Is Democratic Capitalism in Crisis?

Is Democratic Capitalism in Crisis?

[Music]
great to see everyone uh I’m John Levan
welcome I welcome to the launch of the
new uh Stamford capitalism and democracy
uh initiative um and I want to ex extend
a special thank you and congratulations
to a not and Lisa for first of all
launching this initiative and secondly
for putting together uh this event um so
I want to say a little bit about the
Genesis of this um collaboration which
is a collaboration between the Stanford
Business School and the Freeman spoley
Institute and um about uh the
intellectual foundation for this
initiative which really resides in the
work of anat admati professor at the G
SB um so this program is a is a is a
collaboration between the center for
democracy development and the rule of
law which is one of the flagship centers
within the Freeman spoggle Institute and
the corporations and Society initiative
which is one of the flagship initiatives
within the the
GSB I I I’m going to speak to the
corporation Society Initiative for a
minute and then I’m going to introduce
Katherine Stoner who’s going to talk
about cddrl and the work that is done
there the the the corporation Society
initiative has been run for uh quite a
number of years at the GSB by an not ADM
might and now with the support of Lisa
Simpson the executive director and um in
a not’s words um it was set up to um to
deal with inconvenient issues that we
often choose to avoid or ignore and for
those of you who know and not you will
know that she is comfortable
raising uh uh difficult issues uh and in
fact Prides herself on raising those
issues with pretty much everyone with
CEOs with bank Regulators with tech
Executives with policy makers with her
colleagues at the business school with
me she has no does not shy away from
difficult questions or um pushing people
to try to to understand hard issues
around business around governance around
um the rule of law and around democracy
and this initiative which is a a a joint
new chapter and a joint collab opens up
a new collaboration is going to be
centered exactly at that intersection of
uh business decision making uh
policymaking and the foundations of of
democratic institutions which is a a
topic near and dear to a nzart and
centrally important for both the
business school and the center for
democracy development and the rule of
law and um I will just say that uh apart
from being excited specifically about uh
this initiative I’m really excited to
have a new collaboration between the GSB
and the Freeman spoly Institute and
between
cddl we have um we we have one uh person
who spends time one facult member who
spends time as a senior fellow Austin CD
and as some of you will know we do have
a wonderful marriage between the GSB and
cddrl um but the um the having the main
locus of collaboration be within the
Paul oyer Katherine Stoner household um
this is really taking it out into the
open and and creating more of a form for
other people to be involved in the de
debate and discussion so um with that
I’m GNA um thank anat thank Lisa uh and
um introduce Katherine Stoner Who is the
the head of the center for democracy
development and the rule of
law thank you John um so yes I’ll do
anything for Stanford I’ll even marry
someone from the GSB um cross campus um
and see what it’s like over here how the
other half lives um so as John said I am
the MOs blacker director of the center
on Democracy development and the rule of
law and it’s my pleasure to welcome you
this afternoon um and to enjoy this
beautiful uh room we will let you see
the view later when we have uh our
reception at the end um of today’s event
um but it’s also a thrill to introduce
this new um program on capitalism and
democracy that as John mentioned uh is
really the brain child of not at MTI um
and um we are very much looking forward
to integrating her further in this
program further into the center on
Democracy development and the rule of
law so for those of you who are at the
business school I’ll just tell you that
if you cross the street that way there
is a whole university um and part of
that University over there um is uh the
Freeman spoking Institute which is in
Nena Hall just sort of exactly where I’m
pointing I think um and we are as John
mentioned um a center within uh the
Freeman sply Institute it has I think
now seven constituent centers um and we
think we’re the biggest and we know
we’re the best right Larry um and um we
work on basically as a an
interdisciplinary team um we were
actually originally founded as a joint
project between the business school the
law school and Humanities and Sciences
and one of the faculty that spearheaded
the founding was our um uh deceased but
dear colleague John McMillan um so it’s
it’s great to reestablish closer ties uh
with the business school as well despite
my own personal ties which are very
close with the business school um hi
honey um okay so we’ll move on John
raised it might as well just keep going
with it um uh it’s my job to uh tell you
both a little bit about um the program
on capitalism and democracy um and also
to introduce our speakers which is which
is the main draw today um so the program
on capitalism and democracy will explore
as John mentioned the complex
interactions between Democratic
institutions markets and private sector
participants sometimes corporations are
causes for good and sometimes
corporations um May undermine uh the
resilience and quality of democracy and
these are the sorts of questions that we
hope the program on um capitalism and
democracy will get to um it is uh I
think particularly appropriate today
that uh we have um uh Patrick Ali with
us one of the co-founders of global
witness um who they study corruption in
particular um to uh launch this program
with an not ad MTI and they will talk
about is De Democratic capitalism in
crisis I’m guessing I know the answer um
but let’s see um they will be in
conversation with my dear friend and
colleague Larry Diamond um but first let
me say some spectacular things about
these spectacular people first um and
maybe you can come sit down as I
introduce you guys since you’re hovering
on the side there um is anat admat
herself the George C GC Parker professor
of Finance in economics at Stanford at
The Graduate School of Business she’s
also uh has a range of affiliations
around the university I will just hit
the highlights though she is a senior
fellow at Seer um our sister Institute
for economic and policy research faculty
directors was mentioned of Cassie that
is corporations and Society initiative
with wh with which we are partnering
today um a not is uh uh does work at the
interaction of business law and policy
focusing on governance and
accountability issues uh in particular
with corporations and Banks and
financial SE and the financial sector
she has been since 2010 the financial
crisis um been engaged in policy
discussions related to financial
regulation she was named in 2014 time
mag as one of Time magazine’s 100 most
influential people in the world and by
foreign policy magazine as a as among uh
100 top Global thinkers uh she is the
co-author with Martin Helwig of the
Banker’s new CL
what’s wrong with Banking and what to do
about it with Princeton University press
um an Expanded Edition published in 2024
and perhaps among her many accolades I
would be remiss if I did not mention
that she is probably the only Stanford
faculty member to have ever had a cameo
role on the sitcom Silicon
Valley um seated next to a not is
Patrick Ally who is the co-founder as I
mentioned of global witness an
organization that identifies key links
between environmental and human rights
rights abuses and is one of the pioneers
of the global anti-corruption movement
since 1995 Global witness has garnered
significant accolades and a lot of
global recognition including nominations
for the 2003 Nobel Peace Prize and other
prestigious Awards it is behind the
publish what you pay initiative that
pressured oil and mining companies to
report the fees they pay to various
governments so that they can be held
accountable for the money that they
receive and um I believe we’re set
they’re selling the book um very bad
people which is a um book by Patrick
Ally and having read just the first page
the
testimonials Global witness is part of a
global makavelian plot mpla government
Angola they’re corrupt in case you
didn’t get it yeah Global witness are
worse than the CH Rouge prime minister
hunen of
Cambodia um Global witness I call them
blind witness president Paul kagami of
Rwanda if that’s not enough to make you
want to buy the book I don’t know what
else one can say um so Patrick is the
author as I mentioned of very bad people
um and his second book what can you
follow up with terrible humans um will
be published in May of this year um and
gives the reader a fly on-the-wall view
of activists and journalists exposing
crimes including the operations of the
Vagner group um from Russia sanctions
busting Wildlife tra trafficking and
political corruption in the European
Union Union and
finally a man who probably needs no
introduction you’re waiting to see what
I’m going to say right Larry is just
leave out the Lord of Liberty part all
right Larry Diamond the dean of
democracy then um who is the William L
