Democracy Versus Stakeholderism

Joe Everyman, Mr. Corporate, and Ms. Lawfirm walk into a voting precinct. Each gets a ballot, each marks his/her choices, and each puts the marked ballot into the voting box.

Joe Everyman, believing in the principle of one-man, one-vote, leaves.

But Mr. Corporate and Ms. Lawfirm each walk outside, put a sock puppet onto each of their hands, re-enter the precinct and use ventriloquist voices to demand additional ballots, one for each puppet.

The precinct workers say, “you can’t vote a second and third time!”

But Mr. Corporate and Ms. Lawfirm answer on behalf of their respective sock puppets: “I am not voting again, I am merely accompanying a pair of stakeholders who now want to cast their own votes.”

Huh? You would be quite correct if you were to say “This is not democracy!”

But you would be quite wrong if you were to think that this kind of thing does not happen.

In fact it happens quite often.

It goes by then name “multi-stakeholder” or simply “stakeholders”. These are systems in which some people get to use sock-puppets to multiply their votes and influence.

What Is Stakeholderism?

Stakeholderism is fairly simple: It happens when an entity or organization establishes decision making rules that declare that certain groups or organizations get a seat at the decision making table because they have an interest, a “stake”, in the outcome of those decisions. Others are left to observer rather than to participate.

To give a concrete example: The Internet Corporation of Assigned Names and Numbers (ICANN) has a very convoluted decision making process. In that process many industrial groups are granted formal roles and elevated privileges to argue their positions and participate in the making of decisions. The public, the entire public, the entire population of the earth, as a whole, gets a rather limited formal role and only one — yes one — vote.

Most individual users of the internet get only an indirect voice in ICANN. But some of us are more equal than others.

I’m just a person like you. But within ICANN I could claim several places to bend the decisions of ICANN. I own domain names — I get a voice for that — I own trademarks — another voice for me — I am an internet techie — add one or two more voices — I own corporations — throw another voice on the barbie. That’s great for me; but it is quite unfair to you.

Stakeholderism And Managed Outcomes

I’ve written about this topic before: Stakeholderism - The Wrong Road For Internet Governance

We have all heard about how Gerrymandering is used to “adjust” voting districts so that certain candidates are more likely to win. Stakeholderism is worse. Stakeholderism is a system under which some people get multiple votes, others get but one vote, and others get no votes at all.

Sometimes it is not voting that is granted but, instead, greater access to the decision makers or greater participation in the selection of those decision makers.

Stakeholderism is very popular among those espousing new bodies of government and governance, particularly with regard to matters that have some tie to technology.

However, stakeholderism is creeping into traditional governments as well.

Stakeholderism is used, for example, to bring coal companies into environmental regulatory bodies. Those coal companies are not brought in to provide advise and expertise; no, they are brought in and handed a voice or vote in the decisions being made. When humans do this we call it a “conflict of interest” but when stakeholders do it we accept it. Why? Because they are “stakeholders”.

It is right and proper that entities, such as corporations, with expertise in a matter be consulted on those matters. And the opinions of such entities ought to be heard and considered.

But “heard and considered” by whom?

The idea of democracy, whether it be indirect representative democracy or a more direct form, is based on the belief that the source of power in government is the people - living, breathing people - being governed. And we aspire to that each individual person gets one, and only one, vote. This is the principle of “one man, one vote.”

Corporations are nothing more than paper creations of law and finance. Corporations are simply legal wrappers though which people may organize their efforts and resources in pursuit of a goal (often the goal of making money.)

When we empower corporations with a “stake” we are usually using that word as a euphemism to say that we are empowering corporations with the power of a vote or veto on a particular matter.

What this, in turn, means is that the people who manage a corporation get extra bites, extra slices of the decision making pie.

A corporate manager gets put on his “corporation” hat and cast a vote. Then he can put on his “person” hat and cast another vote.

Why Do We Have Stakeholderism?

Stakeholderism grew out of the desire to be “fair”. And what, it seems, is more fair than that decisions should be made by those who are closely and significantly financially affected by that decision?

You might notice that that desire is very subjective and gives great power to whoever or whatever choses those who are closely affected and those who are too remote.

Corporations — and commercial or technical groups — are ultimately composed of people. If we eliminate stakeholderism then those people are still able to express their preferences, but they do not get a privileged place at the table.

Stakeholderism locks in a pre-conceived and static structure of interests. When ICANN was created that pre-conception nailed into place trademarks, domain name businesses, other businesses, and providers of internet services as stakeholders. (The public was largely left out in the cold.) In the decades since ICANN has been locked into combat between those pre-conceived groups; stakeholderism has prevented the fluid formation of coalitions around issues and points of common interest.

In the absence of stakeholderism individual humans could evaluate all of their interests in a matter — but each person gets one and only one voice and one vote.

Consequently I, as an owner of trademarks, as an owner of businesses, as an owner of blocks of IP addresses, as author of internet standards, and as an individual person, would have to measure all of my interests and merge them into one voice and one vote.

That’s called Democracy.