The behavior of corporations has profound effects on individuals’ economic and social conditions, their opportunities, and the quality of their lives more generally.Footnote 1 Because these effects are both pervasive and extensive, it is important to reflect on what the most plausible philosophical theories of justice might imply with respect to corporate behavior, broadly understood. Many important questions lie, in one sense or another, at the intersection of political philosophy and business ethics. Some of these questions are at least primarily about whether the state should implement certain policies or regulations, while others are primarily about what firms should themselves do given the legal framework within which they operate. Many important issues, however, generate questions at both levels. Consider, for example, the issue of to what extent firms resemble states in their morally relevant dimensions and to what extent their internal governance ought to be guided by the same (democratic) principles that apply to the legitimate exercise of state authority (Anderson, Reference Anderson2017; Brenkert, Reference Brenkert1992; Kolodny, Reference Kolodny and Anderson2017; Landemore & Ferreras, Reference Landemore and Ferreras2016; Moriarty, Reference Moriarty2005b, Reference Moriarty2010; Néron, Reference Néron2015; Phillips & Margolis, Reference Phillips and Margolis1999). With respect to this issue, we can ask both whether the state ought to mandate some degree of democratic governance within firms and what firms themselves should do with respect to their internal governance in conditions in which the state does not mandate anything in particular.Footnote 2
The fact that many key normative questions about the behavior of corporations apply both to issues of state policy and directly to issues of firm behavior suggests, at the very least, that no clear distinction can be drawn between issues of social justice and issues of business ethics. And this suggests that political philosophy and business ethics must be thought of as at least substantially overlapping areas of normative inquiry (Heath, Moriarty, & Norman, Reference Heath, Moriarty and Norman2010; Martin, Reference Martin2013; Moriarty, Reference Moriarty2005b; Norman, Reference Norman2011, Reference Norman2014; Rönnegard & Smith, Reference Rönnegard and Smith2013).
Unsurprisingly, much of the work of business ethicists that either engages with issues in political philosophy directly or draws on work in political philosophy to inform normative analyses of corporate behavior has focused on John Rawls’s influential theory of justice.Footnote 3 Recently, a number of scholars have discussed what Rawlsian theory might imply with respect to some central questions in business ethics, and whether we should be satisfied with its implications.Footnote 4 Because Rawls held that the principles of justice apply only to the institutions of the “basic structure of society,” and not to the conduct of individuals or private associations within that structure (Rawls, Reference Rawls1993: 268–69; Reference Rawls1999: 6–9, 47), the senses in which, and the extent to which, his theory can be thought to have implications for business ethics depend primarily on whether, and, if so, in what respects, corporations can be thought to be part of the basic structure (Blanc & Al-Amoudi, Reference Blanc and Al-Amoudi2013: 502–11; Singer, Reference Singer2015: 75–82).
My central aim in this article is to argue that the nature of the concern that we ought to have about the effects of corporate behavior on individuals’ economic and social conditions and opportunitiesFootnote 5 should lead us to reject the Rawlsian view that corporations are bound by principles of justice only if, and insofar as, they are part of the basic structure. Instead, we should accept that, in principle, corporations have reasons of justice to directly promote the aims that principles of justice prescribe for the institutions of the basic structure, and that therefore they are directly bound by the principles of justice.Footnote 6
Before making this argument, however, it is important to give Rawlsian theory its due. To do this, it is essential to clarify precisely what, from a Rawlsian perspective, we ought to be asking when we consider whether corporations are part of the basic structure. In my view, the relevant questions have been mischaracterized in much of the existing debate, and some key distinctions have been overlooked, with the result that there is a fair bit of confusion about which questions Rawlsian theory might provide an answer (plausible or not) to, and which questions lie, as a matter of principle, beyond its scope. I suggest that Rawlsian theory’s potential implications for business ethics are more extensive than some (e.g., Singer, Reference Singer2015) have suggested, despite being less than fully adequate.
