The following blog was written by Lukia Nomikos.

The Covid-19 pandemic has resulted in major social, political, and legal challenges globally and thus has spotlighted the importance of strengthening democratic resilience in the face of crises. As states around the world adopt emergency measures to address the crisis, it is critical that they continue to uphold the rule of law, protect and respect international standards and basic principles of legality, and the right to access justice, remedies, and due process. It is in times like these when it is particularly important to also pay close attention to, address, and counteract any ways in which the crisis may impair democracy and increase authoritarianism.  

So, what exactly is democracy? A democracy is essentially a system of government in which the citizens of the nation have the power to vote and therefore have a say in how the country is run, either directly or indirectly. The UN lists the values of freedom, respect for human rights and the principle of holding periodic and genuine elections by universal suffrage as the essential elements of a meaningful democracy. In turn, democracy provides the natural environment for the protection and effective realisation of human rights. 

Many governments worldwide have adopted democracy in varying forms and to varying degrees. Most of these are representative democracies, in which the citizens elect representatives to run the government and vote on matters such as the passing of laws on their behalf.  

A direct – or participatory – democracy, in turn, is one in which all eligible citizens play an active role in government and vote on these matters directly themselves. In other words, they are afforded the power to make political decisions. Although this would potentially result in decisions that are a truer reflection of the will of the people, increased political involvement, and a more equitable and just society, there are also many challenges to this model of democracy. Many believe that a nationwide participatory democracy, though perhaps an alluring prospect in theory, would be impossible to manage in practice and that this type of government is likely to only be successful on a localised level, with a relatively small population. 

Perhaps then, an absolute direct democracy is an overly idealistic, or even impractical, vision. However, one way in which we could certainly move closer to a democracy that is more participatory, inclusive, and representative of the general will, is by increasing stakeholder engagement in politics. The idea of ‘stakeholder democracy’, in which stakeholders participate in processes of organising, decision-making, and governance, has been gaining traction ever since the 1992 Rio Earth Summit, particularly in the area of sustainable development. 

However, for true, more participatory democracies to exist, it is not enough to just talk about increasing stakeholder engagement in governments and political decision-making. With corporations essentially ‘taking over’ formerly public and governmental functions and influencing governments on various levels, there is considerable concern about the growing power of multinational corporations in a globalised economy, and their systemic commitment to shareholder primacy – which often results in purely profit-driven decision-making at the cost of people and the planet.  

This concern over increasing corporate power was evident, for example, in the mass demonstrations that took place around Europe, particularly in Germany, a few years ago against the Transatlantic Trade and Investment Partnership (TTIP): a proposed trade agreement between the US and the EU that, most controversially, included an Investor State Dispute Settlement (ISDS) provision, which would allow private investors to sue governments for the loss of future profits due to decisions made by national parliaments. This was seen by many as a significant “threat to European democracy” and sovereignty, and the protests eventually led to the defeat of the TTIP. However, ISDS provisions are commonly included in trade and investment agreements and are, for example, right now being used by global firms to sue governments for loss of profits resulting from Covid-19 lockdowns. 

Therefore, when speaking about strengthening democracy in our societies, we must also ensure that corporations are organised in a more democratic manner thus leading to greater corporate accountability and better decision-making. In this context, we often hear the phrase ‘stakeholder capitalism’, which refers to a form of capitalism in which companies do not only optimise short-term profits for shareholders, but seek long-term value creation, by taking into account the needs of all their stakeholders, and society at large. 

This idea of involving stakeholders in decision-making is of course nothing new to SVI and our global community as it essentially forms the basis of our entire mission. We are alarmed by the growing inequality in our societies and the rapid destruction of our natural environment right before our eyes, and we believe that this is happening in large part because those people that suffer the worst consequences of these global crises also tend to have the least say in how our governments and businesses are run. Without giving these stakeholders a voice and the ability to hold those in power to account, governments and businesses will simply continue to operate in ways which are harmful to (most) people and the planet.  

If we are to create a more equitable and sustainable world, this power imbalance in decision-making needs to be addressed. One way in which this can be done is by moving towards a more participatory form of democracy, which gives stakeholders a seat at the table in matters that affect them. Increased stakeholder engagement will strengthen democracy and lead to better decisions – decisions that will benefit all people, increase wellbeing, and help protect our planet, and that is why Principle 1: Involve Stakeholders underpins all other Principles of Social Value. 

The International Day of Democracy is celebrated around the world on 15th September each year. It provides an opportunity to review the state of democracy in the world and to encourage governments to strengthen and consolidate democracy. Democracy is as much a process as a goal, and only with the full participation of and support by the international community, national governing bodies, civil society, and individuals, can the ideal of democracy be made into a reality to be enjoyed by everyone, everywhere.