Clayton senior fellow at the Hoover
institution The Mosser senior fellow in
global democracy at FSI and my
predecessor as The Mosser director of
cddrl not immediate predecessor that’s
Francis B Yama who’s seated out there
and Larry is the bass University fellow
in undergraduate education at Stanford
he is also a mench and one of the
leading scholars in the world of uh
democracy um its quality its decline um
and how we can make it better he also
among all the other things he does at
Stanford which is a lot and we don’t
have time to mention them leads the
Hoover institutions program on China’s
Glo Global sharp power and the program
on Taiwan in the Indo Pacific region he
also leads program on Arab reform um
based at cddrl and where he is also a
senior fellow he co-leads also the
global digital policy incubator at
another one of our centers the Cyber
policy Center he was the founding editor
of the Journal of democracy um and still
works as a consultant for the
international forum for Democratic
studies at the National Endowment for
democracy and with that I will turn
things over to Larry um who will start
the conversation uh well thank you all
for coming it’s really an honor to be a
part of the launch of this um
extraordinarily important and timely new
project or not we’re really in your debt
for uh walking across the street with
some frequency and becoming a part of
cddrl and launching this program and all
the work you’re doing and we certainly
are in debt uh to Patrick uh who uh I I
think is uh really not a terrible human
being but a great human being uh
fighting very bad people and I I want to
say a few things before I start the Q&A
if I may uh the first thing is offered
uh in all sincerity even though I’ve
only read a little bit of the book so
far this is a very very good book about
very very bad people and um it’s also a
highly readable book and if you don’t
want to bu the physical copy it you can
download it into your uh iPhone and
listen to it while you’re walking your
dog and it’ll only cost you
$10 uh the second thing uh I want to say
is to read two quotes that are in the
book If I may uh only one of them is by
Patrick uh who writes an not I’m sure
this is one of her favorite sentences in
the book you can sort out most things if
you follow the money
and you’ve clearly done that um at uh
great risk sometimes and at great Labor
in in terms of your uh research and the
second is from another man I admire um
who wrote the preface George Soros who
writes um corruption is one of the
greatest enemies of
democracy uh and that relates to my
second point I am literally back 48
hours ago from Ghana and uh I can tell
you um with great trembling
conviction corruption is not one of the
greatest enemies it is the greatest
enemy of democracy certainly in
subsaharan Africa and here you have as
you have in South
Africa the two most liberal and
successful democracies in Africa of any
country of any reasonable size and
Corruption is eating both of these
democracies is alive and this is your
event not mine I’m not going to deliver
a lecture on Ghana today but um I think
much of what you write about in the book
Patrick in terms of the implications of
corruption for the uh erosion of um
undermining of development
democracy uh and Environmental Quality
and and Justice no matter how you wrote
rotate it is just kind of visibly in in
evidence there and even more so of
course elsewhere in subsaharan Africa
now so we’ll talk about um all of these
uh
relationships if you uh pan out to the
question that a not is asking in this
project uh of course we’re going to at
some point have to get very systemic get
Beyond very bad people to talk about
about the relationship between the
corruption you see on the
ground uh and as you also uh expose in
the book opaque Financial systems
corporate governance failures and the
whole kind of
system of uh International engagement
not only by very bad States led by very
bad people like Russia the Vagner group
and so on um but by in international
institutions and
organizations that just uh don’t seem to
be doing uh very much about it so I
thought perhaps we could begin with each
of you um telling your stories uh and
then we can back up to the more systemic
uh reality so Patrick you know we’ve
heard the Top Line uh about um Global
witness and its achievements and your uh
founding an instrumental role in it but
could you tell us more about your
motivations uh your journey really
leading to the creation of this your
founding
principles and um you know maybe give us
a a narrative or two of uh some specific
things you found okay well thank you and
I’m very unused to people being nice to
me that’s very clear from longer list of
quotes of tributes to the book so I feel
a little bit embarrassed anyway but
thank you for for all all your
generosity um well like in Britain all
all best ideas start in a pub and and
Global witness was no different it was
the Betsy Trotwood of the farington road
in London um and I was volunteering for
an environmental
organization uh I’d made two
particularly good friends there we were
sitting having a few loggers on a sunny
uh summer evening and this was in the
early 1990s and we found out we were by
complete coincidence really interested
in what was going on in Cambodia and
what was going on in Cambodia in the
early
1990s was the un’s up to that date
biggest peacekeeping operation ever
there were 21,000 troops on the ground
in Cambodia to bring an end to a Civil
War by then between the notorious Karu
Rebel group and um and uh the government
um and also the UN broker the first time
the UN had actually done it the first
Democratic elections in Cambodia and so
we were just talking about that we were
interested and and we had been reading
newspaper articles and they were very
vague there wasn’t much information the
place was a war zone but it said that
there were reports of Timber rainforest
Timber coming from cambodia’s rainforest
across the border into
Thailand um and being bought up by the
Thai Timber industry and we thought well
if that’s true
presumably that is money that’s funding
a civil war can’t think of any other
reason why they would do it um and we
were kind of Greenies you know
environmentalists whatever young
inexperienced naivity was a major driver
in all of this I have to say um and we
thought we asked ourselves the question
is that an environmental issue or is
that a human rights issue environmental
because the rainforest has been cut down
but if it’s funding a war it’s a human
rights issue
too and then we thought well if you
close that border to that trade you cut
the money to the cam as you stop the war
why doesn’t somebody do that and we
thought why don’t we um and we were
three people we had no experience um no
money um just a very crazy idea but we
thought we really want to do this and we
spent 18 months trying to get some money
together got a little bit from uh
the Dutch version of Oxfam which is
called noid we had a meeting I should
just say by way of a narrative with um
the then second in Commander
oxan um we sent a proposal in and he
called us in for a meeting and we were
ushered into his office and his
assistant said oh he’ll be in an Amo and
we could see our proposal on his desk
and it said will they survive scrolled
across it and we thought he didn’t think
so obviously give us any money um but
anyway we got some money and and our
plan was to pose as Timber buyers
European Timber buyers travel up and
down the Thai Cambodia border on the
Thai side not the Cambodian side because
that was kou control and we’d be dead
for sure and see what we could find and
what we found on that first trip was
easier than we thought um we found these
massive stockpiles of rainforest Timber
um we would drive in photograph film
people talk to them we knew nothing
about Tinder absolutely nothing didn’t
know what it was worth what species it
was what anyone did with it no idea but
it didn’t really seem to matter but we
worked out we got you we cross referen
all the information we worked out the
trade was costing rather earning the
Karu between 10 to 20 million US dollars
every month um and was an absolute
threat to the peace process and to this
new
democracy um and I’ll I’ll stop just a
mod because what we managed to do um was
thinking okay where’s the pressure we
can bring to bear we have the
information where’s the pressure we can
bring to bear a mentor of ours like Alan
Thornton said Washington’s the place
where everything happens go there so we
did had no idea about how Washington
worked but we we got through it and
America put pressure on Thailand the
Border was closed um with then 18 months
the karus were out of money and and had
defected um but in the course of that
because we didn’t know about corruption
we didn’t think about corruption and
Corruption was not a much talked about
issue then but we came across some
leaked documents in the course of all of
this which were from the Cambodian Prime
Ministers there were two it’s a long
story um and the Thai defense minister
authorizing the export of a million
cubic meters of Timber worth hundreds of
millions of dollars from keru’s
territory into Thailand what that was
was evident of the Cambodian Prime
Ministers and the K Rouge collaborating
