Utrecht University: Pushing the knowledge frontier on the interaction of corporations and governments

A consortium of four European universities and the Tax Justice Network NGO have received a Horizon Europe grant of 2,7 million euros. Their joint research project DemoTrans will study the interchange between democratic institutions and the globalisation of the economy. Fredo Schotanus external link, Anne Rainville external linkand Vitezslav Titl external linkfrom Utrecht University will take part in this ambitious research project, which aims to encourage stronger accountability, (social) inclusion, and sustainability of liberal democratic societies. That the liberal, representative democracy is in some form of crisis or even decline due to political developments or the influence of powerful companies, can be witnessed on a daily basis. The consortium wants to understand the specifics of this dynamic between politics and business – that interact a lot, and sometimes too much.

Figure out what the rules within the EU should look like to keep the democratic process working
We would like to better understand the role of corporations in liberal democracies and whether and how they undermine the functioning of democratic institutions,” says Vitezslav Titl, “by lobbying, tax evasion, social exclusion and not being sustainable. More importantly, we aim to come up with a better idea of how to set up rules to avoid these issues. Of course, there is nothing wrong with a liberal economy as such. What we can see on a massive scale in in Poland and Hungary for instance, is a change from a democracy into flawed democracy or dictatorship. The democratic procedures don’t seem to work anymore, which is also dangerous for others. This is exactly our concern, and we would like to figure out what the rules within the EU should look like to keep the democratic process working.

If you look at Orbán for example; he is a very rich man (the same holds for his family and close friend) and that is because he gains from their connection with companies, state-owned or not. But there are also completely private businesses that try to influence politics. Powerful companies can shape the system into something that is less democratic. Because it is good for them, they make higher profits if they are allowed to shift profits into tax havens. If they change regulation, they can make more money. The airline industries for example are extremely successful in this: they are often bailed-out and kerosine is exempted from taxes in the EU. And do we really want companies in The Netherlands saying they will move to the United Kingdom if they still have to pay taxes? Should a liberal democracy work that way? The consequences of firms having too much of a say is one of the key aspects studied in the project.

Move towards or hold on to good governance

Within the DemoTrans research project, we want to understand the interaction between politics and business – that interact a lot, and sometimes too much. The ambition of this project is to push the knowledge frontier on the interaction of corporations and governments, and to offer robust recommendations on how to shift away from the bad governance outcome and move towards or hold on to the good governance outcome.”

How do we preserve liberal democracy in Europe? That is a big question and the European Committee has granted us a large sum of money for DemoTrans, but we can’t answer this question forever. Therefore, we will study concrete aspects of the interaction process.

Anne Rainville, for instance, will investigate on procurement, social innovation and inclusion. In Poland and Hungary gay people for example are less and less included in society. Democracy, inclusion, could be promoted by governments – and there, they are not, these governments even make it worse.

You might introduce more inclusion and social innovation via public procurement. In The Netherlands, procurement is one fifth of the GDPO, 20%. So, if you change the effect on inclusion here, you have a lot of influence in society. You could, for instance, offer procurement contracts only to those firms that employ a certain percentage of people from a certain minority, or that our physically or mentally challenged. But these contracts should not be limited to certain groups, but be open for anyone, in order to have a real representation. Procurement could be a tool, although not the only one.

I myself will investigate on lobbying and decision making. Furthermore, within the consortium we will also delve into tax havens, tax avoidance and the influence of these on democracy. In Bergen, for instance, they will investigate at what levels of government we should make decisions as a society. The ultimate question then, again is: how can we structure the governance in a way that liberal democracies can work as we would like them to and be sustainable and inclusive in long-term.

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