Reintroducing Ethics to Economics
Has the domination of neoclassical economic thinking in academia contributed to the economic crisis?
Considering normative expectations and the economic rationale, it is highly questionable whether corporations should enter the politcal arena or not.
Bringing the responsibility of corporations to the table always raises a number of multi-layered and far-reaching questions, starting with the debate as to whether companies as non-human entities are even capable of taking responsibility. How to best deal with corporations assuming roles associated with politics, and just how far corporates' responsibilities should go, are also unclear. The remit of corporations has visibly evolved, and their limits have been taken up and intensively explored in a range of economic, sociological, political and philosophical debates.
Established spheres of influence are visibly shifting…
It seems indisputable that the fundamental core responsibilities of national states, such as health care, transportation infrastructure, postal services, and (military) security, also fall in the purview of corporate business activities today. Changing framework conditions and globalization processes are apparently dissolving the traditional division of responsibilities among the private sector, politics and civil society. Established spheres of influence are visibly shifting, movement accompanied by changes in the defined stakeholder roles and the related tasks involved.
In recent years, suggestions that corporations should assume a political role have increased in prominence, a marked shift from the classic “theory of the firm” and as such the liberal concept of corporate responsibility. These proposals claim that corporations can no longer be understood as merely economic stakeholders; their political element must be recognized as well. As such, they should actively partake in defining policy along with other civil society participants like non-governmental organizations. In a deliberative democracy characterised by framework conditions designed to encourage participation, the stated objective is to involve corporations directly in civil self-determination processes and, based on their experience in a global economic context in particular, to allow them to actively participate in shaping policy. This would expand corporate responsibility to include involvement in solutions for society’s socio-political and ecological problems.
Corporations are neither elected nor democratically controlled – so to what extent could their political role be considered legitimate?
Suggesting corporations assume political responsibility expands our current understanding of corporate social responsibility (CSR), a concept so wide-spread it almost seems matter of course. CSR finds concrete application in a wide range of programmes initiated by corporations and innumerable sustainability reports in which companies articulate their efforts to ensure their business activities are environmentally and social conscious. Classical CSR implies that a corporation considers expectations and demands from its respective business environment and links these to their economic interests. Expanding this concept of responsibility by adding a political dimension for corporations must be very critically explored from a number of different angles. While the economic and political arenas have undoubtedly already started to become intertwined – is there a compelling theoretical argument in favour of removing this barrier? Additionally it bears mentioning that corporations are neither elected nor democratically controlled – so to what extent could their political role be considered legitimate? This association is particularly problematic when considered in conjunction with the image of corporations that serves as a basis here. It posits that corporations are motivated to assume a political role and will not, as the logic of a capitalist market system would seem to decree, hold fast to the overriding interest of possible optimal profitably. Corporations would agree not to pursue self-serving interests, at least not as their sole priority, and work with civil society and political stakeholders to solve serious social problems on a global level in particular.
The capitalist focus of corporations would have to undergo elementary change before they should intensively participate in politics.
According to capitalist logic, however, it is in the disposition of corporations to follow their own interests. Their actions are motivated by pure self-interest, and characterised by primary orientation towards the self-serving and profit-seeking economic rational. The respective behaviours expected from corporations on the one hand and political stakeholders on the other are in line with this understanding very different and at times even diametrically opposed. If we assume this to be true: Would the behaviour we expect from corporations not then be contrary to the expectations we have for the proper execution of a political role? Is it possible that a company, given its self-interested focus, could truly fulfil the normative demands made on a political actor? How believable can the political role of a company be? What can we expect when a corporation is forced to choose between its well-being and policy measures? Hereafter, the qualities of a political stakeholder as the legitimate representative of society are fundamentally different from those of a private sector stakeholder with its economic interests. This means the capitalist focus of corporations would have to undergo elementary change before they could intensively participate in politics.
Every day brings new reports of corporations’ morally questionable behaviour.
These two images of the tenor of corporations are clearly irreconcilable. If we look at the reality, the basic attitude of corporations is much closer to the image driven by self-interest. Every day brings new reports of corporations’ morally questionable behaviour. Our attention is regularly drawn to industry-wide initiatives that, in anticipation of measures to address controversial topics, seek to prevent or influence legal changes and as such are involved in negative agenda setting. This process was clearly visible in the discussion around setting a legal quota for the percentage of women on boards of directors and advisory boards in Germany and in efforts to improve conditions in industrial livestock farming. From this point of view, the concept of corporations as entities that could assume political responsibility and act against the economic rationality of their drive to increase profits is very questionable.
When normative demands call for corporations to assume a political role, misgivings and risks based on experience must be considered.
Equating observations from the empirical with theoretical concepts is not a scientifically convincing argument. But when normative demands call for corporations to assume a political role, misgivings and risks based on experience must be considered. These doubts must be cleared away if convincing arguments are to be made to explain why genuine political responsibilities should no longer be the sole purview of the respective legitimate stakeholders and where the line must be drawn for expanding corporate responsibility. The political involvement of corporations in education, for example, should be met with serious reservations. The education sector aims to neutrally shape members of our society. According to the Humboldt model, it should ideally be a space in which only neutral stakeholders operate. As private sector stakeholders, it is extremely doubtful whether corporations can fulfil this demand for neutrality (even theoretically). Perhaps exploring the justification of corporate responsibility does not yield particularly controversial results when based on a liberal understanding of corporations which foregrounds their self-referential orientation and pursuit of self-interest focused on generating profits. On this basis, it might be possible to extract some specific areas of political corporate responsibility, though these would be severely limited and problematize the already expanded range of corporate responsibilities. These would however not entail the critical questions raised here – even if this ultimately means giving up on the heady ideal of corporations shaping society by political engagement.