with each other the battlefield enemies
to funder war and to make money and that
was a discovery of for us of corruption
and I probably occupied enough air time
to start any like that uh before I go to
a not could you I I know this could be a
several hour narrative but could you
briefly tell us how you went from that
to building a worldclass organization
that has had the impact that you’ve
had sure um well we didn’t start with a
master plan when we got to October 95
we’d had money for a year and we were
very very surprised we were still going
um and we had no strategy um this guy
mentioned Alan Thornton one of the
founders of Green Piece came to us with
this idea and he said there’s a Civil
War in Angola amongst one of several
horrible Civil Wars going on in uh West
Africa the time and the UN Rebel group
are funded by
diamonds and why don’t you I’ll I’ll
give you some money why don’t you go off
and have a look at that long story short
we launched a report in ’98 um after
some
investigations which was the birth of
the The Campaign on blood diamonds um we
couldn’t investigate it in the same way
as we did with Timber you know where we
knew nothing we tried that with some
Diamond dealers and I remember being in
this room and Guy s of got a plate of
diamonds and some tweezers as far as I
was concerned and said okay what do you
think and I picked up the tweezers and
as soon as I did that he said you’re not
Diamond deers because they don’t do it
like that you said okay that wasn’t
going to work um but anyway uh we we
managed to um raise that issue to become
a a public issue and I think when we
began with the Cambodia stuff no one was
particularly interested the presswise or
anything else you know Cambodia country
long way away um whatever the blood
diamonds hit a nerve and you know
without any we had no press office there
were only four of us um but it went
ballistic um the report came out on the
day that Civil War re-broke out in
Angola um but in the course of
researching that the other half of that
Civil War was funded by oil and the
government controlled the oil but as the
IMF said no one knows how much oil
they’re getting no wonder that they
suspected 44 billion dollar a year and
they suspected a billion of that was
going missing um and we thought we can’t
just tackle one side in the Civil War we
have to tackle both we launched a
campaign on oil and it grew from there
and we became started looking at
corruption generally and then kind of
the realization every corrupt NE deal
needs a bank little bit of banks on on
that
goes way it began the mushroom great um
so what’s interesting about you to uh
being paired here um uh in this event
today but maybe I can say in this
purpose this cause is that Patrick
you’ve kind of Started from the ground
up uh
experiencing uh you know these real life
stories of corruption and trying to work
in a way to the theory of what it’s
doing to societies and how to combat it
and not you’re a teacher you’re a
thinker you’re a researcher you’re a
professor at the best business school in
the world and um you kind of started
with the theory and move to the practice
of um you know how corporations are
governed or
misgoverned uh and how
societies regulate or fail to regulate
uh corporate excesses and how it relates
to the broadest question we could
probably asked particularly if we’re
walking back and forth across the street
which is what is the relationship
between uh capitalism and democracy so
why don’t you reflect a little bit on on
your journey and the journey that led to
the creation of this program thank you
thank you so much I have a lot of things
to make so I just do that very briefly
um first of all I have to thank Larry
because actually this idea uh of this uh
program came from Larry and uh and the
timing of that was uh when we met uh in
December 2022 I was coming back from a
um anti-corruption conference that I
went to an International anti-corruption
Conference that was taking place in
Washington DC for the first time ever
and among my objectives going there was
to meet Patrick ell whose book I read
who uh whose organization Global busness
witness I uh became familiar with
through a 60-minute story uh called
Anonymous Inc which exposed their work
uh right here in the US exposing what
they were surprised to hear was the ease
with it with which you can launder money
into this country through the top law
firms in this country so these were
enablers from the law not from you know
corporations uh in in the capitalist
system but anyway Larry then said got to
start a program at cddrl uh the other
person I met in that very same
conference um is Raymond Baker and uh
Raymond Baker had a book called
invisible trillion which he gave me an
advanced copy of uh with a preface by uh
forward by Larry diamond and I’m like oh
Larry I just met Raymond Baker Raymond
Baker is in uh MBA Harvard MBA
1960 and um has a organization called
Global Financial integrity and he
discovered what he calls the Achilles
Hill of capitalism about which he wrote
a book in 2005 and I met him and he said
I bet you I’m the only MBA here and I
said well I definitely bet you I’m the
only Business School faculty here what
is the business School faculty doing in
an anti-corruption
conference um and um so it’s because I I
actually failed to get an a panel
discussion on the corruption of
knowledge into that conference but I
still decided to to go and kind of see
the scene uh and who these people are
anti-corruption and maybe meet people
like Patrick Ellie I didn’t know about
Raymond Baker but I asked people to
introduce me to people doing corruption
or corruption enablers in developed
economies and so because I’ve already by
then really thought a lot about enablers
and enablers of corruption is both about
sort of legal corruption in developed
countries and ways of of corrupting the
system and sort of the enablers of what
we all recognize is corruption you know
bribes and things and extraction uh in
developing democracies and so it’s
intertwined anyway with continuing with
thanks uh I have to thank didy cow and
also uh Frank over there and our
collaboration with Frank Diddy and Larry
uh go back to a conference in
2020 uh on corporations and democracy
and so this was really where we you know
really put our foot on Democracy as a uh
topic for Cassie for the corporation
Society initiative to focus on so it’s
beyond corporate governance it’s about
Democratic governance and and they were
intertwined uh we were by then or at
least I was by then convinced and so we
did this with a bunch of law schools
policy schools Business Schools uh and
cddrl and and U Cassie at Stanford with
the law school at Stanford and John and
uh then Dean uh um who’s now a Provost
opened uh that that that event um and
did is now and all four of us are now in
this initiative together then I have to
thank hasham Salam who uh kind of nudged
me forward okay let’s do it let’s do it
let’s do it uh and and kind of getting
through to the busy Katherine Stoner to
uh to welcome uh this uh program into CD
L and to John uh for uh for agreeing to
do this collaboration uh that brought us
to uh to today okay so I am uh is that
and of course Lisa Loretta uh and um
Nora and and iy the the staff directors
and project managers that got this
beautiful website and uh and all these
Logistics today uh that that we have to
thank for without whom we couldn’t do
this so I come indeed as a theorist as a
finance theorist in a business school I
was not thinking that my work had
anything to do with corruption uh I
lived for 25 years in the little bubble
of where financial markets are a
wonderful thing and uh you know we’ll
write our models and do our math and
that was my life until the financial
crisis so that was a big trigger for me
to start asking questions about what may
have gone wrong
and that just I couldn’t look back a lot
of my colleagues that looked at what
went wrong shrug their shoulders and
moved on to do their work um and of
course there was a lot of research to be
done but you know would you go down to
the policy and get your hands dirty and
go there and argue with people and
challenge people and all of that not so
convenient but I just couldn’t let go of
this and so I started peeling layer
after layer to really start thinking
what about what is going on what am I
seeing why am I seeing it and I can tell
you the disciplines that I was educated
at would not give me the answer I had to
go out of my Silo I had to look at
political science at sociology at
Psychology at all these uh things and at
the law and how the mechanisms of the
rule of law were working how the laws
were written how the laws were enforced
and how that interact with all these
markets so you know capitalism democracy
big words and Corruption so far we
discussed corruption but capitalism and
democracy I mean this is the kind of
words that are thrown around a lot and
oh capitalism is about free market and
about um minimal government intervention
uh Etc well what does that even mean how
can you have government how can you have
markets at scale how can you even have
corporations come to existence without
competent governments how does anybody’s
right get protected uh including
corporate rights and then how about
responsibilities and accountability what