I proceed in the remainder of the article as follows. In section 1, I describe the structure and central features of Rawls’s Institutionalism about justice (Berkey, Reference Berkey2015, Reference Berkey2016, Reference Berkey2018; Heath et al., Reference Heath, Moriarty and Norman2010: 432), that is, his view that the principles of justice apply only to the institutions of the basic structure of society. In section 2, I discuss the implications of this Institutionalism for our thinking about the place of corporations within Rawlsian theory. I argue that two recent and important views, defended by Abraham Singer (Reference Singer2015) and Sandrine Blanc and Ismael Al-Amoudi (Reference Blanc and Al-Amoudi2013), respectively, each distinguish questions that are about the content of the basic structure from those that are not in conceptually problematic and therefore at least somewhat misleading ways. Then, in section 3, I describe how we should think about what Rawlsian theory implies with respect to corporate behavior. I note in particular that while the answers to many questions about which policy choices Rawlsian theory supports depend on empirical matters, no empirical facts can affect whether a particular policy choice is a choice about the content of the basic structure.Footnote 7 Finally, in section 4, I argue that once we recognize both the fundamental grounds on which we are legitimately concerned about the effects of corporate behavior on individuals’ social and economic conditions and the limits on what Rawlsians can plausibly count as part of the basic structure, the Institutionalist claim that the principles of justice apply only to the institutions of the basic structure appears implausible. The fact that corporations can directly and profoundly influence individuals’ opportunities, quality of life, and other justice-relevant values, I argue, provides grounds for concluding that the principles of justice apply directly to their behavior. Whether and in what sense they can be thought to be part of the Rawlsian basic structure simply does not matter.
1. RAWLSIAN INSTITUTIONALISM
Institutionalism about justice (hereafter simply Institutionalism) is the view that the correct principles of justice, whatever they are,Footnote 8 apply directly to the institutions of the basic structure of society, but do not apply directly to the conduct of individuals and private associations within that structure. Because the basic structure is not itself an agent to which normative principles can apply in the familiar sense that agents subject to them must act in accordance with their prescriptions, the central Institutionalist claim requires a bit of interpretation. What Rawls and other Institutionalists appear to have in mind is, roughly, that the aims prescribed by the principles of justice (e.g., ensuring the protection of equal basic liberties and/or maximizing the prospects of the worst-off members of society) “must guide the process of structuring the institutions” that make up the basic structure “as well as the policies and practices of those institutions” (Berkey, Reference Berkey2016: 707). One implication of this for individuals and other possible subjects of obligations of justice (such as private associations) is that whenever they are acting as occupants of roles within a basic structural institution, they are obligated, as a matter of justice, to be guided by the aims prescribed by the principles of justice. In addition, they are obligated to be guided by these aims when they are involved in decision-making that will affect the makeup of a basic structural institution, or are acting in a way that will (or perhaps merely could) have effects on such an institution or set of institutions (e.g., voting). On the other hand, when agents are acting within the constraints determined by the existing basic structure, and when their actions will have no effects on the makeup of that structure, Institutionalism entails that they are not bound by any justice-based obligations to be guided by these aims.Footnote 9
Rawls’s (Reference Rawls1999: 99–100) brief description of the content of what he calls the “natural duty of justice,” which, on his view, generates the subset of individuals’ duties of justice that are not grounded in their voluntary actions,Footnote 10 is consistent with this understanding of Institutionalism. In addition to requiring that we comply with the rules of just institutions, the natural duty of justice, according to Rawls (Reference Rawls1999: 99), requires that we “further just arrangements not yet established, at least when this can be done without too much cost to ourselves.” The idea here is that what justice requires of individuals is limited to compliance with just institutions and (not too costly) contributions to creating just institutions where they do not already exist (e.g., by reforming unjust institutions). It does not require direct promotion of the aims prescribed by the principles of justice. Duties of justice, on this view, are always ultimately explained by a concern for just institutions—we are obligated to respect such institutions by complying with their rules and regulations, and to aim to bring them about when they are not already in place. As Liam Murphy (Reference Murphy1998: 252) puts it, on an Institutionalist view such as Rawls’s, “in a fundamental way, institutions are what normative political theory is all about.”
