This article considers the issue of public accountability of transnational corporations (TNCs) in the light of the experiences of the past 30 years. It discusses the problem of accountability of corporations in general and examines the accountability gaps that are particularly severe as a result of the global reach and power of TNCs, notably those related to the collusion between government officials and TNCs, to regulatory competition, to state weakness and breakdown, and to political subversion. Then existing attempts to close those gaps are assessed, including intergovernmental cooperation, business ‘self-regulation’ and initiatives that involve nongovernmental organizations and supranational agencies in defining standards of conduct for companies and monitoring their compliance.

Whereas traditional institutions used to be seen as an international complement to a dominantly national paradigm, today's international institutions are an expression of political denationalization. The new international institutions are much more intrusive into national societies than the traditional ones. They increasingly contain supranational and transnational features and thus undermine the consensus principle of international cooperation. When society and political actors begin to comprehend this change, they begin to reflect on the features of a legitimate and effective political order beyond national borders. As a result, denationalization becomes reflexive and thus politicized. At the same time, the politicization of international politics harbours the potential for resistance to political denationalization, which increases the need – both from a normative and descriptive perspective – for the legitimation of such international institutions.

This article discusses arguing and communicative action as a significant tool for non-hierarchical steering modes in global governance. Arguing is based on a logic of action that differs significantly from both the rational choice-based ‘logic of consequentialism’, and from the ‘logic of appropriateness’ theorized by sociological institutionalism. Arguing constitutes a learning mechanism by which actors acquire new information, evaluate their interests in light of new empirical and moral knowledge, and – most importantly – can reflexively and collectively assess the validity claims of norms and standards of appropriate behaviour. As a result, arguing and persuasion constitute tools of ‘soft steering’ that might improve both the legitimacy problems of global governance by providing voice opportunities to various stakeholders and the problem-solving capacity of governance institutions through deliberation.

We argue that the democratization of global governance will ultimately depend upon the creation of an appropriate public sphere that connects decision-making processes with transnational constituency. The emergence of such a public sphere would require more transparency in international organizations as well as institutional settings in which policy-makers respond to stakeholders’ concerns. Organized civil society plays a key role by exposing global rule-making to public scrutiny and bringing citizens’ concerns onto the agenda. We illustrate the prospects and difficulties of building a transnational public sphere with the example of the WTO.

Many scholars, commentators and politicians assert that international organizations suffer from a severe ‘democratic deficit’. This article proposes a basic framework for evaluating this applied ethical critique of global governance. It rests on two criteria. The first, philosophical coherence, dictates consistent adherence to one or more conception of democratic legitimacy (libertarian, pluralist, social democratic or deliberative). The second, pragmatic appropriateness, requires that any philosophical standard be calibrated to reasonable expectations in the ‘second-best’ world constrained by transaction costs, commitment problems, and justice claims. The latter judgement is in large part empirical, for which existing constitutional practices in advanced industrial democracies provide the most reasonable baseline. By these two criteria – regardless of which specific conception of democracy is adopted as a starting point – the European Union appears to be democratically legitimate. This establishes a point of democratic legitimacy on the continuum of international institutions that could be analysed using this framework.

From the destruction of the twin towers on 11 September 2001 to the failure of trade discussions at Cancún in September 2003, issues are raised that not only concern large swathes of the world's population, but can only be adequately resolved by increased coordination and cooperation across borders. How such coordination and cooperation can be achieved, and how and to whom there should be accountability, are the themes of this article. The article is in six parts. The first part sketches the contemporary nature of global politics; the second examines problems and dilemmas of global public policy-making; the third explores how global governance can be strengthened; the fourth sets out the framework of a cosmopolitan polity which would place democratic accountability at its centre; the fifth unfolds a related concept of multilayered citizenship; and the final part explores the underlying cosmopolitan principles of the argument.