happens there when corporations come
into the picture being
empowered given legal rights and
protections but nobody home when they
cause
harm that became my issue corporations
in the rule of law capitalism in rule of
law capitalism in democracy as a way for
us to get a rule of law that we
want so here we are uh I when I read
Patrick’s book when I read Patrick’s
book when I saw the uh the 60-minute
report there were numerous points of
that resonated with me that connected
with what I was seeing and what I was
thinking about which is why I wanted to
meet him uh he talks about the enablers
the criminals and the corporations that
pay the bribe the neers who Park their
proceeds in real estate in London New
York Paris and Beyond offshore bank
accounts uh all of that are not over
there where corruption is in Angola and
in all these other countries but they
are over
here uh so the enablers are here and
therefore you know all the different
governments are here and every single
day in since I’ve become so immersed in
this issue in the intersection of
capitalism and democracy every single
day there are case studies of that
problem for example over the weekend uh
in the emails I get uh I subscribe to
propa propa is a investigative reporting
uh I’ve written nonprofit media in this
country and they have a story about how
the US government defended the overseas
business interest of baby formula makers
and kids paid the price this is about
toddler formula that was getting kids
obese that were getting mothers off
breastfeeding in uh in developed
countries and the US trade
representative was helping the
corporations fight against you know
restrictions in different countries in
Thailand and other countries to try to
limit the marketing the misleading
marketing of these products addictive
products harmful products and all of
that so when we teach in this business
school marketing and operations and
finance and all of that are we looking
at what can go wrong or are we not
looking at what can go wrong if you do
look you do see and then the question is
what are you going to do about it how do
we have a system that actually make the
market work for people make the
corporations work for people make the
governments work for people it’s a huge
Challenge and um you know a lot of
people are working on it a lot of good
people are working on it and some of the
bad people are just just greedy people
people who respond to their incentives
people who you know may have gone to the
best business schools and are not seeing
the full implications of what they’re
doing and I think it’s our
responsibility in this business school
and everywhere to uh talk about these
issues and get uh the system to work
better because our democracies are very
um fragile right now in all parts of the
uh world and um that interface with
capitalism is is a piece of it a big
piece of it and that’s what we want to
do great well I’d like to keep moving
back and forth I wanted to ask Patrick
to talk more abouted Anna and you know
shell come to it later yeah but weave
that in whenever you’d like including
right now if you’d like to this is about
global corporations
then yeah I mean
yeah it was just something
um in the way our work developed as we
sort of got more understanding and and
working on a wider range of things is a
case um that we worked on um not that
long ago where um a former oil Minister
in Nigeria ganete awarded himself um an
oil concession the richest oil offshore
oil Block in
Nigeria um awarded it to company called
Malibu oil and gas no one knew
technically who owned it but it was him
um then shell and any the Italian Oil
Company the largest company in Italy
paid $1.1 billion doar to the Nigerian
government who paid $1.1 billion to
Malibu oil and gas so it wasn’t a
corrupt deal because Malibu oil and gas
didn’t get paid directly um but we and a
few other organizations thought well we
think this probably is a corrupt deal
and we we investigated the hell out of
it and it really really stank um
shell uh and any shell in particular
hired quite a few former MI6 people on
their staff we somehow managed to get
hold of lots of internal emails uh which
showed what they were planning to do how
they were doing it they knew that a lot
of the money was going to go into
election campaign of good Lu Jonathan um
in
Nigeria um and
uh it it got blown into the open it
became a big court case with the Italian
prosecutor in
Milan uh Prosecuting shell and any and
ultimately failing um and I have no
doubt at all that those companies were
guilty of bribery and Corruption um but
what we saw as well was just either the
hurdles that law enforcement faced so in
the case of Britain the serious
Fraud Office or pres of crime unit
woefully
underfunded um you know getting
information but not getting the backup
to really push it but governments
absolutely being on side either overtly
or not overtly with those companies it
didn’t suit them at all and I’m talking
about you know Western governments um
and so there’s kind of this an effective
impunity so corruption cases are
enormously difficult complicated
expensive to prosecute people don’t want
to do it I talked to a
guy an American friend works for a law
firm who said that the serious fraud
offices budget is about the same as the
uh I don’t know what you call it but the
attorney’s office in Arizona um you know
for a major Financial Center that’s
totally inadequate and so you have to
ask yourself the question how interested
are our governance in really clamping
down on this issue there is an n came up
it’s also Larry you might remember that
you moderated a panel in that
cooperation and democracy conference to
the at the request of Luigi zingales who
was on the board of enna and found
himself isolated wanting us to bring in
a US prosecutor on the foreign corrup
Practice Act in the US asking whether
the us could help through its law
against
corruption uh by Foreign Foreign Corrupt
Practice Act to
bring any order to this issue and it
wasn’t clear like if there’s corruption
who is going to do something about it uh
was sort of the issue he was
disappointed when he was at the board of
in because he found himself very
isolated on the board and people not not
wanting to talk about it not wanting to
go there and wanting to get away with uh
with what what was going on so it’s like
again you go on a corporate board and if
you want to actually look at something
that might go wrong they don’t want to
hear it they’d rather not and then if
they can get the government not to do
something about it and you know unless
some other government does something
about it you know you get away with
it I want to um before I come to the big
systemic question you want us to get to
about the relationship between
capitalism in crisis and democracy in
very deep recession if I can put it that
way and then we have to interrogate
whether capitalism is really in crisis
uh I want to talk a little bit more
about these pieces uh and before I come
to the question about enablers um you
shared your stories I’ll share one of
mine uh very
briefly uh so like Raymond Baker uh my
passion my experience my analytic
conviction uh that corruption and
kleptocracy are very much at uh the core
of the problem of underdevelopment in
the world particularly say in the
postcolonial era is um uh shaped by my
experience in
Nigeria uh in uh the 1970s
1980s and um in the 1990s you will know
uh Patrick um one of the worst tyrants
uh in the world one of the greediest and
most corrupt and destructive the
military dictator s abacha was ruling
Nigeria and um was putting the
brave Advocates of uh environmental
defense and anti-corruption led by Karo
wewa uh in the Niger Delta on trial with
the intention of hanging them which
ultimately he did a group of uh us
scholars in Nigeria including myself um
went to the United States government I
have to be very careful now uh and saw a
high official in the US government and
pleaded with the US government um to
impose sanctions or threaten serious
crippling sanctions against the abacha
regime if they murder murder murdered uh
kenar wewa and the other uh agoni
activists in the Niger Delta oil Rich
Delta in the show
trial and the answer we got back was uh
and you don’t forget a statement like
this right it just kind of burned in
your memory the exact words we can’t do
that and the words any reminded me of it
we can’t do that because because if we
did the Nigerians would take away our
oil concessions and give them to the
French and
Italians and fast forward now there’s a
new Cold War um over and in Africa it’s
not only about oil it’s about strategic
minerals of all kinds so talk about
enablers in any way you’d like to
Patrick I think the company’s too polite
to let me talk about them now I’d like
to but um
yeah I I
think what we all s talking around here
is that corruption is a a globalized
industry very often people like to think
oh it’s something that happens in that
hot tropical country there or whatever
but how does it work and you know that
was a brilliant example and a chilling
example of that at a top government
level um from our perspective and
through a corruption lens which is the
only expertise I have really um when we
would carry out an investigation okay
there’s the stuff you find out so how’s
