The creation of one’s interests in others negates the need for persuasion or coercion. That is the central premise of my article ‘Interests need not be pursued if they can be created: Private governance in African gold mining’, published in Business and Politics and awarded the inaugural 2015 Richard Higgott Journal Article Prize. In the article, which examines the political economy of sub-Saharan African gold mining, I argue that mining firms are able to create ‘truths’ about the superiority of industry-developed regulation. In doing so, these firms determine industry regulation and impinge on state sovereignty.
The article develops these arguments through analysis of a series of interviews conducted with senior executives of sub-Saharan African gold mining firms and industry representatives. In doing so, it argues that gold mining firms utilise their structural power to set the regulatory agenda and develop private governance regimes. However, it is the use of discursive power, or the painting of these regimes as superior forms of regulation, that allows business to wrest sovereignty from the state.
The globalisation literature has long recognised the role of firms as political actors. Large, powerful firms possess what is known as private authority, which enables them to produce private governance initiatives that are recognised as legitimate forms of regulation. In the mining sector, these include the International Council for Mining and Metals (ICMM), the World Gold Council, the Extractive Industries Transparency Initiative and various ISO standards.
The article utilises a three faces of power framework to analyse the interview findings. The first of these forms of power is instrumental; that is, lobbying, campaign funding and the placement of business-friendly elites in government bureaucracy. Secondly, firms utilise structural power, or threats to relocate operations based on regulatory standards as well as the ability to develop voluntary regulation. Lastly, firms rely on discursive power, or the use of communicative practices, to create ‘truths’ about policy that are accepted by governments and the public alike. Discursive power means that interests do not need to be pursued if they can be created; or, that firms can rely on “perception of legitimacy and voluntary compliance” in preference to coercion.
Using the above framework to analyse the interviews, it emerges that gold mining firms are relying less on instrumental power, instead using structural power supported by discursive power to determine the direction of industry regulation. That is, they set the regulatory agenda, create voluntary systems of rules and then promote these as superior forms of regulation.
The findings suggest that instrumental power is seen to be largely ineffective. One respondent noted that their firm continued to lobby governments, however, “by the time the government is deciding to put a resource tax of 70% on you, it’s already way too late to start lobbying.” The same interviewee noted that in this case they would revert to the use of structural power, by threatening to end the funding of social services in the communities in which they work. Evidence of structural power also emerged in the promotion of the World Gold Council and ICMM, industry bodies that allow firms to jointly decide on the issue areas they wish to prioritise. These cross-industry bodies allow firms to agenda set, and there was general consensus that membership allowed firms a ‘seat at the table’ when it came to developing private governance initiatives.
Although business utilises its structural power to set the regulatory agenda and form industry governance regimes, it is the discursive power of these firms that affords them the greatest amount of power. Interviewees were keen to emphasise their business’ efforts at self-regulation and the adherence to global standards, or as one respondent put it “living to one code”. This presents evidence of a lack of a ‘race to the bottom’ in the industry but it also suggests that firms are keen to promote their private governance solutions as legitimate and superior to government legislation; in turn engaging discursive power. This allows firms to delineate themselves as the holders of knowledge and experts whose regulation is superior to that implemented by the state.
One of the strongest examples of ‘successful’ private governance to emerge from the research was the implementation of the ISO14001 standard across the mining sector. This standard allows firms to certify their environmental management systems (EMS) against a prescribed standard. The voluntary adoption of this standard by one gold mining firm was deeply resented by other companies in the sector, who saw the standard as too prescriptive for the industry (it was originally developed for sectors such as manufacturing). Eventually, all large mining firms, then smaller players, adopted this standard. Ultimately, it has now been used as the basis for several countries’ formal regulation in this area, including in Ghana, the EU and China.
Over the past three decades, extractive firms have created a large number of standards and procedures covering a wide array of issue areas. As in the case of ISO14001, these standards and rules become the ‘accepted way of doing things’ and are relied upon by governments in designing legislation. The ability of firms to promote themselves as capable of governing their industry is evidence of their discursive power. This allows them to build a reputation as industry experts and control the regulation of their sector, in preference to sharing sovereignty with states.