Trust, Corruption, and the Globalization Tango

In anticipation of protests against the 2003 World Economic Forum (WEF) in Davos, the Swiss government deployed 2,000 troops and spent $10 million to protect the meeting's 2,000 participants. Despite the presence of as many soldiers as corporate and world leaders, security forces used tear gas, rubber bullets, and water cannons against demonstrators, whose activities ranged from throwing snowballs to burning a U.S. flag and blocking the rail line into town.Ironically, as the police worked to keep activists out, those gathered on the inside focused on the annual meeting's theme: building trust.

The forum's organizers acknowledged that the "string of corporate scandals of 2002 contributed to the serious undermining of trust as an intrinsic value." ¹ They further observed that corporate corruption had become bad for business and that pressure for operational accountability and transparency was heating up: "Investors are increasingly critical of corporate executives, executives face decreased autonomy and greater scrutiny, board members are concerned about personal liability, and regulators are endeavoring to enforce new rules to avoid future transgressions." ² The forum's public concern about trust highlights the developing tensions among the international private sector, the global polity and its citizens, and the state.

Whose trust did the forum's elite members wish to regain? They were clearly nervous about regulatory intervention from governments, but to what extent are they constricted by the territorially confined reach of the state? It would seem that while capitalism operates increasingly without spatial borders, the state remains restricted to a finite jurisdiction. The state's power to regulate is more and more limited, even when a corporation's actions may directly affect social rights, such as those of workers, minorities, and social movements (see Bonanno and Constance 1998). Companies can, and do, move overseas. In the same vein, while groups of protestors may regularly demonstrate against groups such as those gathered at Davos, protesters' physical access may be as limited as is their financial ability to have a presence in the boardroom. To what extent do the protestors represent the concerns of consumers and investors, or the global "community"? If globalization has largely liberated the corporation from the regulatory hand of the state and its constituents, what has business and political leaders so worried?

It turns out that trust has become an overriding concern for the corporate community during the past few decades and has been assigned a monetary value. Trust has been identified in popular social scientific literature—and has made its way into the business world—as a key ingredient in the construction of networks that form social capital, considered by neoliberals to be a money-making commodity. ³ The international business community relies on social capital's associational links, and forums such as Davos are crucial to the reinforcement of the community's circles of trust: "Social capital produces wealth and is therefore of economic value to a national economy. ... Social virtues like honesty, reciprocity, and keeping commitments ... have a tangible dollar value and help the groups who produce them achieve shared ends" (Fukuyama 1999, 14). Trust binds international capital together, forming morals and values that are mutually understood and transmitted among members of the group. It may be inferred, then, that recent corruption scandals that have rocked the international business community have raised public questions about these values and, consequently, adversely affected its income-generating capability.

Before widespread globalization, as long as the private sector's affairs could remain private, their shared practices and business and social networks could quietly operate according to their established rules of engagement. A crucial element of the corporate interpretation of trust was its confidentiality, as deals took place behind corporate doors, in congressional backrooms, or on the links of golf courses. Trust is a fluidly moral, ethical, and above all, relative concept, and illicit and venal activities most certainly have always taken place, but within traditionally delineated boundaries.

In fact, there is little evidence to suggest that corruption...