something done and in going back to your
question on how did we evolve so you
know every corrupt deal needs a bank um
every corrupt deal needs an anonymously
owned company the getaway cars for for
crime really so we started looking at
all of those things and of course what
you find is that you know
anti-corruption organizations like ours
but also law enforcement are faced with
often impenetrable barriers of
anonymity whole networks of anonymous
companies from the you know most of
which actually were probably in in the
UK and us but more famously in in the
Caribbean or uh the South Pacific um and
so it’s very hard to sort of penetrate
that
Veil um and that’s you know basically
accepted it’s an accepted way of doing
business if you do penetrate the Val and
you get the information and you publish
it like we do um then you get the law
firms after you um I was talking with
gentleman there about Monda in London
which is a pet Obsession of mine whose
business model stated business model was
to take on dodgy clients because they
get more money from um and the chances
are they can throw so much money in now
what’s called slap suits at uh
organizations like ours or IND
individual activists that whether you’re
right or wrong you lose um because you
just can’t fight that that wealth um the
accountancy firms who know what’s going
on the big four or five or however many
there are these days um the pr companies
they all this whole network we got in
the book I call it the Pinstripe Army um
of enablers who can you know make all
this stuff happen and you just another
example from the past back in I know
2006 we we did a report called it’s a
gas um and we were looking at Natural
Gas being piped from Turkmenistan to the
EU uh via Russia and the
Ukraine um and the
Ukrainian um part of the pipeline was
taken over by a company that no one had
ever heard of um it had no experience or
no background at all in oil or gas so
what what was its purpose this company
um it’s called rosu kugo as I remember
and it’s only purpose was to make money
it was to cream money and we made a
recommendation in that report we found
out here was guy called Dimitri feres um
and we said how can the
EU be reliant on energy security when
you have this kind of thing in the
pipeline long before the Ukraine war
happens and that’s not to say anything
about our predictive capacity we didn’t
have it it was just we we it struck us
that was deeply wrong um and part of
what we were trying to build up was this
issue of you know EU energy security w
we weren’t trying to promote the use of
fossil fuels in the EU but how at risk
we were by not tackling this kind of
corruption but we could get nowhere with
it could get no meaningful action
against it ferash as soon as Russia
invaded Ukraine was sanctioned as one of
the many oligarchs who
were you want to comment on en enabler
yeah is a term I used in a um sort of I
looked at what happened to me in five
six years of lobbying for financial
reform and uh you know in order to be so
unsuccessful like I was there had to be
a lot of enablers of the system as it is
or the failed regulations as they still
are and the enablers
uh
allowed um
you know
[Music]
truth analysis valid analysis to be
distorted uh the enablers confused the
public the enablers confuse the policy
makers and they included obviously uh
you know accounting firms um and uh the
credit rating agencies and the uh and
lawyers and they included economists and
academics as well uh so they they had a
role in this system to to do analysis
some of which were very flawed some of
which were based on very bad assumptions
on narratives that seem to reverse
engineer what we saw is good and uh
which ended up with uh being favored by
uh by people with power who preferred um
certain narratives um you know uh about
the financial crisis Ben ber was my
colleague preferred a narrative about
how it was all in the plumbing and all
uh and that same narrative was being
Advanced for you know crisis in the last
year in banking uh it’s all in the
plumbing it’s all liquidity just a
sudden run on a clear blue day uh and
that is a false narrative that diverts
attention to what uh what you can do so
uh this is among my deepest
disappointment that that they are
enablers and sometimes it’s what they do
and sometimes it’s just what they don’t
do um they just it’s just not convenient
to do anything and so you stand by so
enablers are also passive enablers uh
they just fail to do something so you
know in the end of the book in 2013 we
talked about the lack of political will
so what does political will take in a
democracy it takes the public knowing
something and the the public gets easily
confused it takes the policy makers
wanting to do what they need to do but
you know you got campaign contributions
you got some Lobby telling you something
that might sound right whatever and um
the political Willers doesn’t get found
gets lost truth loses power Etc now we
have social media political discourse
gets corrupted so there’s much more
going on a lot of it all of it and up
being some some for-profit entity uh
finding you know ways to to get into the
discourse H to confuse a policy maker or
or the broader public uh so we have a
huge challenge uh and so the erosion of
democracy um or the recession of
democracy as you as you call it uh Larry
uh in in our de
democracies uh is a lot to do with with
the forces of capitalism uh and you know
we have research on that in various
places it’s not you know you know if we
have with this program I’m hoping to
collaborate as long as their research
itself is not corrupted and that is a
big problem I am going to go to a
conference in Chicago in which uh the
head the panel I’m on is called this
conference is not paid for by big Tech
uh well I mean we had conferences in
this very business school funded by Bank
lobbyists we don’t have it right now
maybe because I’m still here but I don’t
know uh what you know whether it’s
profitable to get funding from uh from
me you know we have this debated door
right now at the school about whether
they should take money uh from from
fossil fuel or not and it’s you know we
want to do good when maybe taking money
is good uh even if the people give you
the money um have some conflicts of
interest and maybe everybody says that
the conflict of interest won’t affect
things but sometimes they affect things
very subtly you know a lot of where you
see you know conflict of interest in the
media and I didn’t mention media in
media that is you know no nominally
there to to hold government to account
or to hold power to account in general
uh have their own issues access issues
they won’t don’t want to annoy the
people who give them access I see this a
lot in when I interact with media um
that certain media cannot write certain
things uh or their editors don’t want
them to write certain things you know
the editor of the uh of of an editor in
the telegraph resigned because they
wouldn’t publish a story about
HSBC uh money money laundering because
HSBC was a big Advertiser in in the
telegraph so I mean you just see these
things about the numerous ways in which
private power interferes with democracy
private power people and private power
of Corporations and so unless we
recognize that we will not be able to
fix our
democracies which then are to create
rules for everybody corporations and
people alike and that’s that’s what what
we want what we have to do if we want a
system that works so the the enablers
include media include Academia include a
lot of people but there are a lot of
good people in all these places too so
you know we want the good people to have
more power and the bad people to have
less
power well you you’ve raised this just
please go ahead sorry yeah so something
just occurred to me when you were
talking on that um relat to to climate
change um as everyone will know at the
Rio Summit in 1992 I think it was
126 governments committed to a whole
range of of um pledges um not least of
which was to bring down carbon emissions
to found the to form the United Nations
primar convention on climate change U
and a whole load of other stuff not one
of those pledges has been CED not one
and during that period as we all know
you only have to read the papers because
look at the TV fossil fuel industry has
been pushing back again and again and
again all the time pushing back leaning
on the government um giving political
donation sending their lobbyists out in
force and so those who um have resisted
that and I’m I’m looking at Kumi over
there you know in his his role leading
Green Piece um in the past um you know
many organizations work really really
hard to try raised the issue of climate
change the threat of fossil fuels um and
what we’re seeing now in Europe I’m not
sure about the States you know in the UK
they’re making it illegal to carry out
many forms of protest against the fossil
fuel industry with punitive punishments
on people you know you block a road for
half an hour you’re in jail for two
years um and that kind of thing and
shell just taking out a case against
Green Piece for occupying a a platform
an oil platform I can’t remember how
much it is it’s multi-million I think a
real threat to Greenpeace so you had a
failure of the democratic process and