The structure of Institutionalist views can be seen more clearly by noting what they imply about individuals’ obligations with respect to distributive justice in a society that lacks a just basic structure. Consider the following example:
Carly is a well-off person in a society that counts as substantially unjust on any plausible view about what justice requires. Her annual income is $400,000, and the effective tax rate on that income is significantly less than it would be if the basic structure were just (or even merely less unjust). More specifically, she currently pays about $90,000 per year in federal, state, and local taxes after taking advantage of the many tax breaks that are available to people like her. It is clear that just institutions would tax her at least $40,000 more than she is in fact taxed and would use the additional revenue obtained from taxing people like her at a higher rate to improve the prospects of society’s worst-off members (by, for example, improving educational opportunities in poorer areas or simply redistributing income), who typically live on less than $10,000 per year.
Rawls’s natural duty of justice implies that Carly is obligated to contribute to bringing about changes in the institutions of her society in the direction of justice.Footnote 11 Specifically, she is obligated to vote for candidates for office who support raising her taxes or, if possible, to vote directly for an increase in her taxes. She might also be obligated to contribute some time and/or money to efforts to change her society’s tax laws so as to make them just, or at least less unjust. For Rawls, as well as most other Institutionalists, this latter obligation will not require her to make very large sacrifices (it will not require her, for example, to donate $40,000 to a campaign to raise taxes on the well off). What Carly is not obligated to do, as a matter of justice, on an Institutionalist view, is to voluntarily redirect the $40,000 that just institutions would tax her, or any portion thereof, in ways that would benefit those who are unjustly disadvantaged in her society. She is not obligated to do this even if the resources would do at least as much good for the worst-off members of society as would be done if they were directed through the tax system.Footnote 12
I suspect that the fact that Institutionalist views clearly imply that well-off people are not obligated, as a matter of justice, to directly promote the aims prescribed by the principles of justice by, for example, directing a portion of their resources in ways that would benefit the worst-off members of society, is a significant source of its widespread appeal (Berkey, Reference Berkey2016: 708; Julius, Reference Julius2003: 326–27; Murphy, Reference Murphy1998: 288–89; Nagel, Reference Nagel1991: 53–54; Tan, Reference Tan2004: 335).Footnote 13 The theoretical and normative plausibility of this implication of Institutionalist views depends, at least in part, on the way in which Rawls and others combine the central Institutionalist claim that the principles of justice apply to the institutions of the basic structure, but do not apply directly to the conduct of individuals and private associations, with a pure procedural account of distributive justice (Rawls, Reference Rawls1999: 74–77; Thomas, Reference Thomas2011; for critical discussion, see Berkey, Reference Berkey2015: 852–56, 866–69; 2016: 716–18; Cohen, Reference Cohen2008: 126–27). As Rawls (Reference Rawls1999: 75) puts it, on a pure procedural account, “there is no independent criterion for the right result: instead there is a correct or fair procedure such that the outcome is likewise correct or fair, whatever it is, provided that the procedure has been properly followed.” With respect to distributive justice, the correct procedures, on Rawls’s view, consist in the proper functioning of a fully just set of basic structural institutions plus full compliance among individuals and private associations with all of the rules and regulations imposed on them by these institutions.Footnote 14
This pure proceduralist account defines distributive justice in terms of the existence and operation of, plus full compliance with, a fully just set of basic structural institutions. Because of this, it implies that a distribution of resources is just only if it is the result of the operation of fully just institutions plus full compliance by individuals and private associations with the rules of those institutions. In other words, it implies that being produced by the operation of a just basic structure is a necessary condition on the process by which a just distribution can be brought about (as is full compliance by individuals and private associations with the rules imposed by the basic structure).Footnote 15 More importantly for my purposes, however, pure proceduralism also implies that nothing that individuals or private associations might do within the context of an unjust basic structure, apart from contributing to making that structure just (or at least less unjust), can reduce the extent to which the distribution of resources in society is unjust. Because distributive justice is defined in terms of the operation of just institutions, behavior that is independent of, and has no effect on, the relevant institutions cannot affect it, either by making the resulting distribution more unjust or by making it less so. And because at least much of the behavior of individuals and private associations in fact has no effect on basic structural institutions, this behavior cannot be subject to principles of justice. After all, if, as a conceptual matter, the relevant behavior cannot affect justice in any way, there is no basis on which principles of justice might require anything with respect to it.
