ABSTRACT:The major aim of this article is to show that John Rawls’s theory of justice cannot be applied effectively to questions of business ethics and corporate governance. I begin with a reading of Rawls that emphasizes both the critical and pragmatic nature of his theory. In the second section I look more closely at the notion of society’s “basic structure” and its place within Rawls’s theory. In the third section, I argue that “the corporation” cannot be understood as part of (...) this basic structure and is not, therefore, a subject of justice for Rawls or his interpreters. Finally, I show that Rawls’s inability to speak to the corporation is a weakness, regardless of one’s particular view on the corporation. I conclude by considering what Rawls’s theory helps us to understand about the problems involved in integrating corporate governance, business ethics, and political philosophy. (shrink)

This paper offers the concept of “justice failure,” as a counterpart to the familiar idea of market failure, in order to better understand managers’ ethical obligations. This paper takes the “market failures approach” to business ethics as its point of departure. The success of the MFA, I argue, lies in its close proximity with economic theory, particularly in the idea that, within a larger scheme of social cooperation, markets ought to pursue efficiency and leave the pursuit of equality to the (...) welfare state. As a result, the core ethical responsibility of business actors is to avoid profiting off of market failure. After reviewing this approach I challenge its emphasis on efficiency. I argue that just as we note the suboptimal efficiency of actual markets, we should also take seriously the suboptimal equality of actual welfare states. Taking this idea seriously results in a whole other set of ethical responsibilities for businesses to take into account; in addition to market imperfections and regulatory lacunae, managers should also avoid profiting from, and exacerbating, structural inequalities and injustices. I offer an outline of the kinds of injustices and inequalities that would have bearing on business ethics, and the kinds of ethical responsibilities that this approach suggests that business actors should take into account. (shrink)

What, if anything, is wrong with high executive compensation? Is the common “lay reaction” of indignation and moral outrage justified? In this paper, my main goal is to articulate in a more systematic and philosophical manner the egalitarian responses to these questions. In order to do so, I suggest that we take some insights from recent debates on two versions of egalitarianism: a distributive one, according to which no one should be worse off than others because of unfair distributions of (...) goods and resources, especially ones based on matters of luck or arbitrary factors, and a relational one, which maintains that egalitarian justice requires members of a society to relate to one another as equals. Drawing on recent attempts to highlight the tricky nature of managerial authority, I argue that high inequalities in pay are not simply a distributional matter but should also be analyzed through a relational lens. I also attempt to show that relational egalitarians are well-equipped to question the now dominant “incentives” view of CEO compensation. (shrink)

ABSTRACT: What kinds of markets, market regulations, and business organizations are compatible with contemporary egalitarian theories of justice? This article argues that any thoughtful answer to this question will have to draw on recent developments in political philosophy that are concerned not only with the equality of the distribution of core goods but also with the requirements for equality of status, voice, and so on, in the relations between individuals and within organizations. The dominance of theories of distributive justice in (...) egalitarian political philosophy since Rawls may have contributed, on the one hand, to the oft-recognized gulf between these theories and their theorists and, on the other, to discussions of corporate governance and business ethics. The main purpose of this article is to introduce business ethicists to some of the less-familiar features of recent relational theories of justice and equality, and to suggest that some of these notions may help bridge the gap between business ethics and political philosophy more generally. (shrink)

ABSTRACT:Like most egalitarian political philosophers, John Rawls believes that a just society will rely on markets and business firms for much of its economic activity—despite acknowledging that market systems will tend to create very unequal distributions of goods, opportunities, power, and status. Rawls himself remains one of the few contemporary political philosophers to explore at any length the way an egalitarian theory of justice might deal with fundamental options in political economy. This article examines his arguments and conclusions on these (...) topics. It argues that contemporary Rawlsians will reach different conclusions if they take more seriously than Rawls himself did: (1) the implications, for the political culture and the democratic regulatory state, of large firms competing in adversarial markets characterized by the inevitable “fact of market failure,” and (2) the relevance of ownership and governance relationships involving different kinds of business firms. And with respect to the second point, Rawlsians and other egalitarians have much to learn from contemporary economic, legal, and sociological theories of the firm, and the role of these theories in the structure of and rationale for corporate law. This is the kind of social theory that Rawls believes is relevant to the justification and application of theories of justice, but he himself did not appeal to it in his writings on political economy. Contemporary egalitarians can and should appeal to it now, and in doing so correct errors and omissions in Rawls’s analysis. But taking seriously the two points mentioned above will also force egalitarians who support efficient markets to face difficult dilemmas or compromises of their own. (shrink)

