Rethinking the Ethics of Corporate Political Activities in a Post-Citizens United Era: Political Equality, Corporate Citizenship, and Market Failures

Abstract

The aim of this paper is to provide some insights for a normative theory of corporate political activities (CPAs). Such a theory aims to provide theoretical tools to investigate the legitimacy of corporate political involvement and allows us to determine which political activities and relations with government regulators are appropriate or inappropriate, permissible or impermissible, obligatory or forbidden for corporations. After having explored what I call the “normative presumption of legitimacy” of CPAs, this paper identifies three different plausible strategies to criticize and object to corporate political involvement: the “egalitarian” strategy, the “corporate citizenship” strategy, and the “market failures” strategy. It constitutes an attempt to develop the market failures approach to reflect on CPAs. My main claim is that within such an account, the idea that corporations have a license to operate considerably limits their right to engage in political activities.

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Notes

  1. 1.

    Attributed to Jones by Birnbaum (1993).

  2. 2.

    See Dworkin (2010) for an analysis of President Obama’s stance and a critical analysis of the decision (and also Lessig 2010). For a critique of Citizens United based on a desire to find firm grounds for the distinction between individuals’ and corporations’ rights to free speech, see Sepinwall (2012).

  3. 3.

    For some thoughts about the importance of the determination of “corporate political responsibilities”, see Néron and Norman (2008) and Crane et al. (2008).

  4. 4.

    See Hasen (2011) for an excellent account of the political science literature on CPAs, especially lobbying.

  5. 5.

    There is now a growing body of literature on this topic, closely associated with the development of the notion of “political CSR.” See Crane et al. (2008) and also Whelan for a recent defense of political CSR (Whelan 2012), and Néron for a critical look (2010a, b, 2013).

  6. 6.

    For example, Stark (2010), who has published some of the most sophisticated scholarly works on the permissibility and limits of corporate political activity, is clearly not a “political CSR” theorist. The same thing could be said about the illuminating analysis proposed by David Silver in a recent paper (Silver 2014), in which he contrasts his attempt to normatively theorize corporate political activities with the current literature on “political CSR.” See Scherer et al. (2013) for a recent attempt by political CSR theorists to investigate these questions within a political CSR framework.

  7. 7.

    This idea seems close to what Silver (2014) calls a “political passivity principle”.

  8. 8.

    See also Norman (2011) for an important formulation of this approach, which has also been modified and pursued in other directions by Pierre-Yves Néron (2010a, b) and Martin (2013).

  9. 9.

    See Hamilton and Hoch (1997). The quotation is from Weber (1997, p. 256).

  10. 10.

    Quoted in Ostas (2007, p. 34). The quotation is from 1956, before Kennedy became president.

  11. 11.

    Here, it should be noted that in some ways, the associationist argument also “extends” an individual behavior (free speech) to corporations. For the sake of argument, I am referring only to the last argument as the “extensionist” one, because I will be concerned later with the limits of the logic of the invisible hand argument. I also think that the differences between the two arguments are clear enough.

  12. 12.

    Silver (2014) articulates another version of this argument, one that he calls the financial interest principle. He ultimately rejects it.

  13. 13.

    See Sethi (2001, p. 10).

  14. 14.

    See Gilen and Page (2014) for a recent account of the influence of business organizations and economic elites on the U.S. government, in which they claim to have shown that “economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while mass-based interest groups and average citizens have little or no independent influence.” They conclude their impressive empirical study by suggesting that “if policymaking is dominated by powerful business organizations and a small number of affluent Americans, then America’s claims to being a democratic society are seriously threatened.”

  15. 15.

    For more empirical literature on the role of money in politics, see Ansolabehere et al. (2003) and their provocative paper “Why is there so little money in US politics?” They suggest that the view that individuals (and executives) give political contributions to influence legislation, hoping for political “returns” in their investment (the investment view), is incorrect and argue that political donations are just a form of “consumption” associated with an expressive benefit. This is important, since if the “consumption” view is correct, the egalitarian worries appear to be partly misguided. For a critique and an attempt to provide empirical support of the investment view, see Gordon et al. (2007). See also Bonica et al. (2013).

  16. 16.

    Following Alzola, the anti-corruption arguments are consequentialist, while the citizens equality argument is deontological and more explicitly based on considerations of justice (Alzola 2013).

  17. 17.

    Precisely, in Crane et al.’s account, corporate citizenship does not mean that corporations are individual “private” citizens. On the contrary, it means that corporations are political entities.