Combining Institutionalism with pure proceduralism about distributive justice, then, provides Institutionalists with a theoretical basis, grounded in a view about what justice is, for the central Institutionalist claim.Footnote 16 More generally, it provides the basis for the type of distinction between the public and private spheres that Institutionalists accept, and for the view that only what is done by agents acting in the former is directly relevant to justice. The public sphere, for Institutionalists, consists of the institutions of the basic structure plus the subset of the behavior of individuals and private associations that is either carried out on behalf of or stands to affect the makeup of one or more of those institutions. The private sphere, within which behavior is not directly subject to the principles of justice, encompasses all of the conduct of individuals and private associations that does not fall within the public sphere.
2. CORPORATIONS AND THE BASIC STRUCTURE
Where do corporations fall within Rawlsian theory’s distinction between the public and the private spheres? In what sense, if any, are they part of the basic structure, and what are the implications for the application of principles of justice to corporate behavior?
On Rawls’s (Reference Rawls2001: 10) view, the institutions that make up the basic structure include “the political constitution … the legally recognized forms of property, and the structure of the economy … as well as the family in some form.”Footnote 17 And the principles of justice, as he puts it, determine “the way in which the … institutions [of the basic structure ought to] distribute fundamental rights and duties and determine the division of advantages from social cooperation” (Rawls, Reference Rawls1999: 6). The structure of the view, then, is the following. The principles of justice prescribe certain requirements and aims for the institutions of the basic structure. For Rawls, these include the protection of certain basic rights and liberties, promoting fair equality of opportunity, and maximizing the prospects (understood in terms of “primary social goods”; Rawls, Reference Rawls1999: 78–81) of the worst-off members of society. Whichever institutions are part of the basic structure must adopt the rules and policies best supported by these requirements and aims. The adoption and enforcement of these rules and policies, along with full compliance with them by individuals and private associations, together constitute the procedures that, if followed, ensure, as a matter of pure procedural justice, that outcomes are just whatever they turn out to be. And because the principles of justice do not apply directly to the behavior of individuals and private associations, in the sense that these actors are not, as a matter of justice, bound to promote the aims that the principles prescribe for the basic structure, a wide range of, for example, distributive outcomes will be consistent with the procedures being properly followed, and therefore will be consistent with justice.Footnote 18
To determine whether, and if so, in what sense, corporations should be considered part of the basic structure on a Rawlsian view, we must ask what the best account of the criteria that determine which institutions ought to be included is. Rawls himself was not always entirely clear about what, on his view, the relevant criteria are, and there is a fair bit of disagreement among political philosophers working within the Rawlsian framework, broadly understood, about how the basic structure should be characterized.Footnote 19
There are two types of views about the criteria for inclusion in the basic structure that have been defended, both as interpretations of Rawls’s own view and as independently plausible accounts of the boundary between where principles of justice apply and where they do not. On the first type of view, which encompasses what I will refer to as Coercive Accounts of the basic structure, it is at least a necessary condition of an institution’s being a part of the basic structure that it be legally coercive. On views of this type, the basic structure consists in, as Cohen (Reference Cohen2008: 133, emphasis in original) puts it, the “broad coercive outline of society.” Those who accept Coercive Accounts disagree about exactly which coercive institutions should be included and which, if any, should be excluded.Footnote 20 There is, however, no doubt that certain institutions must be included—for example, the constitution, the system of legal property rights, tax and inheritance law, and marriage and family law.
