ensure economic stability and social progress. While the private sector has for the most part demonstrated its ability to adapt and flourish in a global economy, governments have struggled, due in large part to complex decision-making processes and centralized bureaucracies that were created to manage 20th century realities. The result has been ever more indebted nations and governments that have been unable to maintain the core foundation and social investments on which their economic competitiveness and the social well-being of their citizens depend.
The Challenge Ahead
The task now is to create a social contract and collaborative governance model that is equal to the challenges of governing a global economy in the interest of all. In this new model, the roles and responsibilities of the public, private and civil society sectors will need to be rethought and redefined. High Meadows Institute’s view is that for the private sector in particular this will include the need to take greater responsibility for managing its impact on society and the environment, as well as bringing its expertise, resources, and leadership to find new ways to finance and deliver public services more efficiently and cost effectively, and to drive the innovations we need for systemic reforms. It will require governments for their part to acknowledge they alone can no longer provide the leadership society needs, and to create a public policy framework that will encourage and enable the private sector and others to take greater leadership within a collaborative governance framework.
For business to direct its considerable resources to the greater public good, while simultaneously producing a competitive return to shareholders, will require a degree of innovation and leadership that many in the private sector will find difficult. It may also require rethinking the way corporations are chartered and governed in addition to other policy innovations by government that will enable and support a greater contribution and responsible leadership role in society from business.
High Meadows Institute is currently commissioning and conducting research on the drivers changing our social contract and the role of business in building a social contract equal to the challenges of governing a global economy and society. Working papers from this research can be found in the resource center here.