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Last week, I attended a very interesting conference organized by Jean-Christophe Graz, Christoph Hauert, Marc Audetat and Danielle Büschi at the University of Lausanne in Switzerland. At this conference, the prospects and limits of participation of civil society in international standardization were not only assessed by leading academics working in the field but also by members of various NGOs, including consumer and environmental organizations operating at the national and transnational level. The conference was part of a research programme at the University of Lausanne called “Living together under uncertainty” which has the aim to reinforce the relationship between academic knowledge and civil society. The INTERNORM project is trully transdisciplinary in the sense that Helga Nowotny understands the term: bringing together different types of knowledge from academics and practitioners for democratic problem-solving in the global sphere. The conference was one of the rare moments where academics and pratictioners engaged in really productive intellectual inquiry into how problems of standard-setting are framed, organized and managed in various national and transnational arenas. It also turned out to be a very cross-fertilizing event between the French and English-speaking communities in this field. Discussions revealed the many still persisting obstacles created by technical standard-setting organizations which make it difficult for civil society actors to participate on an equal footing. Yet, discussions also pointed to the strategic capacity of transnational and European NGOs to coordinate effectively across borders and to set their priorities in ways to enhance their leverage and influence. The presentations of the conferences are available on the INTERNORM project website.

(sigrid)

Just recently the renowned Göttinger Institute for Democratic Research has published a remarkable study on the motives of protest movements in Germany (“The new power of citizens”). While the book reveals interesting insights about who protests and why in 2012, it itself triggered public criticism – not for its content, but for who financed the study – the international petrol company BP. This triggered a larger debate about the role of transnational companies as financiers of research particularly into activism, which is occasionally also directed against such companies. Are research results used by companies to democratize economic projects or rather to further the economization of democratic concerns of citizens?

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There is great ambiguity on the true representation of the ‘’adoption’’ of International Financial Reporting Standards (IFRS). What constitutes the ‘’adoption’’ of IFRS? At what point can a country, company or entity claim to have adopted IFRS? What is the best measure for IFRS adoption?

International diffusion literature and transnational governance literature provides insights as to the point of departure of how global norms are translated into local laws. It suggests that laws, norms, ideas or global regulations when diffusing turn to be reshaped and edited as they are transformed into local practices. To be exact, actors translate ideas, recombine new, externally given elements and old locally given ones to form local laws. Scholars in this arena argue that, in this context, never can we suggest that passive adoption of global standards has taken place. Yet, in many other contexts, actors at both the local level and the transnational level have tended to refer to such process as ‘adoption’ as opposed to a reflection of the variant of the law, idea or norm so implemented. In many cases, only portions of the diffused law or standards are implemented. Nevertheless, actors often refer to such as adoption as opposed to a modification of the diffused law. At other times, different actors refer to the modification of the diffused law as the adaptation of the law. This ambiguity so created has led to mixed results when looking into the idea of International Financial Reporting Standards.

In the global accountancy arena there have been several calls for the world to embrace the idea of a single global high quality accounting standard- thus IFRS. These calls have been stronger following the recent financial crisis as the world continues to pursue globalization strategies and capital flows across borders became even more pronounced. In this direction, accounting standard setters have been working to design high quality accounting standards that is applicable by nearly every country irrespective of the unique economic and cultural conditions that confront these entirely diverse countries and continents. These standards promulgated by the International Accounting Standards Board (IASB) has however, been applied in different ways than that put forth by the global accounting standard setter (IASB). In this blog entry, it is my aim to try to provide some lines of reasoning on the true meaning of IFRS adoption. I do not claim that this is the first of such arguments. However, it is my claim that global standard setters, local actors responsible for the implementation of IFRSs have often referred to entirely different versions of IFRSs when referring to IFRS adoption. If indeed IFRSs were adopted, we should expect a single version of the standard in all the jurisdictions that claim to have adopted the standards.

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A while ago I gave a talk at the “Frankfurt Digital Night” at this year’s Frankfurt Book fair, making essentially three points: first, publishing requires – and has always required – to create and court communities of readers. Second, there are new digital tools emerging for creating and courting these communities. Third, in this context, openness in terms of APIs is becoming a feature.

Even long before the advent of the internet, probably even before the invention of the printing press with movable type, publishing was essentially a social network business, with strong network effects. The Matthew Principle lies at the heart of the dynamics leading to bestsellers: „For unto every one that hath shall be given.” – what is popular becomes even more popular. And the reason is that the utility –  the reading pleasure – of the individual reader not only depends on how well written a book is, but also on whether he or she is able to share this experience with others.