The second type of view about the extension of the basic structure, which encompasses what I will refer to as Profound Effects Accounts, is grounded in Rawls’s (Reference Rawls1999: 7) claim that the basic structure is the primary subject of justice because “its effects are so profound and present from the start” (see also 82). Shortly before making this claim, Rawls (Reference Rawls1999: 6) describes the basic structure as consisting of society’s “major institutions.” And although the examples that he goes on to give of such institutions include some that are clearly legally coercive (e.g., “the legal protection of freedom of thought and liberty of conscience,” “private property in the means of production”; Rawls, Reference Rawls1999: 6), others would seem to include both legally coercive elements and more informal norms and practices (e.g., “competitive markets,” “the monogamous family”; Rawls, Reference Rawls1999: 6). If the justification for including an institution in the basic structure is that it has profound effects on people’s prospects in life, then it does not seem as though there is any justification for thinking that only the legally coercive aspects of an institution like the family should be included, because informal norms and practices that structure family life and behavior in competitive markets also have profound effects on people’s life prospects (Cohen, Reference Cohen2008: 136–38). Instead, we should think that an institution is part of the basic structure only if, and perhaps to the extent that, its effects are sufficiently profound (Berkey, Reference Berkey2016: 721).
In the recent business ethics literature, Singer (Reference Singer2015: 75–78) has argued that Rawlsians must accept a Coercive Account of the basic structure, whereas Blanc and Al-Amoudi (Reference Blanc and Al-Amoudi2013: 506–9) have argued that they should accept a Profound Effects Account. In light of this, it is perhaps not surprising that Singer (Reference Singer2013: 81–82) holds that corporations fall outside of the Rawlsian basic structure, whereas Blanc and Al-Amoudi (Reference Blanc and Al-Amoudi2013: 508–11) hold that, at least under certain conditions, they are part of it. I do not, in this section, attempt to resolve either the issue of whether Rawls is best interpreted as holding a Coercive Account or a Profound Effects Account or the issue of which type of account renders Rawlsian theory most plausible. Instead, I argue that both Singer’s and Blanc and Al-Amoudi’s accounts of the boundaries of the basic structure are conceptually problematic. This makes their accounts of which questions are about what the content of the basic structure ought to be (and so must be answered in terms of the principles of justice) conceptually problematic as well.
Before considering Singer’s and Blanc and Al-Amoudi’s positions, it is important to note that there is a significant ambiguity in framing the key question as whether “corporations” are part of the basic structure, and so subject to the principles of justice. As I noted earlier, important questions at the intersection of political philosophy and business ethics arise at two different levels. First, there are questions about what firms themselves are required, permitted, and not permitted to do within whatever the constraints of society’s legally coercive institutions happen to be. And second, there are questions about what legally coercive restrictions applying to corporate behavior, broadly understood, the state is required, permitted, and not permitted to adopt. We can, then, ask both whether corporations are part of the basic structure in the sense that their conduct is itself subject to the principles of justice and whether they are part of the basic structure in the sense that the content of laws that enable, constrain, incentivize, and regulate their conduct ought to be determined by applying the principles of justice (Blanc Reference Blanc2016: 411–17).
On Coercive Accounts of the basic structure, no questions about what firms ought or ought not do within the constraints of the legal structure can be questions about what the content of the basic structure ought to be. This is because the behavior of firms, and that of individuals acting as occupants of roles within them, is not itself legally coercive. On the other hand, at least many, and plausibly all, questions about what legally coercive restrictions on corporate behavior the state ought and ought not enact are questions about the content of the basic structure. In contrast, on Profound Effects Accounts, it might seem that whether a question (about either what corporations themselves ought and ought not do or what legally coercive policies applying to corporate behavior ought or ought not be enacted) is one about the content of the basic structure depends on whether compliance with competing answers would have sufficiently profound differential effects on the life prospects of members of society.
