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Infrastructure
New Trajectories in Law
Mariana Valverde
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Infrastructure
New Trajectories in Law
Mariana Valverde
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About This Book
This book provides an overview and assessment of infrastructure's legal and governance underpinnings.
Infrastructure is often thought of as a term referring only to the physical entities â pipes, cables, utility poles, highways, airports â that facilitate the transmission of water, gas, telecommunications and electricity, as well as enabling both private and public transportation, and serving to house more or less public services such as health care and schools. However, infrastructure planning and implementation are not reducible to bricks and mortar. The complex process requires drawing from and sometimes re-inventing or recycling legal tools, from construction contracts to financing 'deals', which are often taken for granted by both practitioners and urban studies scholars. These are as important today as they were when the first railway lines were built, and to a large extent they remain just as invisible: the avalanche of drawings and photographs of planned or in-process fancy buildings tends to hide from view the behind- the-scenes negotiations and decision-making that had to happen before construction could start, and which in some cases continue afterwards. This book does not ignore the material and nonhuman aspects of infrastructure. But, focusing on the legal and governance underpinnings of infrastructure projects, via a series of key terms that refer to hybrid legal processes, the book offers an important socio-legal supplement to the current 'infrastructure turn'.
This book will be of interest to students in the areas of socio-legal studies, urban sociology, urban studies, urban geography, planning, public law, and contract law, as well as practitioners involved in infrastructure projects.
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Chapter 1 Audit
DOI: 10.4324/9781003228523-2
An influential professor of accounting at the London School of Economics (LSE), Michael Power, has for over two decades now drawn attention to the ways in which the techniques and the broader logic of âauditingâ, for a long time confined to checking flows of money with the aim of ensuring corporate expenditures were properly authorized, have spread like wildfire to all manner of non-financial fields. In his 1997 book The Audit Society: Rituals of Verification, he describes the adoption of the language of âauditâ, together with some of auditâs techniques, in areas and entities where quantification, never mind monetization, is either impossible or counterproductive.
The travels of audit talk and audit methods beyond the original function of an audit (meant to reassure board members that the managers of the entity of which they are directors are conducting themselves honestly) are in large part due to the fact that the work of many institutions has recently become subject to greater scrutiny by government funders, by international bodies both official and not (e.g. non-governmental organizations (NGOs)), and/or by wary consumers. It would be possible now to collect information about the working of audits and audit-like techniques in fields as diverse as international aid, the state regulation of charities, and the experiences of hospital patients.
As Power and others after him have shown, we now have audits of medical practice geared to patient satisfaction; we have âsafety auditsâ of institutional or public spaces (often carried out after pressure from womenâs groups); we have audits of the quality of education at postsecondary institutions; there are âsupply-chain auditsâ of transnational corporations prompted by consumer or labour groups, designed to denounce and root out exploitative labour conditions or environmental harms, or both; and so on.
Power notes that whatever the particular target of this or that âauditâ, most audits function as âquality labelsâ. In many cases, the quality in question is not as easy to define as that ensured by the older label âmade with union labourâ. One reason why the process of being certified or authorized in these fields is not as easy to determine as whether a labour union exists in a plant is that the idea of quality assurance or audit only emerges after the fact once a space or business or activity has been functioning for some time. That is the case with the âsafety auditsâ that womenâs groups have imposed on many education and housing providers. When an audit concerning some risk that was not within the original plan is instituted after the fact, the audit has to use measuring sticks that had not been anticipated ex ante â in the case of a campus, when the parking lot or the building in question were built or designed. That means that obtaining the data necessary for the ex post audit is much more difficult than the task faced by accountants auditing financial statements in firms long used to having their financials audited. Corporate staff members are trained to be careful about figures being filled in and authorizing signatures being obtained during the course of the fiscal year, well in advance. In situations such as the campus safety audit, however, the lack of fit between the initial, traditional purpose of the entity in question and the information that is later required creates problems (as Marilyn Strathern and many others have shown in the context of the audits of the quality of British academic research and education1).
1 Marilyn Strathern, âThe tyranny of transparencyâ British Educational Research Journal, vol. 26, no. 3, 2000, 309â21. The large literature on academic audits is largely British, with some Australian contributions, probably due to the central governmentâs increasing control over universities in those countries, which has facilitated the imposition of standardized audits and similar measures. Canada and the US have far more decentralized university systems, which likely explains why quality assurance and audit-like mechanisms play a smaller role.
It is nevertheless the case that when a new type of audit or evaluation is created/imposed, that action will have recursive effects on the organization and on personnel. Wendy Espelandâs justly famous study of the recursive effects of US law school ranking systems shows that once the indicators used to generate rankings are known to the institution managers, all manner of creative moves will be made in order not so much to game the system as to use it to oneâs advantage.2
2 Michael Sauder and Wendy Espeland, âThe discipline of rankings: tight couplings and organizational changeâ American Sociological Review, vol. 74, no. 1, 2009, 63â82. The study found, among other things, that second-tier law schools began to reject well qualified Black applicants deemed likely to choose first-tier schools so as not to negatively impact the indicator âproportion of acceptance offers acceptedâ.
