Institutional Voids and the Role of Civil Society: the Case of Global Finance
Globalizing policy fields can contain institutional voids in which effective regulatory frameworks and the corrective counterbalance of civil society are equally absent. With the inherently incomplete regulation of global finance on the one hand and the evident dearth of civil society institutions on the other, a central governance question emerges: under what conditions could civil society help to recapture the financial system by embedding it in a wider social and economic policy, and thereby reversing the erosion of confidence in market capitalism and liberal democracy? For this purpose, this article proposes the systematic development of a transnational civil society infrastructure in terms of organizational capacity and expertise for accountability enforcement, policy review, performance oversight and advocacy. The goal of this infrastructure is to fill the institutional void and form a counterveiling force against the unchecked might of global finance.
- So far, all suggestions and proposals to reform the global financial architecture have aimed at establishing new agreements, statutes and committees but without changing the overall institutional framework. Yet such procedures merely add new layers of complexity. The results will be counterproductive.
- The institutional void in international finance cannot be closed by civil society actors as they are too scant at both national and international levels. Yet civil society can act as a counterveiling force to help fill the institutional void by working towards embedding the finance sector within broader social norms and conventions.
- Activists have to overcome relatively high barriers, such as major salary gaps, to enter the discussion on financial issues and to be taken seriously by experts. These barriers lead to a ‘brain drain’ of leadership personalities in civil society.
- One potential solution to overcome current impediments is offered by independent, endowed foundations. The dual financial and political independence of philanthropic foundations from the market and the ballot box means that they possess sufficient autonomy, which can be paired with expert knowledge and generate a high degree of legitimacy over time. Foundations could interconnect the mobilization potential of member organizations with the political expertise and know-how of think tanks.