On either view, the basic structure is best understood, as Cohen (Reference Cohen2008: 133) suggests with reference to Coercive Accounts, as an “outline” of society, within which the choices of individuals and private associations that do not affect the content of the basic structure are made. That outline, on Coercive Accounts, can be thought of as consisting of “slots” into which legally coercive policies are to be placed. The content of these policies should, of course, be chosen by properly applying the principles of justice. At least whenever these principles require that a particular policy be adopted, the slot into which that policy ought to be placed is part of the basic structure.Footnote 21 On Profound Effects Accounts, the outline consists of slots into which either legally coercive policies or informal norms and practices are to be placed. And again, at least whenever the principles of justice require that a particular policy, norm, or practice be adopted, the slot into which it ought to be placed is part of the basic structure.Footnote 22
2.1 Singer
Early in his discussion, Singer (Reference Singer2015: 70) notes that business ethicists who have engaged with Rawlsian theory have tended to pay relatively little attention to the shift to a “political” conception of justice that characterized Rawls’s later work. This shift was, for Rawls, motivated by the thought that it is inevitable that, in a liberal democratic society, even reasonable citizens who attempt in good faith to arrive at well-justified views will disagree, often in deep ways, about what is involved in living a good and ethical life. They will, in Rawls’s (Reference Rawls1993: xvi–xix) terms, endorse a wide range of incompatible “comprehensive doctrines.” An appropriately political theory of justice must, Rawls claims, be built around this fact. The central function of such a theory is to specify the terms under which citizens who are the subjects of deep disagreement can nonetheless be committed, consistent with their broader comprehensive doctrines, to living together and doing their part within a fair system of social cooperation.Footnote 23
Singer’s insistence that business ethicists who aim to draw on Rawlsian theory (and to engage with political philosophy more broadly) ought to do so in a way that recognizes Rawls’s shift to a political conception of justice is important.Footnote 24 As he rightly notes, adopting the kind of political conception of justice that Rawls did in his later work has implications for how the basic structure must be conceived. One of the main aims of a political conception of justice is to explain how a just basic structure can provide the conditions within which individuals and private associations can pursue their distinct and incompatible conceptions of the good, consistent with a commitment to justice and to the free and equal status of citizens within the scheme of social cooperation defined by that basic structure. Because of this, it cannot be the case that the principles of justice apply to the internal affairs of private associations or to the conduct of individuals within the private sphere.Footnote 25 This is the case even if, for example, the ways in which private associations behave and structure their internal affairs have profound effects on people’s life prospects. Political liberalism, then, renders Rawlsian Institutionalism incompatible with Profound Effects Accounts of the basic structure that include informal norms and practices that operate within private associations, such as families, churches, and, as Singer (Reference Singer2015: 75–82) plausibly argues, corporations (see also Rawls, Reference Rawls1999: 126, 241). Rawlsian theory, in its political liberal form, then, clearly implies that matters internal to corporations, such as decisions among legally permissible options about what the structure of their governance arrangements will be, are not part of the basic structure, and are therefore not subject to the principles of justice.
In addition, Singer argues that political liberalism entails strict limits on the legal requirements that can permissibly be imposed with respect to the internal governance structures of private associations, including corporations. He begins by noting that members are free to exit corporations in at least roughly the same sense that they are free to exit other voluntary associations, such as churches (Singer, Reference Singer2015: 69, 79–80). Because of this, he claims, the respect for citizens’ reasonable yet incompatible comprehensive doctrines that, for political liberals, motivates the theoretical division between the public and private spheres and the associated limitation of the principles of justice to the former (i.e., to the basic structure), requires that corporations be afforded the same types and degrees of associational liberty to which other voluntary associations are entitled. And because it is widely agreed that, at most, very limited legal restrictions on the internal governance structures of, for example, churches or private clubs are permissible as a matter of justice, the same must be true for corporations. Rawlsian theory, Singer concludes, implies that virtually no restrictions on the structure of governance within firms is permissible, so that arguments to the effect that Rawlsian theory supports, for example, a legal requirement for some degree of workplace democracy necessarily fail.Footnote 26
After drawing this conclusion, Singer (Reference Singer2015: 82) claims that it supports the further conclusion that
it seems difficult to imagine how the corporation could be seen as part of the basic structure in any way, at least as Rawls uses the concept… . The corporation becomes relegated to the realm of the voluntary and associational. As a result, a thoroughgoing critique of corporate governance cannot be accomplished through a theory expressed in “political” terms… . Rawls’s theory is of no use to the big normative questions of business ethics and corporate governance.