ABSTRACT:The notion of “democracy” has become a much-debated concept in scholarship on business ethics, management, and organization studies. The strategy of this paper is to distinguish between a principle of organization that fosters participation and a principle of legitimation that draws on consent. Based on this distinction, we highlight conceptual shortcomings of the literature on stakeholder democracy. We demonstrate that parts of the literature tend to confound ends with means. Many approaches employ type I democracy notions of participation and often (...) take for granted that this also improves type II democratic legitimation. We hold this to be a mistake. We provide examples of the ambiguity of organizational procedures and show that under some circumstances a decrease in the degree of participation may actually increase legitimation because a governance structure that results in higher productivity can provide higher benefits for all parties involved, serve their interests and therefore meet their agreement. Less type I democracy may mean more type II democracy. We believe this to be an important insight for judging the legitimacy of both capitalistic firms and competitive markets. (shrink)

Recent judicial rulings and changes in federal and state legislation have given for-profit corporations a growing list of rights and constitutional protections, including the right to practice religion free from many types of federal or state restriction. In this paper, we highlight the implications of these developments using Rawls’ Theory of Justice to explore the consequences of for-profit corporate religious freedom for consumers and employees. We identify preliminary principles to spark a discussion as to how expanding religious freedom for businesses (...) and fair access to goods and services can coexist in the for-profit marketplace. (shrink)

By considering what we identify as a problem inherent in the ‘nature of the firm’—the risk of abuse of authority—we propound the conception of a social contract theory of the firm which is truly Rawlsian in its inspiration. Hence, we link the social contract theory of the firm with the general theory of justice. Through this path, we enter the debate about whether firms can be part of Rawlsian theory of justice showing that corporate governance principles enter the “basic structure.” (...) Finally, we concur with Sen’s aim to broaden the realm of social justice beyond what he calls the ‘transcendental institutional perfectionism’ of Rawls’ theory. We maintain the contractarian approach to justice but introduce Sen’s capability concept as an element of the constitutional and post-constitutional contract model of institutions with special reference to corporate governance. Accordingly, rights over primary goods and capabilities are granted by the basic institutions of society, but many capabilities have to be turned into the functionings of many stakeholders through the operation of firms understood as post-constitutional institutional domains. The constitutional contract on the distribution of primary goods and capabilities should then shape the principles of corporate governance so that at post-constitutional level anyone may achieve her/his functionings in the corporate domain by exercising such capabilities. In the absence of such a condition, post-constitutional contracts would distort the process that descends from constitutional rights and capabilities toward social outcomes. (shrink)

This paper assesses employees’ moral agency within corporate capitalism from a politically liberal standpoint. While political liberalism has spelt out its key institutional implications at state level, it has neglected moral agency at work, assuming that a rights-based state that secures freedom of contract, free choice of occupation and a free labour market within a fair context would protect it sufficiently. Yet two features of corporate capitalism constrain employees’ moral agency: the relation of authority that forms part of the work (...) contract and organisations’ fragmented decision-making processes. Both seem at odds with the liberal ideal of allowing people to live by their own conception of the good. Consequently, this paper examines whether political liberalism should recommend greater safeguards for protecting workers’ moral agency. It proposes a criterion for assessing corporate capitalism: the ‘moral space’ defined as the socially shaped opportunities for action that can be enacted or endorsed from a comprehensive perspective. It argues that liberals should favour arrangements that widen workers’ moral space and suggests institutional designs that may achieve this while remaining within liberal boundaries. (shrink)

This article asks whether firms should contribute to the costs of procreation and parenthood. We explore two sets of arguments. First, we ask what the principle of fair play – central in parental justice debates – implies. We argue that if one defends a pro-sharing view, firms are required to shoulder part of the costs of procreation and parenthood. Second, we turn to the principle of fair equality of opportunity. We argue that compensating firms for costs they incur because their (...) employees decide to procreate or parent may undermine some of the incentives leading to (statistical) discrimination in the workplace. (shrink)

ABSTRACT:Singer has recently argued that questions related to corporate governance are beyond the reach of Rawls’s political conception of justice. This is because justice applies to the basic structure of society, understood as society’s legally coercive structures, and because corporate governance cannot be considered part of this structure in political liberalism. This commentary challenges the second part of the argument. First, it suggests that the criterion used to exclude corporate governance from the basic structure—whether employees can exit economic organizations—is not (...) conclusive for corporate governance, notably as institutionalized in corporate law. Second, even if the focus were on corporate governance, it would still be possible to argue that it legally coerces citizens, if not employees, in a relevant way. Thus, the argument is not successful in demonstrating that political liberalism goes beyond its legitimate boundaries when considering that aspects of corporate governance may be matters of justice. (shrink)