Can Civil Society Survive in a Free Market Economy?

07/22/2010 04:15 pm ET | Updated May 25, 2011
  • Fron Nahzi Fron Nahzi, Global Business Development Director, Walton Sustainability Solutions Initiatives, Arizona State University

An inappropriate, mutually beneficial relationship between political leaders and members of the "business" elite in the countries of Eastern Europe is thwarting the emergence of genuine democracy, warping development of free market economies, co-opting the mass media, and weakening the rule of law and formation of efficient state institutions.

This was not what Western governments, and especially the US, had in mind when they began providing grants to civil advocacy organizations (CAOs) in these countries emerging from decades of Communism. CAOs were supposed to have stymied the development of the politician-business club by organizing and empowering the people of these countries, nurturing the development of institutions and a legal framework that would keep the leaders and "businessmen" from sopping up wealth for themselves and monopolizing decision-making to their benefit.

Correcting the situation will require a long, tedious struggle. And, if they are to play a significant role in the process, civil advocacy organizations must redirect their efforts and the way they operate: they must monitor the government and the economic elites of their countries, promote the development of laws and regulations that will open the doors to the many instead of just the few.

After the fall of the Berlin Wall, Western nations, led by the US, sought to ensure that the people of the countries of Eastern Europe remained active in public affairs. With funding and training, local CAOs along with politically independent media outlets were expected to be watchdogs and public advocates, to hold government accountable to the public.

Western leaders assumed that as the countries of Eastern Europe stabilized and as their economies began to grow with dismantling of the command economy and the introduction of free enterprise, a strong civil society would flourish in due course. The thought was that, in free-market conditions, sponsors of a healthy civil society would replace Western aid and ensure the CAOs' sustainability.

But effective CAOs have not emerged in Eastern Europe to the degree once anticipated. The assumption that they would turned out to be as naïve as believing that a democratic state would emerge naturally and painlessly in Iraq after the war of 2003.

Members of the business elite and government leaders in the Eastern European countries quickly learned from their respective counterparts in the US that developing a cozy relationship -- concessions to business in exchange to payoffs to political leaders -- would enable them to overpower the developing CAOs, reap significant wealth and ensure a monopoly on political power.

The law of the jungle thwarted the development of real rule of law. The words "free market" became a green light for financial misdeeds and Ponzi schemes. The mass media -- especially television -- has produced sensationalistic pabulum for the unlettered masses. (Not unlike what is being produced in the United States today. The US has long been a leader in promoting civil advocacy, but that superior wisdom seems to have come into question with the recent financial crisis and Ponzi schemes, where US-base CAOs have been all but absent.)

Tocqeville's three-layered civil society (government, civil society, and the public) has shrunk to a two-layered structure, in which government and business are joined at the hip and reaping vast wealth and the public is atomized and irrelevant to serious decision-making. CAOs, weak, feckless, and suffering image problems, are the product of Western aid and still rely on international funding for their existence. Too many public figures in these nascent democracies have tarnished the CAOs' image because they have used them as springboards to enter politics. The public views such CAOs Western-funded temporary employment agencies for future political leaders rather than as genuine civic-driven organizations representing the public interest.

The marriage between the government and the economic elite is consummated during the election campaigns. If they exist at all, laws and regulations on campaign advertisements and spending are not enforced in many countries with proportional voting systems. Large political parties benefit by placing themselves on the bidding block. Business leaders, quick to protect their interests, place multi-million-dollar bids in the form of campaign contributions or open their respective media outlets to the party of their choice. Expensive US-based public relations firms and campaign strategists are hired to manage campaigns. They come armed with polling specialists, slogans, targeted advertisements and lists of former world leaders and celebrities willing to publicly support one party over the other for a price. This creates a cycle in which elected officials divide their time between talking about how they are governing in the interest of the public while actually preparing for their next elections by filling their war chests by awarding contracts and passing sham financial regulations that allow their business sponsors to run wild.

Some CAOs are working to develop the capacity to help correct this situation. Their survival and success are of critical importance. What can be done to allow CAOs to survive and become significant?

Governments and private donors should closely examine the work of George Soros's foundation's and its ancillary organizations, especially the Revenue Watch Institute for a model that can work. The Soros model has been to target the development and empowerment of local organizations that lodge themselves between the government and the business elite in an attempt to safeguard the public interest. These organizations monitor how business is being done, how contracts are let by the government, how regulations and laws are developed and implemented. Then they release their findings of misdeeds, bring their findings to the public, and press legislatures to pass better legal and regulatory measures and call upon government institutions to enforce them more effectively.

In the transition economies of Europe, some of the current proposed initiatives such as imposing term limits on elected officials, public disclosure of media and corporate ownership and campaign financing, election regulations that limit campaign spending and advertisement are steps in the right direction. But these steps are not enough. The CAOs themselves need also to adapt to the new reality by becoming more aggressive in monitoring performance and shouting loud and strong when misdeeds are discovered.

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