Singer’s thought here appears to be that because Rawlsian theory implies that there are virtually no permissible legal restrictions that can be imposed with respect to corporate governance structure, corporate governance law is not part of the basic structure any more than the behavior of individual firms is. It is difficult to see how else we might interpret the claim that Rawls’s theory is “of no use” to questions about corporate governance. The thought appears to be that the theory applies only to the basic structure, and so because corporate governance law lies outside of the basic structure, the theory has no implications for it whatsoever.
This, however, is a conceptual mistake. Singer’s argument, if correct,Footnote 27 does not license the conclusion that corporate governance law lies outside of the basic structure. Instead, it implies that a proper application of Rawls’s principles generates the conclusion that virtually no legal restrictions on how corporations structure their governance arrangements are, as a matter of justice, permissible.Footnote 28 This is a substantive conclusion about what part of the content of the basic structure should be. It is not, as Singer seems to suggest, a conclusion to the effect that the slot in the coercive outline of society into which legal restrictions on corporate governance arrangements might or might not be placed is not part of the basic structure.
One possible source of this conceptual error is a failure to properly conceptualize the basic structure as a theoretical outline of society containing slots into which policies (and, if we accept a Profound Effects Account, informal norms and practices) with different contents can be placed. This failure may lead one to think of it instead as consisting in the particular policies that either are, or ought to be, adopted. If, with this latter conceptualization in mind, one asks the question whether particular policies (such as those restricting the corporate governance arrangements that are legally permitted) should be adopted and arrives at the answer that no restrictive legal provisions are permissible, then one might be led to think that the question must not have been one about the basic structure at all. After all, if this answer is correct, then there are no restrictive policies that ought to be adopted as part of the content of the basic structure.
To see why this is a mistake, consider that justice, on a Rawlsian view (and on at least most plausible views), requires that freedom of speech and liberty of conscience be protected. These requirements clearly apply to the basic structure of society, and what they imply is that virtually no legal restrictions on freedom of speech and liberty of conscience are to be enacted. It would clearly be a mistake to think that because virtually no legal restrictions on freedom of speech are permissible, speech law must not be part of the basic structure. What is required is that the basic structure, as a whole, protects individuals’ freedom of speech and liberty of conscience. The means by which it does this might consist primarily in avoiding adopting any legal restrictions on the content of citizens’ speech. A requirement of justice to avoid adopting a particular policy is no less a requirement of justice than a requirement to adopt a particular policy. This is easy to see if we ask questions about whether particular policies ought, as a matter of justice, to be adopted with the conception of the basic structure as an outline that is to be filled in with particular policies clearly in mind.
In the case of corporate governance law, if respect for the pluralism of reasonable comprehensive doctrines, and for freedom of association, requires that the state refrain from adopting virtually all potential legal restrictions, then this is because justice turns out to require, for example, the robust protection of freedom of contract, in the same way that it requires protecting the right of churches to organize themselves as hierarchically as they wish. This is a conclusion about what part of the content of the basic structure ought, as a matter of justice, to be. It is certainly not grounds for thinking that Rawlsian justice has nothing to say about corporate governance. If it is the right conclusion, then Rawlsian justice says something very clear about corporate governance and justice, namely, that virtually any corporate governance arrangement is consistent with justice. This may not be a conclusion that we find especially plausible, but if Singer is right, then it is the conclusion that Rawlsians, or at least those who accept the political liberalism that characterizes Rawls’s later work, are committed to accepting.
