January 25, 2012

In his State of the Union address on Tuesday evening, US President Barack Obama struck a familiar note—though none the less important for its familiarity—about creating a level playing field for competition in the global economy, thus helping to create American jobs. How to do this, when the Doha round of trade talks, and perhaps the WTO itself, are well and truly finished? Well, if you are “the one indispensable nation in world affairs,” you simply take it into your own hands: conclude more bilateral trade agreements (“Soon there will be millions of new customers for American goods in Panama, Colombia and South Korea”), launch more trade cases, particularly against China on issues of piracy and especially unfair subsidies (“I will not stand by when our competitors don’t play by the rules”), and adopt a tax policy designed to…well… subsidize American manufacturing (fairly, one supposes. OK, two out of three isn’t bad).

One cannot blame Obama, who is one of the voices of relative reason in global affairs and has an appreciation for the dilemmas faced by multi-national organizations of all kinds, for trying to appeal to American voters more than to a global audience. But the problem America or any nation faces in trying to develop jobs, strengthen its balance of trade, or fend off challenges from countries with different political/economic rules is exactly that the global playing field is not level, and that no unilateral or bilateral action will ever fix this. Multilateral agreement is necessary in order to get anything close to a fair and balanced global system, and no such agreement seems anywhere in sight.

What, then, about a role for business? Even if only out of enlightened self-interest, business should take up the challenge do what governments continue to prove they cannot accomplish: co-create a transnational governance system to set and administer tax, trade, and social policy—including (un)employment. This means inviting governments and other businesses into a socially- and long-term-oriented dialogue, with fast and measurable outcomes. It means reinvesting in the societies where we work – in communities, yes, but also in states and super-states. Businesses know how to work across borders. To help the world deal with crisis-level unemployment and a host of other problems, they need to bring that skill to the arena of governance as well. Then they need to co-invest with governments and societies toward coordinated, equitable and sustainable social policies.

It’s unlikely that government is going to reach out to business to start this kind of dialogue. In the US at the moment, it would be almost impossible, given the negative public image many business leaders have. But at the global level—the only level at which sustainable solutions can now exist—businesses leaders should be starting and sustaining the conversation. Like President Obama, we should be taking at least a piece of the problem into our own hands.

Maury Peiperl is Professor of Leadership and Strategic Change at IMD and Chair of the Evian Group@IMD Faculty Advisory Board.