Winter Issue — February 2005

Between Chaos and Control: The politics of transparency

Transparency. It’s a buzzword whose presence invokes powerful associations of openness, integrity and honesty, and whose absence suggests secrecy, corruption and dishonesty. It has become the favoured solution for all of our current ills, particularly in discussions about international economic and political reform.

Yet is it wise to assume that by focusing on transparency, we can eliminate all of the ambiguities in our political and economic systems?

“We should be very careful in treating transparency as an economic or political cure-all,” says Jacqueline Best, assistant professor of political science and author of the forthcoming book The Limits of Transparency: Ambiguity and the History of International Finance, published by Cornell University Press.

“Transparency has become our new mantra,” she adds. “Yet ambiguity can actually play a valuable role in maintaining international political and economic stability.”

This is a daring new argument in economic and political circles where conventional wisdom dictates the adoption of a vast array of new international economic standards or “best practices.” Predominantly championed by the International Monetary Fund (IMF) and the World Bank, these standards, Best suggests, are a misguided attempt to control and contain uncertainty and ambiguity.

After devoting a significant part of her research effort to reviewing the evolution of the IMF, she has come to see that the increasing rigidity of the institution, and its corresponding inability to accommodate ambiguity, flies in the face of the institution’s original architects and thinkers – thinkers who were deeply aware of the need for a balance between government regulation and market autonomy.

“Those using the language of transparency tend to assume that governments are corrupt and that markets are transparent,” says Best, “an assertion that is undermined by experiences like Enron. This is one of the reasons why transparency advocates often seek to constrain state sovereignty, which often decreases democratic accountability.”

Transparency International, the international organization that has probably played the single biggest role in making transparency a buzzword, focuses almost exclusively on public-sector corruption, even after the scandals of Enron, WorldCom and Nortel.

“It is a long process to find a balance between these tendencies of chaos and control, but it is possible,” she says. “We have lost sight of that in contemporary circles of international governance.”

While completing her doctorate at Johns Hopkins University, Best became increasingly convinced that the problem of uncertainty in global economic stability was insufficiently addressed by simply providing more information to the system, as implied in the notion of transparency. The “cult of transparency,” she soon came to see, suffers from a number of problems.

One of these is the belief that information on its own will solve our problems, that it will eliminate all ambiguities from our economic and political systems. Best argues that we must recognize that ambiguity is not only pervasive and substantive, it is also potentially constructive. This notion of “constructive ambiguity” is at the heart of her research.

“We don’t like things to be ambiguous; that makes us very uncomfortable,” she explains. “But when you look very closely at economic practices, above and beyond any mathematical formulas, they are still about people, perceptions, interpretations, struggles and politics, and because of this are inherently ambiguous. We have to learn to live with that and find a way to deal with that permanent ambiguity.”

Ironically, one way of managing ambiguity, she suggests, is to integrate it into our governance practices – by fostering institutional flexibility and political negotiability, two examples of “constructive ambiguity.”

Citing the IMF’s response to the Asian model of economic development, which it felt had too much government intervention and not enough transparency, Best argues that while counter-intuitive, the pursuit of transparency is also often undemocratic.

“By attaching extensive conditions on Asian loans designed to transform Asian domestic economic, legal and political institutions to make them more transparent, the IMF eroded those governments’ sovereignty and often contradicted the will and the interest of the people.”

Best points out that advocates of transparency almost invariably seek to standardize practices to make them easily quantifiable and comparable. However, in international economic terms, this often means making the world’s economies look alike. While a certain degree of convergence is both likely and desirable, Best believes that a global economic monoculture is a dangerous objective.

“A brief glance at the history of economic thought makes it clear that economists often get things wrong. Rather than seeking to impose a rigid international monoculture we should be encouraging a diverse range of economic practices and respecting the different values that they reflect.”

In doing so, she says, the stability of the global economic system will come from the dynamism of diversity. This doesn’t necessarily imply that all models will be equally valid or even appropriate. Yet the flexibility of the system will always provide opportunities to learn. Rather than talking about transparency, Best suggests that we should perhaps be calling for a different kind of politics.

“Transparency is a holy grail that will always exceed our reach. We need to recognize the limits of transparency and accept that economic and political uncertainty is an inevitable part of life.”

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