The decomposition of the corporate body: What Kant cannot contribute to business ethics

Journal of Business Ethics

Volumn 74, Issue 3, 2007, Pages 253-266

  Altman, Matthew C ^a  

^a CENTRAL WASHINGTON UNIVERSITY   (United States)

Author keywords

Bowie; Categorical imperative; Collective responsibility; Corporate internal decision procedure (CID); Corporate responsibility; Decision procedures; Deontological ethics; Kant; Maxims; Moral agency; Norman; Responsibility

Indexed keywords

EID: 34547904324     PISSN: 01674544     EISSN: 15730697     Source Type: Journal    
DOI: 10.1007/s10551-006-9233-z     Document Type: Article

References (58)

1. Barbara Herman, The Practice, of Moral Judgment (Cambridge, Mass.: Harvard University Press, 1983), 206;
2. and Onora O'Neill, Constructions of Reason: Explorations of Kant's Practical Philosophy (Cambridge: Cambridge University Press, 1989), 122-125.
3. William M. Evan and R. Edward Freeman, 'A Stakeholder Theory of the Modern Corporation: Kantian Capitalism', in Ethical Theory and Business, ed. Tom L. Beauchamp and Norman E. Bowie, 4th ed. (Englewood Cliffs, N.J.: Prentice Hall, 1993), 75-84. The distinction between, stakeholders and shareholders has become commonplace in business ethics. Shareholders own part or all of a given company, and they are certainly affected by the performance of the business. However, there are many other people who are impacted by corporate behavior: employees, the community, suppliers, customers, etc. These people have a stake in the company's actions, even though they may not own any part of it. And, so the argument goes, if they are affected by the actions of the company, then the company has a moral responsibility to them.
4. Norman E. Bowie is almost singlehandedly making up for the fact that Kant's philosophy was overlooked for so long in business ethics. Recent writings in which he explicitly references Kant include, among others, Business Ethics: A Kantian Perspective (Malden, Mass.: Blackwell, 1999);
5. 'A Kantian Theory of Leadership', Leadership & Organization Development Journal 21 (2000), 185-193;
6. and 'Sweatshops and Respect for Persons' (with Denis Arnold), Business Ethics Quarterly 13 (2003), 221-242.
7. Corporate responsibility is one kind of collective responsibility. Although some people attribute group intentions and collective responsibility to such loose groups of people as crowds and unaffiliated members of a particular profession, more often collective responsibility is only attributed to groups whose members' behavior is governed by established rules and which has a particular body to carry out the group action, such as an elected government or a board of directors. In any event, the claims made in this paper apply both to the broader category of collective agency and to corporate agency. Kant cannot make sense of collective agency generally, and thus cannot accommodate corporate agency in particular.
8. Albert Carr, 'Is Business Bluffing Ethical?' Harvard Business Review 46 (1968), 143-153.
9. Milton Friedman, 'The Social Responsibility of Business Is to Increase Its Profits', New York Times Magazine, 13 Sept. 1970.
10. John R. Boatright, 'Does Business Ethics Rest on a Mistake?', Business Ethics Quarterly 9 (1999), 586-587.
11. Immanuel Kant, 'Groundwork of the Metaphysics of Morals', in Practical Philosophy, trans. and ed. Mary J. Gregor (Cambridge: Cambridge University Press, 1996), 393. As is standard in Kant scholarship, references to Kant's works cite the pagination of the Royal Prussian Academy edition, which is indicated in the margins of the translations.
12. Kenneth E. Goodpaster and John B. Matthews, Jr., 'Can a Corporation Have a Conscience?', Harvard Business Review (Jan./Feb. 1982), 132-141.
13. Christine M. Korsgaard, 'Reflective Endorsement', in The Sources of Normativity (Cambridge: Cambridge University Press, 1996), 49-130.
14. Peter French, 'The Corporation as a Moral Person', American Philosophical Quarterly 16 (1979), 207-215.
15. See also French, Collective and Corporate Responsibility (New York: Columbia University Press, 1984),
16. and Thomas Donaldson, Corporations and Morality (Englewood Cliffs, N.J.: Prentice-Hall, 1982), 30-32.
17. Kevin Gibson makes a slightly weaker claim: corporations are not moral agents, but because of their decision, procedures - the fact that there is a corporate culture (a "continuing 'spirit'") that persists despite employee turnover - they are enough like agents ("quasi-persons") to have moral responsibilities. Thus the corporation can be held to account, but without "assigning intentionality to a nonhuman entity" ('The Moral Basis of Stakeholder Theory', journal of Business Ethics [2000] : 251-252, 254). For the purposes of this paper, the distinction between French's stronger claim and Gibson's weaker claim, is not important. As I will show, under Kant's deontological theory, a corporation, is neither an agent nor enough like an agent to be held morally responsible for its actions.
18. William H. Shaw and Vincent Barry, Moral Issues in Business, 8th ed. (Belmont, CaL.: Wadsworth, 2001), 202.
