Prabhat Kumar, the Director of an independent Centre for Governance in India and former Governor of Jharkand State, said today that ‘there is a palpable crisis of governance in many developing countries’.

Prabhat Kumar, the Director of an independent Centre for Governance in India and former Governor of Jharkand State, said today that ‘there is a palpable crisis of governance in many developing countries’. He was speaking at the 32nd annual Caux Conference for Business and Industry in Caux, Switzerland, on the theme ‘Globalization: closing the gaps’.

India and China had achieved enviable rates of economic growth over the past two decades, said Mr Kumar, who served for three years as Cabinet Secretary to the Government of India. But there was a global gap in good governance. ‘The issue of governance should be taken as a global challenge,’ at a time when over 1.2 billion people were surviving on ‘below the international poverty line accepted by the international community of one dollar a day’. In some Indian states the rate of infant mortality is nine per cent of all births. ‘These people are too poor; they do not get to hospitals,’ he said.

He urged businesses and civil society to engage in putting into practice models for good governance. The role of world bodies such as the IMF and the World Bank was not enough. ‘Governance is too serious a matter to be left to governments,’ he said. The world’s leading 200 multinational corporations had a combined turn-over of more than the GDP of all developing countries. Yet none was coming up with ‘path-breaking technology for the rural poor’, such as the low-cost appropriate technology needed for rural water management, rural stand-alone power systems, housing and transport. ‘There is not a single technology developed by the multinationals for the villages of the poor countries,’ he believed.

A team from the new Centre for Governance, under the auspices of Initiatives of Change (IofC), and with the support of an Indian institute of management, was researching ways of closing ‘the development divide’ between states within India, Kumar said. ‘We shall consider our mission accomplished if we can make a small dent in the better governance of India.’ IofC in India had also launched a Centre for Training in Ethical Leadership, which will hold it first training programme in September.

Agricultural liberalization was ‘the biggest single issue looming before the World Trade Organization,’ said Robert Anderson, a WTO counsellor who specializes in competition policy. ‘There is a strong case for the reduction of tariffs and subsidies which would yield major welfare gains for the world, especially for farmers in developing countries’, and which would also have long-term benefits for the developed world. ‘So why don’t we do it?’ he asked. Agricultural liberalization would also affect livelihoods in the developed world. ‘And there are developing countries that are net agricultural importers who benefit from subsidies, at least in the short run.’ He warned that it is ‘a long and tortuous process. We shall get there in the end but it isn’t going to be easy. All of us who care about the future of the world need to support the process.’

Mr Anderson said that trade was an engine for stimulating growth, ‘but not trade at all costs’. He emphasized that the WTO is a rules-based system, based on agreements entered into by sovereign member governments. WTO agreements were reached by consensus, which allowed the smallest countries the opportunity to dissent, he said.

Mr Anderson warned against ‘anti-competitive practices of businesses, such as cartels who meet secretly in price fixing compacts’. Cartels, he said, act as ‘unofficial reverse development assistance that transfer wealth from poor countries to rich countries.’ Anderson said that ‘we need honesty and honest evaluation of these Issues’ and that is why he welcomed the emphasis of Caux on honesty and integrity. ‘This makes the values of Caux quite appropos,’ he said. Picture: Prabhat Kumar, India.

Stephen Young, global executive director of the Caux Round Table group of senior executives, and author of ‘Moral Capitalism: reconciling private interest with the public good’, emphasised four gaps surrounding issues of globalization, addressed in his book. They were the gaps between virtue and self-interest; aspiration and action; liquid capital and its distribution; and the profit-motive in business and stakeholder interests. The world’s liquid capital totalled $79 trillion, or $13,000 per capita: enough to set up a Tajik herder with sufficient head of sheep to be self-sustaining. These gaps did not represent either/or choices but a balance between them would lead to a ‘moral capitalism’. There was a need to develop ‘the capacity for moral courage’. He warned against ‘the philosophical nihilism, which asserts that there is no absolute truth and anything is permitted’. Such moral relativism made it difficult to look someone in the eye and say, “That is wrong”,’ he said.

Conference Summary

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