the government’s pledged to various
things they failed to carry it through
the you know the Civil Society used all
of the legal means available to them for
the next 30 Years and the only thing
you’re left with at the end is you got
to do something illegal and pay the
price because governments are not doing
their
job so um might as well now uh since
sonad is in roduced it get to the
systemic issue the
relationship between capitalism and
democracy I mean when you consider that
you are talking about private
corporations
Patrick uh and the accountants the
lawyers the bankers are all part of the
capitalist
system you know is there something just
rotten about capitalism as a global
system system is there something
intrinsically rotten about capitalism
period or um might it just be the case
um
that people in any system are
potentially very bad people without uh I
see my is my colleague Frank fukiyama
still sitting there strong states with
uh strong rule of law and Regulatory in
institutions to restrain them and uh put
the fear of God into them by uh you know
holding them accountable and uh you know
ensuring that people who do Very Bad
Things uh that are in fact violations of
the law will be discovered and not just
by you uh and Global witness um and your
work but um by the legal Authority ities
and and held accountable so maybe now
Patrick let’s start with you and and
talk about the systemic question uh and
how you see the relationship between
capitalism and
democracy and we’ll briefly concl
conclude or you can reflect on what the
what the real levers of change are
probably anat’s area of expertise more
than mine but from the perspective that
that I’ve had um I think the the rule of
law is a critical one
um what we’ve seen I think in in my
adult lifetime is a real decline kind of
all the issues we’re talking about
companies are getting away with more
than they did um and whenever you know
we and I know it’s true of other
organization try and get a law into
place about you know curbing corruption
or being trans arent about your um
payments to countries that you know
you’re buying oil and gas from or
whatever you’re always meeting with the
barrage of lobbying from the industry um
saying they don’t want to do it um so
they don’t want to law and that they
have more influence than we do but also
um they will promote voluntary standards
certification of their sort yes of
course we’ll do net for zero by this
date or whatever it might be in our
experience volunteerism simply doesn’t
work you cannot trust a profit-making
company especially a listed company
whose Duty it is to return the maximum
amount to the shareholders in the next
three years or five years you cannot
trust them they’ve shown in every case
to be completely untrustworthy so you
have to change that system that’s one
thing that short termism of public
listed companies you know they have to
be thinking going in sort of the BCPS
Direction um they need to be forced to
do it um
yeah so and I think that yeah you can’t
trust the voluntarism the voluntary
approach you know Corporate social
responsibility it’s a joke um
so what you know we’ve termed the
predatory capitalism you know it’s not
we’re anti- capitalist but it’s
predatory capitalism and whether that’s
you know relating to climate or whatever
that you know you’re referring lar to
your experience in in Nigeria and
certainly it’s my experience of
you know I guess in
neocolonialism you know a lot of the
most resourced rich countries are
amongst the poorest countries in the
world the resource curse is a you know a
well-used
term um and they’re the poorest
countries in the world ruled by corrupt
Elites precisely because their resource
rich and precisely because the people
who want those resources the rich world
are happy to turn a blind eye um to what
takes those to to to how to get those
resources and I think there we’re at a
real Crux point because of you know the
issue of transition minerals now um and
if you look at Democratic Republic of
Congo it possesses 2third of the world’s
Cobalt Cobalt which is essential to the
the energy transition um and everybody’s
lining up to get a slice of that pie um
you know Russia the Vagner group are
taking over in many countries and I read
about three weeks ago that Russia and
DRC have signed military pact um you’ve
got China the EU all want to go in there
and if they if they’re going to act like
the colonial powers that most of them
once were then it’s going to be a
show excuse my French
um now we really really need to be
serious about getting this right or
we’re just going to repeat the cycle
we’ve been going on you know for a
century or two yeah so I think one of
the the most important important things
in terms of getting us systemically you
know solve this is first of all to get
out of the false dichotomies that we
that we keep being offered that somehow
you know there’s this big government cap
socialism and this capitalism over their
free
market and you know what we’re talking
about and what you were just mentioning
we had an together with inviting Larry
uh and uh raymon Baker we had in also in
May 2023 um author of a book called The
Big myth which was about that propaganda
of hating the government in the US and
and that has been part of the problem
and um you know we had an event also um
last year with Tariq fancy a um Black
Rock sustainable investor who called BS
on this and you were using corporate
social responsibility where our event
was called CRS Corporate social
responsibility plus ESG the recent
buzzword uh equals BS question mark so
that was the equation uh we posted as a
thing and in it uh interviewed by
Bethany mcin who’s also going to be here
again this this week uh
uh people asked uh him about free market
and he said free market is is one of the
big hoax is a big hoax said saying that
the government is intervening in free
market is just like saying that the NBA
is interfering in the free game of
basketball by setting the three-point
line someplace you know no Mark no rules
no markets so to your point uh uh
Patrick you know the law is our joint
Collective commitment to a set of rules
that we ourselves would be tempted to
break you know why do we have a speed
limit on the road we you know or law
Against Drunk Driving we may be tempted
to drive too fast but the policeman is
there to stop us and and remind us that
we shouldn’t uh so same here and that
applies to people very bad people but it
also in most challenges applying it to
corporations because corporations have
so much of a veil of of secrecy behind
them and so much deniability to
individuals that you know people start
being angry about why no executive goes
to jail and this is a good serious
question to ask who should bear the
liability when a corporation repeatedly
causes harm should it ever fall on any
person if that person was a high level
responsible officer should they not be
responsible that they are coroporation
doesn’t cause harm those are the kinds
of questions that I hope this program
will go to uh we didn’t add the rule of
law to the name because democracy is
supposed to embody a rule of law that
the people want uh the rule of law
should represent the people and the
democracy and that rule of law should
apply to these legal persons that we
enable to exist and pro and whose rights
we protect in markets and and in the in
the economy even speech rights and other
rights but if they have all these rights
they should should if they can go to
courts to enforce contracts if they can
sue if they can do all these things they
should also be responsible to society
and accountable to the people uh and so
that’s how we’re going to get Democratic
accountability the first item of
business is education so I always fall
back on the fact that we need to educate
the public I start you know because I
have the opportunity to start with
Stanford
undergraduates um
that’s the when people say to me you
know how depressing everything is I say
well I can say I had 150 students and
they understand the world better right
now and I’ll have somebody walk up to me
and you know Advisory Board and say oh
my daughter took your class and she now
sees how the world works so can we teach
the young people who might get some
fairy tale story in high school about
how the place actually works uh to be
Savage in dealing with the financial
sector which I happen to know a lot
about so I teach them that and how
corporations operate and what we’re
allowing and not allowing people and
corporations to do and what should we
allow and not allow people and
corporations to do that’s the essence of
you know Civic minded you know
leadership Civic you
know just Civic being in a democracy so
you know our democracies should be where
you know Justice
comes about uh that’s my hope so thank
you very much for that that was really
interesting discussion I have a question
about the way that this whole system has
been affected by the rise of
cryptocurrencies uh Patrick’s story
about the timber being smuggled out of
Cambodia reminded me of the story in
Zeke Fox’s book money go up about the
crypto industry that there’s apparently
an entire city in Cambodia where people
are captured and forced to Market tether
so Fox was interested in how did tether
survive as a stable coin and so they’re