19. Onora O'Neill, 'The Moral Perplexities of Famine Relief, in Matters of Life and Death, ed. Tom Regan (Philadelphia: Temple University Press, 1980),
20. Similarly, David T. Ozar compares businesses to clubs and nations, which have rules that govern their actions. See his 'The Moral Responsibility of Corporations', in Ethical Issues in Business: A Philosophical Approach, ed. Thomas Donaldson and Patricia H. Werhane (Englewood Cliffs, N.J.: Prentice-Hall, 1979), 294-300.
21. Although one could blame only the corporation and not the people in it, one could also hold each person involved in the decision fully responsible, or could assign proportional blame depending on how involved each person was. The options are spelled out by Richard T. De George, 'Can Corporations Have Moral Responsibility?', in Ethical Theory and Business, ed. Tom L. Beauchamp and Norman E. Bowie, 2d ed. (Englewood Cliffs, N.J.: Prentice Hall, 1983), 63-65.
22. Immanuel Kant, The Metaphysics of Morals, in Practical Philosophy, 219.
23. Kant, Groundwork, 397.
24. Ibid., 402.
25. Ibid., 429.
26. Immanuel Kant, Religion Within the Boundaries of Mere Reason, trans. George di Giovanni, in Religion and Rational Theology, ed. Allen W. Wood and George di Giovanni (Cambridge: Cambridge University Press, 1996), 26-28.
27. Kant also says that we have a third predisposition, a predisposition to "humanity." This is our tendency to compare ourselves to others, which is really just a different kind of self-love. When Kant talks about humanity in the Religion, he is describing a natural predisposition we have rather than our rational capacity to set ends, which is what he calls humanity in the Groundwork and the Metaphysics of Morals.
28. Kant, Groundwork, 412-414.
29. Ibid., 425.
30. Immanuel Kant, 'Critique of Practical Reason', in Practical Philosophy, 47.
31. Bowie, Business Ethics, 83-84; italics mine. By Bowie's count, the second formulation of the categorical imperative is the formula of the end in itself.
32. For Kant, the condition of all other goods is simply adherence to the moral law. This is the supreme good. But for morality to make sense to us, for it to be complete, happiness and virtue must be united somehow. This is the highest good, which is only achievable if freedom, the immortal soul, and God are not just possible but actual. See Kant, 'Critique of Practical Reason', 110-111.
33. As Manuel G. Velasquez notes, the corporation and its employees are not related in the same way that a person, is related to her body. Only in the latter case does the intention of the agent directly bring about the action ('Why Corporations Are Not Morally Responsible for Anything They Do', Business and Professional Ethics Journal 2, no. 3 [fall 1983]: 1-18).
34. Of course, the person, must actually will the maxim. If it is a "mere wish," then the maxim has not, strictly speaking, been adopted (Kant, Groundwork, 394). For example, if I want to exercise more but I make no effort to get off the couch, then I do not intend to exercise. Instead, I want to have that intention.
35. Michael Keeley, 'Organizations as Non-Persons', journal of Value Inquiry 15 (1981), 149-155.
36. This is where Velasquez and I seem to overlap. He does not look at the setting of maxims, however. He focuses on the physical act of bringing about a particular end as one of the conditions of moral responsibility. He claims that a business cannot actually do anything, and thus any intentions it does have cannot be actualized: "The intentions French attributes to corporations, then, do not mark out corporate acts as intentional because the intentions are attributed to one entity (the corporation) whereas the acts are carried out by another entity (the corporate members)" ('Why Corporations Are Not Morally Responsible', 8). Businesspeople are agents of the corporation, but they are the ones who act. That is why the intentions of the corporation, are irrelevant. Unfortunately, Velasquez also notes that "corporations 'as a whole' may legitimately be held causally responsible for an act or an effect," which (he notes) is a sense of responsibility distinct from moral responsibility (14). Yet agreeing with French that corporations can have intentions and conceding that they can be causally responsible for a given action seems to imply that they meet the two conditions he sets out for moral responsibility: that the agent "personally brought about the wrongful, act" and that "he did so intentionally" (2). If he defines 'personally' in a nonquestion-begging way, Velasquez must concede that, according to his criteria, corporations can be morally responsible. By looking at responsibility through a Kantian lens, we can see that what seems to be an intention is actually just an artificial constraint that employees may or may not follow. Thus corporate responsibility is more effectively criticized by first explaining what is required for moral culpability, then by showing that businesses do not meet these conditions. That is the approach I take in this paper.
37. Bowie, Business Ethics, 83-84.