In the world of infrastructure, there are of course inspection and quality assurance mechanisms that focus on the bricks and mortar. However, there is a growing emphasis on mechanisms to ensure âgood governanceâ (a vague notion currently institutionalized in the financial worldâs focus on âenvironmental, social, and governanceâ (ESG) factors). In regard to the quest for measures of the vague idea of good governance, a number of techniques have been devised, including the ubiquitous âvalue for moneyâ calculations meant to justify procurement models (see Chapter 9).
Interestingly, however, UN bodies and international lenders constantly deplore the poor quality of data needed to do proper assessments or audits of infrastructure projects. Indeed, given that most large infrastructure projects are not subject to after-the-fact independent evaluation,3 there are likely professional associations that certify the quality of welding, but it is unclear how any audit-like process could gather the information necessary to render a trustworthy judgement of the quality of governance. Why then insist on audits and transparency mechanisms? It is possible that the reason for the unceasing demand for data that are not regularly collected or that do not serve the institutionâs own purposes is the structural fact that demanding audits plays a very useful role for the entities that require or expect audits. The request for certain data that might facilitate some kind of external audit but is not regularly collected by the entity in question serves to download responsibility for many problems (including lack of data) onto the institutions being audited. The institution or department can easily be chastised for not having collected the right data or for not presenting data in the right form â criticisms that absolve the higher-level entity seeking to impose audits (usually a government or a transnational body such as the World Bank) from responsibility. The hand-wringing about âlack of dataâ regularly performed across the entire field of sponsors of audits may or may not help to generate good data, but it will certainly help to popularize the notion that all institutions but especially those in receipt of public funds have to make themselves not only visible but accountable, in quantitative terms, to governments and to the public.
3 As admitted by infrastructure practitioners themselves at a World Bank workshop; see World Bank, Value-for-money analyses: practices and challenges (Washington, DC, World Bank, 2013).
As institutions are pushed to make themselves auditable, improving the organizationâs score in relation to the newer, often consumer-focused goals may clash with the organizationâs stated, traditional goals. This happens when a consulting firm is hired to do a âgender equality auditâ of a corporation devoted to selling commodities, not redressing gender injustice, or when experts are asked to measure the ESG performance of a multinational company whose original purpose was to increase shareholder value.
As Power and others have shown, the great popularity of âauditâ discourse and practices well outside auditâs original arena (corporate financial statements) is closely linked to wider cultural trends. One such trend, clearly visible in the world of infrastructure project planning, is a growing mistrust of powerful organizations â a trend in turn closely related to the rise of the vaguely described phenomenon known as âpopulismâ. Only if there is mistrust is there a call for an audit or evaluation, after all. Family members do not generally demand to audit one anotherâs financial records, but spouses going through a divorce do have to make themselves financially transparent to the other party precisely because they no longer wish to be a family. Similarly, when physicians enjoyed higher prestige and authority, such as in Dr. Spockâs 1950s, hospital boards and ministries of health would not have thought of subjecting hospital departments to audits of the quality of medical treatment and measurements of the satisfaction of patients.
The rise of the âauditâ is closely linked to, and indeed is almost synonymous with, the growing demands for institutional transparency. Other phenomena linked to the apparently limitless thirst for institutional transparency are the emergence of âaccess to informationâ and whistle-blower protection legislation in the public sector and in the private sector, as well as the rise of NGOs that succeed in appointing themselves as issuers of âquality labelsâ of sustainability or âfair tradeâ.
What about the world of infrastructure? In that world, the term âauditâ merges, in practice, with other equally fashionable terms: âevaluationâ and âperformance measuresâ. There are of course audits of disbursements by both private corporations and the public bodies that commission and ultimately finance most infrastructure. Those sometimes generate scandals about corruption or about self-serving decisions. But the term âauditâ is also used to cover all manner of evaluations that cover rather fuzzily qualitative issues such as gender equality, the ethics of the supply chain, or good labour practices.
There is much overlap between the literature on the dissemination of the audit and the larger and more diffuse literature on risk and risk management, which makes sense since auditing is a common method for managing the risks of malfeasance (or more modestly, sending a message that these risks are being managed). Financial malfeasance has admittedly never been strictly separate from other institutional risks, especially âreputational riskâ. Currently, actors in the world of high finance who are trying to position themselves as socially responsible (with former Bank of England governor Mark Carney being a leader in this regard) are proclaiming the audit society notion that seemingly non-monetary reputational risks can quickly turn into financial risks if negative non-financial audits influence many shareholders or consumers.