actually doing this in a closed City in
Cambodia where you know hundreds of
people try to Market this coin to
retirees in North America and it seems
to me that this whole sector has created
this entire extremely
non-transparent you know world uh in
which the kinds of phenomena you’re
describing are you know it’s an open
field for for that sort of
thing yes uh I I love the number go up
highly recommended book uh by Zeke Fox
uh of Bloomberg um who traces this uh
sector um you know it started with
public anger uh and Bitcoin in 2008 all
of a sudden we were supposed to you know
have a TR you know was a trustless
system but but we were supposed to trust
it somehow so uh and there’s some
algorithm very heavy uh you know
resource demanding and the rest
is oh I don’t know I mean uh
you can sell all kinds of things to
people uh and if you get a lot of people
believing in something it can also hold
value for while I think in 15 years uh
it’s hard to see uh the actual use case
uh for uh we have plenty of currencies
in the world and uh so having currencies
is not our problem um and some
currencies are just useful for certain
you know things I say okay you go to Las
Vegas and you change your central bank
money for you know little tokens and
then you play and then you change them
back you know you may have some freaking
fer miles and they will buy you a ticket
on a particular Airline so there are
many ways to pay for things in a
particular of context you have a axi
Infinity game and you know there’s a but
to from that to a useful currency for
payments uh you know the story doesn’t
doesn’t work but of course hype uh is is
you know lives and um so I don’t know
where this is going but it certainly
fits into the picture of you know
opacity and confusion and fear of
missing out and all kinds of things
great who else has a
question Don
Emerson oh my God you’re walking this
well it seems like most offici
do this is a fascinating uh experience
um and unfortunately my mind is kind of
all over the place my mind visits an
alternative
Universe which is exactly like this one
except for the content and in that
alternate universe Stanford University
the business school at Stanford
University is now hosting a discussion
of an initiative about socialism and
autocracy and the relationship between
the two because if we look at capitalism
and autocracy I think for many people
not everybody of course there’s a
natural tendency to think aha yes
capitalism can danger endanger
democracy but can democracy endanger
capitalism now that’s an intriguing
question
I’m not sure if it’s on the agenda of
the initiative and in a way one could
argue that what I’m doing is not helpful
at all because the the detail the
practicality of activists who don’t
worry about the theoretical meanings of
terms right but actually are operating
on essentially ethical
principles that don’t require actually a
lot of theoretical
justification so you know is is there a
causal relationship between what happens
in capitalism and what happens in
democracy and sometimes can that
relationship be ethically unfortunate
and how do we single out those
connections those causal connections to
try to prevent them because we’re living
under these two gigantic words and the
Temptation is to really uh operate at a
level of abstraction do we really even
need to talk about capitalism and
democracy
uh given the practicality of the
experiences that you have just shared
which are essentially ethical I not well
I
mean the issue is one about institutions
you do not have anything kind of working
in scale without some institutions and
then I ask a question of governance
that’s all and I ask it of all
institutions the people the in
institutions and people institutions are
abstract things okay we created them out
of you know election and and
constitutions and things of that sort in
the in the you know in the political
sphere and we create them out of the law
you know when they are private sector
institutions corporations nonprofits you
name it Partnerships everybody exists
under the law as an institution
otherwise we’re just individuals in
tribes and you know we may barter but
when you have markets at scale with
people you don’t know you need
institutions you need and contract and
contract enforcement that’s all we’re
just talking about infrastructure now of
markets so I don’t know when you say
democracy can undermine what is
capitalism anyway capitalism is set of
markets set of Institutions that are
private sector based but private sector
needs the government to protect its
rights and to enforce its contracts and
then to protect the people who are
affected by it that’s all we’re talking
about here so sure we do need to talk
about capitalism and democracy because
they interact because the institutions
of democracy and the institutions of
capitalism be it corporations and
markets interact with one another the
people in them interact with one another
if people in the corporations and people
in the government collude to harm the
public that’s the main concern okay and
they both then fail the people so what I
want is for capitalism and democracy to
work for the people and I always make a
parallel between institutions of the
government and institutions of the
private sector and their
governance do you want to add anything P
yeah I’d like to add something to that
yeah I mean in my experience and going
back to the term I used earlier the
resource curse whereby a lot of resource
rich countries are in fact the poorest
because of the way the exploitation has
happened and what I’ve seen in so many
places is that as soon as a corrupt
leader whether that’s a head of state or
a senior Poli polition takes money from
a company and those companies as we
talked about earlier could be
multinationals American for sure you
know my my colleague Simon who works on
on oil says his his working belief is
that every oil deal is corrupt it’s just
the question of how they did it this
time um and and he says that not blindly
um so so the politician takes the money
and now their allegiance is inevitably
shifting away from the electorate presum
he or she were elected um to their new
um money supplier um so their allegiance
goes towards the companies and then
because they’re probably talking about
money which is more than anyone could
usually dream of they want to protect
that money they don’t want to lose it
and so they’ll start building a heavy
mob around them they put big walls on
the palace and whatever um and and
Retreat into that they don’t want to
lose the next election because this is
going very very nicely for them so the
Democratic process is going to be
screwed from within you’re seeing this
again and again and again um and you end
up with autocracy um and you end up with
populations that are extremely poor I
quoted a figure in the book I’m turle
have changed by now but when I wrote the
book since the
1950s three around $300 billion dollar
worth of oil had been pumped out of
Nigeria most of which by shell um and in
the year I wrote the book book um
Nigeria overtook India as the country
with the poorest population 87 million
people 80% of the population living on
less than $2 doll a day so that’s what
capitalism’s done for Nigeria um and
they had an autocratic government for a
lot of that time so I I I I don’t look
at this from you know the way you
posited it like you know activist sort
of look at okay it’s got to be ethical
it’s like it’s just an observation about
what corruption does and Corruption is
part of what’s wrong with capitalism
I got the
microphone Catherine so um so I wanted
to ask how you’re defining corruption
and and just picking up on your last
point there is that capitalism doing
that or is that a weak State doing that
um because it it is possible to pump oil
without ripping off all the people who
live there and thinking Norway Canadian
Canada um so you know Nigeria had a weak
State before they found oil found oil
have a weak state so it’s not surprising
to me that they want to maintain access
to those rents right and and continue to
have a weak state in authoritarian
government without transparency so it’s
not necessarily oil that’s done the
problem that’s created the problem or
capitalism but oil has exacerbated a
problem that existed before so I mean
isn’t governance basically the the the
problem here getting back to your issue
with rule of law and
and you know obviously markets without
rules is like a basketball game without
rules right um it it would be chaos so
there have to be some rules but there
are places and sectors that rules where
rules exist and and actually do work and
so could we also talk a little bit about
successes and Regulatory successes one I
think of is tobacco um in this country
it’s not successful everywhere um but
you know there’s been some regulation
and Improvement there just try and be
brief in your responses because we’re
not leaving here without get getting Kum
NAU’s questions so go ahead
okay yes so there the state needs to be
competent the state state needs to be uh
willing to do what it needs to do
basically and so and there are a lot of
examples of States doing that the US you
know once the public gets the
information once there is a sort of
understanding broad understanding that
certain rules need to be put in place