38. John Rawls, A Theory of Justice, rev. ed. (Cambridge, Mass: Harvard University Press, 1999), 458.
39. Quoted in Bowie, Business Ethics, 83.
40. Rawls, Theory of Justice, 222.
41. See Kant, Religion, 91-147.
42. Bowie, Business Ethics, 93.
43. De George, 'Can Corporations Have Moral Responsibility?', 61-62.
44. Donaldson, Corporations and Morality, 30.
45. Among other places, we see this in Hegel's treatment of the Oedipus story, where Oedipus finds out what he actually did by being held to account by others. See G. W. F. Hegel, Phenomenology of Spirit, trans. A. V. Miller (Oxford: Oxford University Press, 1977), §469.
46. Shaw and Barry, Moral Issues in Business, 47-48.
47. When we rule out corporate responsibility, we are still left with two possibilities: either we assign full blame to anyone who was necessary to carry out the wrong action, or we assign it proportionally based on how important each person's actions are. See note 14 above.
48. O'Neill, 'The Moral Perplexities of Famine Relief, 286. This is O'Neill's influential rephrasing of the formula of the end in itself.
49. It would go beyond the scope of this paper to talk more specifically about the obligations that agents of the corporation have. However, without collective agency, Kant's theory also cannot make sense of obligations to groups of people such as unions, which are not themselves deserving of respect even though their members are. If, as Gibson argues, stakeholder theory depends on collective responsibility - that is, it depends on groups having moral obligations to other groups - then deontological, ethics may undermine stakeholder theory in general ('The Moral Basis of Stakeholder Theory', 245-257). Unfortunately, many stakeholder theorists claim, to be drawing on the formula of the end in itself to make their case. For example, R. Edward Freeman writes: "Each of these stakeholder groups has a right not to be treated as a means to some end, and therefore must participate in determining the future direction of the firm in which they have a stake" (Strategic Management: A Stakeholder Approach [Boston: Ballinger, 1984], xx; italics mine). See also Evan and Freeman, "A Stakeholder Theory of the Modern Corporation," 76. Gibson's claim fails to convince me, however. Businesspeople are obligated to take into account the personhood of everyone who is affected by the business, even if they are not obligated to them as groups. If that is so, then Kant's individualistic view does not undermine stakeholder theory, but merely refocuses it on individual stakeholders.
50. W. D. Ross's clearest statement of his moral philosophy is 'What Makes Right Acts Right?', in The Right and the Good (Indianapolis: Hackett, 1930), 16-47.
51. Shaw and Barry claim that there is no "promissory relationship" between investors and employees. Instead, shareholders simply buy stock that they expect to increase. They do not make an arrangement with management to increase profits, and managers are not given a choice (as, for example, financial advisors are) to refuse the offer (Moral Issues in Business, 207). This seems to assume a rather one-dimensional notion of consent. Employees are hired on the assumption that they will advance the interests of the company, and that includes (at least) the commitment to attract and reward investors by increasing profits. They tacitly consent to such a relationship by taking a position in a publicly traded company. That is not their only obligation, but it is certainly one of them.
52. Daniel R. Gilbert, Jr., 'Respect for Persons, Management Theory, and Business Ethics', in Business Ethics: The State of the Art, ed. R. Edward Freeman (Oxford: Oxford University Press, 1991), 116.
53. David Luban, Alan Strudler, and David Wasserman, 'Moral Responsibility in the Age of Bureaucracy', Michigan Law Review 90 (August 1992): 2359.
54. See also Donaldson, Corporations and Morality, 109-128;
55. and Robert Jackall, 'Looking Up and Looking Around', in Moral Mazes: The World of Corporate Managers (Oxford: Oxford University Press, 1988), 75-100.
56. John Stuart Mill distinguishes how we judge the action from how we judge the person who performed the action, whether she has a character that (on the whole) tends to aim at maximizing utility. See Mill, Utilitarianism (Indianapolis: Hackett, 1979), 19-20. Bad actions can issue from people whose characters are good, so sometimes an action would be wrong without the person's being blameworthy. When we are talking about the actions of a business, we can say that the action is wrong without attributing the action to some blameworthy character. In such cases, there is no character to consider. When we talk about the "character" of the institution, we are referring to whether its policies encourage its employees to act rightly or not.
57. Joseph A. Petrick and John F. Quinn, Management Ethics: Integrity at Work (Thousand Oaks, CaI.: Sage, 1997), 53-55.
58. Louis Althusser, 'Ideology and the State', in Lenin and Philosophy, and Other Essays, trans. Ben Brewster (New York: Monthly Review, 1971), 172.