Paradoxically, reading books combines solipstic and social practices. From a publisher‘s perspective, the social aspect is probably much more important than the solipsistic one. Because sharing the joy of reading a certain book makes others buy and read the book as well. And all bestsellers in the history – from the Gutenberg Bible over Harry Potter to Shades of Grey – were to some degree viral, rooting in social practices related to reading a book.

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CRESC, the Centre for Research on Socio-Cultural Change, is a well-known institution for many working on finance in sociology and political science, as well as researchers in cultural and media politics. By uniquely bringing together researchers from these fields, its annual conference in Manchester is an inspirational forum for unorthodox interdisciplinary exchange, without the numbing genericity of academic mega-conferences.

The theme chosen for this year’s conference (5-7 September) proved an excellent basis for taking stock of economies and societies in crisis: “Promises“. One striking feature of this conference was the presence of journalists, NGO representatives, and professionals like asset managers (as spectators and presenters) alongside academics, which added diverse perspectives and precluded overly technical/theoretical debates. (Other conferences may follow this good example.) Being spoiled for choice among the many panels, I mostly attended the ones on finance, missing the more culture-heavy sessions. Therefore, the three observations which impressed themselves upon me relate to the more political-economic questions in coming to grips with the present state of capitalism. Three insights from Manchester:

1. Financialisation is so pervasive and wide, many facets are only now being explored. Read the rest of this entry »

This is the first part of a three-part series on the regulation of securitization before and after the crisis. Why were the banks so affected by the run on the shadow banking sector, which was formally off-balance sheet? How can we explain the lack of regulation in the shadow banking sector? How did governments promote the expansion of the credit supply via the shadow banking system?

Securitization has had a very bad press reputation in recent years (but see “securitization is not that evil after all”), being related to overly complex re-securitizations, which became impossible to value during the financial crisis of 2007/2008. Before that crisis, securitization was en vogue, favored by most financial economists as a way to spread credit risk from banks into the financial markets, thereby increasing the resilience of the financial system as a whole (s. Bhattacharya et al 1997). The idea was to liquefy credits, to turn them into tradable assets, generating deep secondary markets in which traders could constantly readjust the amount of risk they held in their portfolio. Banks could refinance the credits they gave and thereby expand their lending. Credit would become cheaper, as the demand for securitized assets generated from credit increased, raising the available supply of credit.

Turning credits into tradable assets requires that the transfer of these assets into money is possible instantaneously and without loss of value. Otherwise, the entire idea of readjusting one’s portfolio to changing market circumstances; which is what underlies modern portfolio theory (also the Black-Scholes formula requires continuous adjustment of the traders position, which is why trading in continuous time is a necessary assumption for the pricing to work). Credits on banking books, in contrast, are held on the book of the banook  at historical cost accounting (s. Sigrids work on fair value accounting); i.e. not changing their value from the contracted valuethe moment the contract is signed. Only if banks undertake corrections in value to account for expected losses does the value of these credits in the books of the bank change.

In this blog I will look at the infrastructural preconditions of securitization (Special purpose entities, in the following SPEs) and the shifts in how they were proposed to be treated at an international level and how they were treated on a national level before the crisis and after the crisis. Before the crisis, there was pressure by the Committee of European Banking Supervisors to not force these SPEs on the balance sheet of banking groups (CEBS 2004). After the crisis, we can witness a 180° shift in the position of the financial stability board which states that it wants full prudential consolidation for sponsored SPEs. In my three blog entries I will have look at the impact these transnational recommendations had before the crisis on actions of national governments and will speculate about the fate of the current regulatory proposals in the future. Read the rest of this entry »

Recently, together with Jeanette Hofmann, I have been discussing a research proposal on sharing cultures. In this context, we were asking ourselves whether the notion of “sharing” has shifted in the digital realm. Sharing knowledge is different from sharing a cake. George Bernard Shaw is ascribed the following quote, illustrating this difference:

“If you have an apple and I have an apple and we exchange apples then you and I will still each have one apple. But if you have an idea and I have an idea and we exchange these ideas, then each of us will have two ideas.”

This leads to the conventional wisdom that sharing immaterial goods is different from material goods. In the digital age, more and more goods can be easily shared in form of perfect copies. And even when the economic value of a digital good might depreciate if it is shared freely, sharing can at the same time generate indirect returns (for examples see Anderson 2009). Consequently, authors such as Lawrence Lessig paint the picture of a “hybrid” or “sharing economy“, which they deem to be beneficial for all parties involved. Prerequisite for such a sharing economy to work is a sharing culture, which includes practices such as giving attribution or using open formats and licenses. Read the rest of this entry »

Interregionalism  – multi-lateral meetings between different regions – has become an important aspect of governing global economic, financial and political issues. One such interregional exchange is the Asia-Europe Meeting, (ASEM). The 8th meeting just has been taking place in Brussels 5th-6th of October. ASEM is an informal dialogue bringing together Heads of Governments of the 27 EU Member States and 16 Asian countries, the European Commission and the ASEAN Secretariat.

