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Journal of Business Ethics

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01-03-2015

Business Ethics After Citizens United: A Contractualist Analysis

Author: David Silver

Published in: Journal of Business Ethics | Issue 2/2015

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Abstract

In Citizens United v. Federal Election Commission (2010), the US Supreme Court sharply curtailed the ability of the state to limit political speech by for-profit corporations. This new legal situation elevates the question of corporate political involvement: in what manner and to what extent is it ethical for for-profit corporations to participate in the political process in a liberal democratic society? Using Scanlon’s version of contractualism, I argue for a number of substantive and procedural constraints on the political activities of businesses. Central to this contractualist analysis is (1) an identification of the self-governance-based interests of individuals that are affected by corporate political activity and (2) a method for judging the various assignments of social rights, duties and roles according to how they collectively meet those interests. Together, these two features make this contractualist approach distinctive and allow it to generate substantive ethical results.

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Despite longstanding disagreements within democratic society about this question, the “business and corporate social responsibility literature contains little discussion of the ethics of business efforts to influence public policy decisions.” (Weber 1997, 73) Although Weber made this observation some time ago, the business ethics literature has given relatively little attention to this question.

Whelan contends that political CSR theorists are concerned both to “normatively prescribe, and positively describe and explain, the political duties and activities of corporations.” (711) My goals in this paper are purely normative.

Adults with severe cognitive deficiencies that prevent them from conceiving of and planning for their lives do not qualify as rational self-governors. While they do have moral standing, they are not the primary subjects of a theory of liberal democratic society.

“In order for the idea of justification to a being to make sense it must at least be the kind of thing that can be conscious.” (Scanlon 1998, 197).

Werhane advances this view: “the rights of organizations such as corporations are derived from, dependent upon, and secondary to, individual rights". (60).

This phrasing is due to Rawls (1971, pp. 26–27).

See Scanlon (1998) for a more formal statement of the account: “According to contractualism, when we address our minds to a question of right and wrong, what we are trying to decide is…whether certain principles are ones that no one if suitably motivated, could reasonably reject.” (189) Shortly later, he states that “our thinking about right and wrong is structured by…the aim of finding principles that others, insofar as they too have this aim, could not reasonably reject.” (191).

This understanding of contractualism draws from Rahul Kumar’s individual reasons restriction: “Principles in virtue of which an act is judged wrong are to be defended, on this view, by appeal to considerations that have to do with the importance for an individual of its being impermissible to relate to another in this way.” (1999, 281).

See Donaldson and Dunfee (1999). Freeman (2006) also presents a social contract theory of business ethics with his Rawlsian articulation of Kantian stakeholder theory. Note that Freeman includes business organizations as parties to the social contract.

The libertarian should be especially careful not to assume that stockholders want to maximize profits. As Gowri observes: “It is plausible that shareholders seek profits, but it is not necessarily the case that they seek them at the cost of altered social and political structures. For instance, when I invest in a chemical company, I plausibly only want the level of profits feasible within the constraints of current environmental safeguards. Chemical stockholders obviously would like to make money, but are not obviously willing to legalize currently illegal levels of pollution.” (Gowri 1844).

See Buchanan (1985) for a review of arguments for and against capitalism.

There are many other non-contractualist defenses of democracy. See Christiano (1996).

Once the rights of individuals are defined and protected, the equal consideration of interests requires the principle of majority rule, except when doing so systematically disfavors the interests of some citizens. The idea here is that the principle of majority rule is a principle that cannot be reasonably rejected—unless it systematically discounts the interests of some. In that case, some modification of the principle of majority rule is in order. For a contractualist defense of the principle that the greater number is morally significant, see Kumar (2001).

The quote is from Scalia’s dissent in Austin (1990). The majority found legal limits on corporate speech to be Constitutional.

Unfortunately, the production of false and misleading information has been a corporate strategy that has migrated from tobacco companies seeking to obscure the well-founded fact that cigarette smoking causes lung cancer to other industries. For example, some energy companies have recently pursued a strategy to obscure the overwhelming scientific consensus regarding the existence of human-caused global warming. For a review of Exxon’s efforts to undermine evidence concerning global warming see Mufson (2007).

My thinking here has been advanced by related concerns in Hussain (2012).

It is conceivable—although hardly relevant in the present American social and political context—that corporations could be morally permitted to get around the spirit of laws governing their political activity. This would be the case if the laws prevented them from effectively representing the legitimate interests of their stakeholders or from presenting information that is necessary for citizens to make informed social and political decisions.

I thank Rahul Kumar for helping me to recognize this kind of interest.

I would venture—with some trepidation—that businesses could enter the political arena to support matters on which all reasonable citizens agree. This would mean that they could help support the liberal democratic order itself, without endorsing a contested understanding of that order. This might make sense when the liberal democratic order itself was under threat, or required the help of the business world to maintain the stability of that order. Such activity would, however, threaten to undermine citizens’ recognition interests by giving the impression that corporations and not citizens wielded ultimate power in society.

I am indebted to Fleischacker (2005: 138) for this observation. The Smith quote is from Book 4, ch. 2.

Note that on this point there is a stronger case for political activity by unions than by corporations since (1) there is generally a much stronger sharing of interests among members of a union than among shareholders and (2) political activity by unions may be one of the most effective ways for those interests to be protected. These shared interests may include, for example, being subject to the arbitrary power of corporations, or generally relying on wages rather than capital.

As Christiano puts it, a “society that includes a large business sector but in which that sector had no voice would be dangerously uninformed about itself.” (247).

In Silver (2012), I argue that businesses have an obligation to reasonably assess whether various stakeholders are vulnerable, and if so to actively consider their interests so as not to take advantage of their vulnerability.

Austin v. Michigan Chamber of Commerce, (1990). 494 U.S. 652.

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Citizens United v. Federal Election Commission. (2010). 558 U.S. 310.

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First National Bank of Boston v. Bellotti. (1978). 435 U.S. 765.

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Title: Business Ethics After Citizens United: A Contractualist Analysis
Author: David Silver
Publication date: 01-03-2015
Publisher: Springer Netherlands
Published in: Journal of Business Ethics / Issue 2/2015
Print ISSN: 0167-4544
Electronic ISSN: 1573-0697
DOI: https://doi.org/10.1007/s10551-013-2046-y

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Does Honesty Result from Moral Will or Moral Grace? Why Moral Identity Matters

Value-Enhancing Capabilities of CSR: A Brief Review of Contemporary Literature

Competing Against the Unknown: The Impact of Enabling and Constraining Institutions on the Informal Economy

The Inexorable Sociality of Commerce: The Individual and Others in Adam Smith

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