The growing slipperiness of the very word âauditâ further fudges the distinction between monetary malfeasance and other problem areas that were in the past outside the remit of accountantsâ audits (such as where a jewellery company sources its diamonds). Today, calling for an audit may function less as a sober bean-counting operation and more as a modern secular substitute for the old Christian idea that God is personally watching each human and counting up sins that are otherwise invisible. In the infrastructure world as in other fields, the risk being managed by means of audits and other ârituals of verificationâ is often a hybrid of financial and non-financial factors, a hybrid that has a strong moral flavour. The audit thus plays a role that is very similar to the ubiquitous calls for âmore transparencyâ that enact populist mistrust and rely on the assumption that legibility equals virtue.
In the rest of this brief chapter, I will show that audits and related calls for transparency, even if heeded, do not in fact bring about the empowerment of the people or the grassroots â the âordinary folksâ featured in populist discourses, left-wing as well as right-wing. The âaudit societyâ trend certainly represents an attack on the prestige of some older sets of trusted authorities, including politicians (formerly called âstatesmenâ, in the period when what is now infrastructure was âpublic worksâ) and some groups of expert professionals. But it is often simply assumed, not demonstrated, that more transparency and more audits, evaluations, and commissions of inquiry will empower ordinary people. There is also often an assumption that just doing audits promotes democracy, an assumption rarely followed by close attention to who exactly does the audit and how.
A key point that is not widely understood is that, if one looks at how audits and evaluations are actually done in the field of infrastructure governance, which does not seem out of line with what has been documented in other areas, one sees that the audits are not being done by or for ordinary people. They are routinely carried out by management consultants who decide what data to gather and how to sort and analyze those data. In turn, the data do not fall from the sky: data have to be produced by a set of experts (possibly the same ones who then do the audit, possibly different ones). The rise of the âauditâ both represents and effects a general shift in authority often presented, falsely, as a victory for the common man, the consumer, and the taxpayer. In reality, however, the dissemination of âaudit societyâ techniques and logics in the infrastructure world mainly takes authority away from traditional experts (lawyers, engineers, scientists, university lecturers) and hands it over to a shadowy mixed group populated by accountants and business-school graduates (and in many contexts, officials from ministries or state agencies who have fully adopted the values of the PPP world [see Chapter 7]).
The default scepticism about expert opinions that marks populism may well be justified. In relation to infrastructure, the public is encouraged by the press and by opposition politicians to be suspicious of the motives of political leaders who authorized ego-boosting or electorally popular projects, and this is certainly a well-founded suspicion. On its part, the public may also believe, with good reason, that the companies that build highways and bridges and finance them canât be relied upon to hold themselves accountable. Those who are more suspicious of the state than of the private sector are often on the right wing of the spectrum, while those who are suspicious of capitalists are usually on the left. But they can all agree to declare transparency a key virtue and to recommend the audit as the right technique to achieve it. The knight in shining armour that can cut through todayâs right-left divide is thus one whose shield is inscribed with the magic word âtransparencyâ â even if in real life he/she is an accountant who is duller than Clark Kent. Transnational firms such as KPMG, Deloitte, and McKinsey employ thousands of such personnel in luxury offices spread among many cities and countries.
What is important politically is that transparency, even if we grant that it could be achieved (which is doubtful), may not amount to or even foster real accountability,4 much less democracy â as this whole book shows. An audit, or a ranking produced by collecting more or less arbitrary piles of data,5 is unlikely to tell us whether the entity in question, be it a law school or an infrastructure project, is on balance contributing to humankindâs wellbeing.
4 Marilyn Strathern, âThe tyranny of transparencyâ British Educational Research Journal, vol. 26, no. 3, 2000, 309â21.
5 Kevin Davis, Benedict Kingsbury and Sally Engle Merry, âIndicators as a technology of global governanceâ Law and Society Review, vol. 46, no. 1, 2012, 71â104.
Apart from the problems created when audits are extended to non-monetary processes, a common problem, one that makes any audit, however carefully done, less than useful for purposes of democratic accountability, arises from the scale of the audit. In the world of infrastructure, the scope of audits and evaluations is almost always the single project, the âdealâ.6 Auditing a deal could spot ordinary monetary corruption, but it cannot tell us whether the infrastructure needs of ignored communities were more deserving than the needs that were addressed by what eventually got on the blueprint.
6 Mariana Valverde, âAd hoc governance: public authorities and North American local infrastructure in historical perspectiveâ in Michelle Brady and Randy Lippert, eds., Neo-liberal governmentalities and ethnography (Toronto, ON, University of Toronto Press, 2016), 199â220. See also Chapter 5.
In general, audits are meant to spot malfeasance or negligence in the carrying out of a for-profit or non-profit business. At best they do precisely that. But they cannot guarantee virtue. Especially important in relation to infrastructure, audits cannot verify a rational allocation of resources, especially if the audit or evaluation is carried out exclusively at the scale of the single project (this bridge, this new clinic, or, rather, the respective âdealsâ since the actual bridge and the actual clinic canât be easily audited). A longer-term and more geographically ambitious plan would be needed if competing infrastructure (or other) needs are to be prioritized in a rational manner. Even when national âplansâ are announced (as when in summer 2021 President Joe Biden set out some ambitious infrastructure spending targets), the pr...