The first ASEM meeting took place in Bangkok in 1996 in order to foster economic development and counterbalance the US influence in the Asian region. While these meetings are informal and non-binding, they are nevertheless aiming at strengthening economic and political relationships between countries. This year’s summit was dominated by the  financial and economic crisis. Under the heading ”More Effective Global Economic Governance” European and Asian officials agreed upon closer economic cooperation as well as financial coordination, and stressed the importance of sustainable growth and climate protection goals.

Such meetings – as international trade politics in general – suffers from the lack of democratic participation and support of citizens. Negotiations take place behind closed doors, the negotiation processes are intransparent and the parliaments are largely shut out of such processes. Consultative bodies and advisory committees are dominated by business interests or business affiliated lobbying groups.

As a response to the lack of transparency and democratic checks and balances, unions and NGOs found counter summit, the Asia-Europe People’s Forum (ASEF) where labor unions and social movements across Asia and Europe expressed their concerns about marketization and demanded  a “social and market regulatory dimension” of trade negotiations.

But in how far does challenging this global economic governance institution contribute to any kind of change?

At first sight it looks like a success story: Labor, environmental and human rights issues play a promomient role in the final ASEM declaration and the ASEM leaders promised a people-to-people approach. But the disappointment about the discrepancies between words and action is huge.

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Before the Wikimedia Foundation was established as the organizational carrier for Wikipedia and its sister projects, the Wikipedia trademark as well as the server infrastructure had been owned by the start-up company bomis.com, which ran an ad-funded search engine mainly targeting a male audience. Wikimedia was founded over two years after Wikipeda and only after a substantial part of the Spanish Wikipedia community had started a Wikipedia-fork named “Enciclopedia Libre Universal” to prevent Bomis from including advertisments in Wikipedia. Bomis then handed on all Wikipedia-related intellectual property to Wikimedia.

In projects using open or free licensing standards such as Wikipedia (Creative Commons By-Share-Alike license) or Linux (Gnu General Public License)  a “fork” is always a (mostly: latent) option. In a way, the mere possibility of a fork should secure that an organizational carrier is attentive to the needs and positions of the community, whose contributions the project depends on. Of course, forking is also a way to resolve conflicts within communities, for example between sub-communities with different priorieties as the case of BSD Unix.

In the case of Wikimedia, choosing the organizational form of a non-profit foundatiofn allowed for community participation and tax-exempt donations (see “The Importance of Clear Boundaries for Community Participation“); but most of all it was a signal to the community of volunteer contributors that their content will not be exploited by a private enterprise. It is all about trust. Read the rest of this entry »

This post is provided by our “guest blogger” Bernhard Brand. Bernhard Brand works as research assistant at the Institute of Energy Economics at the University of Cologne. This contribution is the first of a series of critical reviews of transnational economic governance arrangements, based on an analysis of policy reports undertaken by graduate students of Sigrid Quack’s seminar on Transnational Economic Governance during the summer term 2010.

The Siemens corruption scandal of the year 2007 was one of the largest bribery cases in the economic history of Germany. It ended with a number of (suspended) jail sentences for high-ranking executives and a painful €2.5 billion penalty to be paid by Siemens for running an extensive worldwide bribery system which helped the Munich-based company to win business contracts in many foreign countries, as for example in Russia, Nigeria or Greece. Interestingly, if the bribery case just had happened a few years before, there wouldn’t have been any sentence at all for Siemens: Until 1999, the practice of bribing officials and decision makers in foreign countries was not considered a crime in Germany. And even worse: The German law allowed companies to deduct bribes from their tax declarations – under a tax law provision ironically termed “useful payments” (in German: “nützliche Aufwendungen”). This incentive for the German industry to perform corruption in the international business became abolished under the pressure of the OECD Anti-Bribery Convention. The convention criminalizes the so-called ‘foreign bribery’, the act where a company from one country bribes officials of a ‘foreign’ country.  Germany, as well as the other OECD members had to align their legislation to the new OECD standards, enabling their courts to punish the person or entity who offers the bribe – even if the bribing action originally took place somewhere else in the world. Read the rest of this entry »

The Book

Governance across borders: transnational fields and transversal themes. Leonhard Dobusch, Philip Mader and Sigrid Quack (eds.), 2013, epubli publishers.
June 2021
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