Are We Underplaying the Role of the State?

• Author: Hampson, Francoise J.
• Position: Economic growth and social responsibilities - Brief Article

Economic development, in principle, should be capable of delivering improved education, health care, access to food, water and housing, and improved personal security. In an era of globalization and economic liberalization within and between States, one might expect to see more of these benefits. But there is a widening gap between the rich and the poor, both within and between States. Economic power of multinational corporations threatens the ability of States to make and implement decisions in the interest of their peoples. The effect can be felt in escalating levels of corruption, or in political pressure from more developed States, which pressure has been "bought" by wealthy corporations.

Economic development has hidden costs; it requires the State to provide an educated workforce, a safety net to ensure that job flexibility and the loss of security of employment can be accepted, and built-in environmental costs. But in many cases liberalization has been accompanied by a decline a wide variety of public provisions or in their quality, without commensurate decrease in spending on armed forces, perhaps not surprising, given the levels of instability and violence. But decline in provision of education and health care and absence of economic and social security may be contributing to these ills.

How can we control the adverse effects of economic development? Protectionism and nationalization are not the answer. Tools of a non-economic character are required to regulate the operation of economic development. It is in everyone's interest, including multinational corporations, to promote stability as the most favourable environment for sustainable economic growth. This requires equity, accountability, sustainability, community values, empowerment and participation in decision-making processes. It requires medium- and long-term visions, with implications for the concentration of capital and the ease with which capital transfers should be made. But multinational corporations are not well placed to determine how to promote these values. Their function is to make profit and promote economic growth. It is for individuals, the institutions of civil society and the State to determine which values to foster and how. Each, however, needs the other. Without economic growth, there is not enough to distribute.

Multinational corporations, the institutions of civil society and the State need not be in competition with one another. There is a necessary...