then they can be put in place so often
time it’s because of some Scandal or
because you know you have some expose of
whatever Facebook files or whatever and
all of a sudden there’s energy behind
something from that to doing something
there’s there’s know there are different
philosophies in Europe they have more of
a
precautionary you know uh approach to
regulation here it’s much the default is
that the private sector can do what it
wants to do and only when there’s a lot
of harm that we somehow discover might
we wake up to a problem so we’re less
precautionary in our approach so but
definitely the issue is always
ultimately that’s why I ended up going
getting to democracy from coming from
where I was that if democracy doesn’t
work we can’t get the financial system
that I want um and then why is democracy
not working for this sector and then you
look around and how it doesn’t work here
or there or elsewhere okay you want you
have a question you
want did you have anything you wanted to
say on this before I come to Kumi I
couldn’t take any kum’s time go ahead
thank you um Patrick and the global
witness I just want to say one of the
very important contributions they made
to the world of protecting the space for
civil society was tracking
the number of environmental activists
that are killed on an annual uh on a
weekly basis so about 10 years ago it
was two activists a year and right now
it’s four activists roughly per
year sorry I your pardon per week per
week so I just would like to just ask us
all to just pause and bring a human
Centric uh component into this
conversation my question though is that
and and I currently serve on the
international Council of transparency
Internationals where we’ve been
grappling with the issue of when we talk
about corruption we homogenize it we
talk about and and it’s really picking
on cathine Katherine’s question
there so from the global sou perspective
what we say is that there are three
types of corruption right one is what we
call Petty corruption when a police
officer stops you on the street and asks
you for a bride in lie of paying a fine
and that’s obnoxious it shouldn’t happen
but actually the impact on the national
economy is quite limited because money
is still circulating within that
National economy the second form of
corruption is large scale corruption
which as the work of global witness
eloquently shows is very much about um
extractive Industries right but let’s
just be very clear that none of that big
scale corruption that happens in the
global South would be possible without
the participation the co collusion and
the active Bene benefiting by powerful
interests in the global North right and
the third corruption is what you could
call policy corruption in this sense
that just because slavery was legal at
one point never made it moral or just
and so on so yeah just because fossil
fuse is legal right does through policy
doesn’t mean that it so my question is
in the space of your work are you
thinking about having a little bit of a
gradation when you tackle the specific
question uh of corruption and the last
thing that I just wanted to say I liked
your question very much thank you uh but
I there’s a reflection that others have
said it before me what does it say about
us that we live in a world where the
majority of people can find it easier to
imagine the end of the world as a result
of climate change but find it very very
difficult to imagine the end of
capitalism the fact that most people can
actually embrace the idea of the world
ending by climate change but actually
one of the systems that has droven
driven us there uh yeah I’d love some
Reflections on that thank you okay we’ll
start with you
well he said it better than I
could say it’s going to be your last
chance to say anything on this platform
so say whatever you’d
like I’ll let an that go first and I’ll
dream something
up well uh to your question about policy
gradation definitely you know there are
tons of policy issues lots and lots of
policy issues that’s why it’s difficult
for public to really get you know
involved because there’s just so many
different things and they require
expertise that what we should strive for
is that you know less conflicted
expertise and more uh you
know in a setting in which you know
unconflicted experts who care about you
know really sort of good social planners
uh actually uh set the rules and there’s
a lot of rules determined in the private
sector even accounting rules and you
know auditing standards and things of
that sort and The Regulators very um
Meek about those those things in the end
we they got very few Powers uh and so as
you look at places in finance like I
know most closely uh there’s plenty to
do and it’s very hard to get it because
it’s kind of obscure other areas you
have dead people you know you might be
able to get some attention to it you
know you might be able to get some law
against smoking or against advertising
of you know ecigarettes or whatever and
uh or against
pollution uh for clean air or safety of
you know train or whatever so uh you
know there is just a lot to do and uh
and we just need to you know get people
to do it in the government and have
enough resources to uh get it right and
not overly complex uh but just just
right
and and then on the final point about
capitalism and just my last words um yes
it’s baked into us this notion that you
know the private sector uh is the engine
of growth and the engine of innovation
and that is
true it is true it’s just their sort of
I call it financialized capitalism
because I come from financi it calls it
uh predatory capitalism it’s the
capitalism that is that is undermining
democracy the typee we want to kind of
push back from Once democracy asserts
itself properly then we will be able to
get the gains of
capitalism right well uh I’d like to say
two things in conclusion unless you have
anything else you want to say Patrick I
just the only other thing I said to
really endorse what what Kumi was saying
and to pick up on what you just said and
that capit um the private sector is the
engine of growth but you cannot have
unlimited growth in a finite
World well stated uh I I’ll just answer
Don Emerson’s Point uh first uh in my
own uh direct way uh if you had a
conference on the relationship between
socialism and autocracy I think it would
be a very short
conference uh because
every like real existing socialism
rather than the socialism of Carl Marx’s
imagination um has been a disaster for
uh political freedom and individual
rights there’s no contrary case and to
my mind they are powerful theoretical
and logical reasons why they’ll never be
you concentrate that level of power in
the State uh and take away the potential
counterveiling power of private property
and individual initiative and that’s
what you’re going to get I think we’ve
had enough natural experiments and uh I
would say to you Kumi that um a
different version of what an not said
that no one I think is really objecting
to individual Enterprise and initiative
honestly earned transparently conducted
rule of law minded with concern for the
community um it’s the predatory
capitalism that uh a muck and Breaking
Free of um of transparency and
Democratic regulation that I think
really threatens um fairness human
well-being and democracy itself and I’ll
just say finally to put it in a human
Dimension which you asked us to do we
were kind of doing at the beginning I
I’ll do at the end I once just compared
uh the single best to my mind if you
need need a single statistic uh for
human development what percentage of
children under the age of five die uh
under five mortality it’s it’s a un uh
statistic it’s available for all all
countries uh over probably 65 70 years
now and uh you can look Nigeria and
Ghana became independent within three
years of one another they start out in
um very similar terms over
20% of children under five dying and
then um uh you know after a certain
period of time particularly when Ghana
emerges from the worst of its
dictatorship Ghana starts to
decline much more rapidly than
Nigeria and uh I think that you can
attribute
frankly all of the additional deaths of
children under five and Nigeria to the
fact that the quality of governance in
Nigeria remains abysmally bad and it
gets better in Ghana particularly after
2000 but really beginning in the 1990s
when Jerry Rawlings at least subed
himself to constitutionalism and
multipartism
and that 30 years of of excess deaths is
three million Nigerian children now
maybe more and it’s all due to bad
governance nothing else and most of that
I think is due to oil and when when
Ghana discovered oil I said oh my God
this is the worst thing that has ever
happened to Ghana uh and indeed
governance is deteriorating now uh and I
think um uh the resource curse is a
major reason why anyway please join me
in in thanking Patrick and anad and
congratulating anad on the pro Jo
[Music]

A conversation launching the Program on Capitalism and Democracy (CAD) with CASI Co-Faculty Director and GSB Professor Anat Admati, CDDRL Senior Fellow Larry Diamond, and Global Witness Co-Founder Patrick Alley. CAD is a partnership with GSB’s Corporation and Society Initiative (CASI) and Stanford’s Center on Democracy, Development and the Rule of Law (CDDRL).