  18. 18.

    See Sepinwall (2012) for an illuminating critical analysis of corporate citizenship combined with a critique of the idea that corporations should enjoy the same robust-free speech rights that individuals enjoy.

  19. 19.

    As Heath notes, another institutional response is the creation of a firm (2013).

  20. 20.

    In March 2008, more than 90 people were arrested in Italy because they were involved in passing off low-quality oil for the finest Italian product (Mueller 2007).

  21. 21.

    Heath suggests that the market failures approach represents a form of “adversarial ethic”.

  22. 22.

    Néron (2010a, b) made the remark about the (radical) implications of the MF approach for the ethics of CPA, but he did not develop it in a sophisticated way.This paper represents an attempt to articulate the argument in a more lengthy way. Heath mentions that the argument is suggested by Baumol (1992).

  23. 23.

    This is something that Heath (2013) recognizes. In fact, in his response to critics, he admits that his approach could have the kind of implications on the ethics of CPAs that I am exposing here.

  24. 24.

    Finn (2006, p. 150).

  25. 25.

    There are debates concerning the unethical nature of rent-seeking strategies. While Heath identifies rent seeking as being a classical form of unethical behavior, Jaworski (2014) sees no problem with it.

  26. 26.

    Here it should be noted that the market failures approach seems to share some similitudes with the institutional conception of corruption proposed by Lessig (2011). A market system in which corporate actors are able to undermine the conditions for realizing the very purpose of the system seems to be aptly described as a form of institutional corruption in Lessig’s approach. Further attempts to introduce a dialog between the market failures approach and the institutional conception of corruption might be a fruitful avenue for future research.

  27. 27.

    My argument is quite similar to Hasen’s one. I owe a lot to his excellent 2011 paper on lobbying and rent-seeking.

  28. 28.

    Heath refers to an “organized culture of resistance to regulation in all its forms” (2014, p. 201).

  29. 29.

    See the debates surrounding Kasky v. Nike (Nike v. Kasky at the US Supreme Court), which involved Nike’s appeal of an April 2002 California Supreme Court ruling, rejecting the claims made by Nike’s lawyers that the First Amendment immunized the company from being sued for an allegedly deceptive public relations campaign. See on this issue Mayor (2007) and Stoll (2005). From the point of view of the market failures approach to CPA, Nike’s false statements in their CSR report cannot be labeled as corporate political speech. It should be viewed as commercial and therefore as deceptive and false advertising.

  30. 30.

    More precisely, “Prop 8” was a state constitutional amendment passed in the November 2008 California state elections, and has been now ruled unconstitutional by a federal court.

  31. 31.

    Here, egalitarians might also find themselves in a strange position, because although they might like the marriage equality initiative, they might oppose to corporations politically promoting it because of the inequalities it creates between individual and corporations.

  32. 32.

    Here it should be noted that Jarowski is critical of Heath but does not reject the market failures approach entirely. He tries to correct it by drawing attention to what he refers to as “governmental failure.” In some sense, my paper represents a defense of Heath’s account against Jarowski’s.

  33. 33.

    See Fleischacker (2004).

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Acknowledgments

This work was generously supported by the Centre Éthique Entreprise et Économie at the Lille Catholic University (France). Versions of this paper have been presented at the Society for Business Ethics’ Annual Meeting in San Antonio and Philadelphia, the Centre for Ethics at the University of Toronto and the EBEN’s annual congress in Lille. For helpful comments and questions, I thank the audience at these presentations. I owe special thanks to Joe Heath for his detailed comments and criticisms of various versions of this paper, while I was working as postdoctoral fellow under his supervision at the University of Toronto. For comments and discussions on this paper I also thank Sandrine Blanc, Ryoa Chung, Peter Dietsch, Xavier Landes, Chris Macdonald, Dominic Martin, Wayne Norman and Sareh Pouryousefi. I finally thank two anonymous Journal of Business Ethics referees for their excellent suggestions and remarks.

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Néron, PY. Rethinking the Ethics of Corporate Political Activities in a Post-Citizens United Era: Political Equality, Corporate Citizenship, and Market Failures. J Bus Ethics 136, 715–728 (2016). https://doi.org/10.1007/s10551-015-2867-y

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Keywords

  • Corporate political activities
  • Equality
  • Efficiency
  • Citizens United v. Federal Election Commission
  • Market failures
  • Social license to operate
  • Joseph Heath