Abstract
Much ink has been spilled in the past two decades on the topic of transnational private regulation. How can multinational corporations be held accountable for their record in sustaining environmental and labor standards? What are the limits of business firms stepping in to regulate where the state is weak or has withdrawn? How can transnational private regulation bring about substantive improvements in performance? These are big questions of central importance for scholars and policymakers as they try to make sense of the evolving role of business, labor, and the state in a semi-globalized world.
Tim Bartley, in his book Rules without Rights, strides onto center stage to address these questions. And what’s novel and refreshing about this book is its ambition to zoom in from “10,000 feet up” down to “1,000 feet up both theoretically and empirically” (p. 14). The author does a good job of achieving this ambition in a well-organized way, encompassing two issues (land rights in forestry and labor rights in apparel) in two countries (China and Indonesia, the former authoritarian and the latter more democratic since the fall of the Suharto regime in the late 1990s). The result is a substantive theory of transnational governance, derived inductively from extensive fieldwork and summarized in eight propositions (some mentioned and discussed below) in Chapter 2. A road map in the form of these propositions up front is helpful, but most readers are likely to return to this chapter, as I did, after digesting the empirical chapters, because the concluding Chapter 7 does not refer us back to the propositions in an explicit manner.
Empirically, one chapter is devoted to each issue in each country. Chapter 3 is about forestry in Indonesia, and Chapter 4 is about forestry in China. We learn much about the historical details of contested land rights for natural forests and plantations. If we focus our attention on the Forest Stewardship Council (FSC) certification, democratic Indonesia saw less adoption of FSC standards than did authoritarian China. Bartley attributes this to what he calls “the dual logic of certifying in authoritarian places”—in effect, in authoritarian places, certification is easier because civil society is less active and autonomous, and because auditors are likely to accept more minimalist definitions of compliance (Proposition 3).
The following two chapters shift to the empirical context of labor standards in apparel. Chapter 5 details how corporate social responsibility has spread in China, where the absence of freedom of association led to the spread of what Bartley calls managerialism, that is, the adoption of human resource systems including the promotion of better worker–management communication. This speaks to both Proposition 1 about process over performance (that transnational private regulation tends to lead to more policies, systems, and record-keeping than to substantive changes in performance) and Proposition 4 (when transnational rules clash with domestic governance, the latter usually retains primacy). Chapter 6 demonstrates how the same issue, labor standards, has become much more contentious in Indonesia, not least because trade unions attempted to use codes of conduct as a bargaining tool. Consequently, the adoption of Social Accountability International’s SA800 standards is more limited in Indonesia than in China.
Anyone who has undertaken research fieldwork knows how messy “getting your hands and feet dirty” can become when you are in the field, and when you wade through the data—notes, documents, interview transcripts, survey responses, and regression results. It is messy enough with one issue in a single location. Imagine the complexity when you multiply this by a factor of four, and you will appreciate the extent of Bartley’s achievements in condensing the data to come up with narratives and an inductive theory. Empirically, there are some aspects about which I would like to know more; for instance, while we are exposed to perspectives through interviews of the “practitioners of private regulation” (i.e., auditors and certifiers) and labor and community leaders, real voices of the state and transnational corporations remain somewhat silent. But I respect the need to be selective, given the author’s pledge to zoom in from “10,000 feet up” to just “1,000 feet up,” not 100 feet up.
One theory, the so-called substantive theory of transnational governance, presented in Chapter 2, has many strengths. Essentially, Bartley is dissatisfied with the extant literature on transnational private regulation, which tends to focus on how initiatives emerge and standards are monitored, and leaves out domestic governance that affects the implementation of these standards. Somehow the domestic context is treated as an empty space or a regulatory void, or else it is transcended and bypassed in order to uphold the integrity of transnational standards. In response, Bartley argues convincingly that theory should start with domestic governance and should focus on how the nature of domestic governance influences the content and scope of compliance. He goes as far as to say that because domestic governance largely wins out when it clashes with private rules, “focusing on compliance with domestic law is one way in which transnational governance can re-center the state” (p. 262). In Chapter 7, Bartley gives two example: first, the 2008 Lacey Act amendment subjecting US companies to penalties for selling wood and paper products that can be traced to illegal timber, and second, the Timber Legality Assurance Systems that empower exporting countries to enforce their domestic laws once they develop clarity on what is legal in logging and timber trade. He hopes that a more mandatory approach may be forthcoming in apparel as well, given the Rana Plaza disaster in Bangladesh in 2013, and cites the Better Work initiative and the UN Guiding Principles on Business and Human Rights as promising signs. He is not naïve, and is aware of the fact, that this approach to wire transnational governance to domestic governance has its own risks given the varying degree of repressiveness, as well as capabilities, of the state.
I found the last proposition, Proposition 8, one of the most interesting, as it makes sense of why private rules have been more rigorously enforced in sustainable forestry than in fair labor. Bartley proposes that this is because while both issues involve multiple stakeholders, forestry attracted more powerful non-industry stakeholders, such as FSC and WWF, than did fair labor; and because forestry with land rights involves more immobile and visible resources than does apparel with labor rights. One under-explored reason for the difference follows from this and involves a business perspective: Owners of forests and plantations must operate with a longer-term investment perspective than owners of apparel factories have, making them more visible and easier to pin down. Given that “patient capital” creates a basis for sustainable improvements in performance (p. 263), how can transnational corporations be incentivized to engage in “patient sourcing” even in the face of low cost as a primary driver of global production networks? This remains an unanswered theoretical and policy question.
Rules without Rights, given its theoretical and empirical richness, should be read widely by scholars and students of comparative politics, labor studies, and management, if they wish to take on the challenge of refining theories concerning transnational governance, multi-stakeholder initiatives, and standards.