It is important to notice that even on Singer’s own view, the question whether legal restrictions on corporate governance arrangements ought to be enacted is a question of justice, to be settled by determining what the principles of justice imply. This helps to make clear exactly why his suggestion that Rawlsian theory is “of no use” to questions about corporate governance must be a conceptual error. For Rawlsians, any question that must be settled by determining what the principles of justice imply is necessarily a question about what part of the content of the basic structure should be. This follows from the central Institutionalist claim that the principles of justice apply to the institutions of the basic structure and do not apply directly elsewhere. Only a conception of the basic structure on which it consists, at least roughly, of slots into which policies (or informal norms and practices) might or might not be placed can properly capture the fact that questions about whether legal restrictions ought or ought not be adopted are questions of justice.
2.2 Blanc and Al-Amoudi
Blanc and Al-Amoudi make a conceptual mistake that is similar to the one that I have claimed characterizes Singer’s discussion. Their central thesis is that many of the effects of the decline of the welfare state in a number of industrialized societies over roughly the past forty years provide reasons to think that what they call “corporate institutions” (Blanc & Al-Amoudi, Reference Blanc and Al-Amoudi2013: 497) should, in those societies, be considered part of the basic structure. This is the case, on their view, despite the fact that these institutions could plausibly have been thought to lie outside of the basic structure when strong welfare states were in place.
By “corporate institutions,” Blanc and Al-Amoudi mean, roughly, laws regulating the internal governance structures and operations of corporations, for example, legal requirements that corporations be governed in accordance with some form and/or degree of workplace democracy (Blanc & Al-Amoudi, Reference Blanc and Al-Amoudi2013: 505–6, 509, 511–15).Footnote 29 On their view, whether a particular institution or set of institutions is part of the basic structure of a society is in part an empirical question (Blanc & Al-Amoudi, Reference Blanc and Al-Amoudi2013: 506), which is to be answered by determining whether that institution or set of institutions “has a systemic influence on the distribution of primary goods” (507). If an institution satisfies this “systemic criterion” (508), then it is part of the basic structure, and so subject to the principles of justice, in the sense that its policies must be chosen by properly applying those principles. If, on the other hand, an institution does not have a systemic influence on the distribution of primary goods, then it is not part of the basic structure, and therefore it is not subject to the principles of justice.
Blanc and Al-Amoudi claim, in effect, that with a strong welfare state in place, whether or not corporations are legally required to adopt democratic governance procedures may not have a systemic effect on the distribution of primary goods. In the absence of a strong welfare state, on the other hand, it seems much more likely that requiring corporations to adopt some form and/or degree of workplace democracy would make a significant difference to the prospects of the worst-off members of society. These are not implausible empirical claims. They do not, however, support the conclusion that Blanc and Al-Amoudi suggest, namely, that legal requirements for workplace democracy might be part of the basic structure in societies characterized by weakened welfare states, but not in societies with robust welfare states.Footnote 30
This is because, like Singer, Blanc and Al-Amoudi treat the conclusion that a certain kind of policy is, as a matter of justice, either prohibited or at least not required as grounds for concluding that the question about whether the policy should be adopted is not a question about what the content of (a part of) the basic structure should be. But, as I have already argued, this is a conceptual error. What their argument actually suggests is that when we ask whether justice requires mandating that corporations adopt some form and/or degree of workplace democracy, there are reasons to think that the answer might be negative in cases in which the society in question has a strong welfare state in place but positive in cases in which the society in question lacks a strong welfare state. But regardless of what the correct answer is in any given case, the question whether mandating workplace democracy is required as a matter of justice is always a question about what (a part of) the content of the basic structure should be. Once again, there is a slot in the broad (coercive) outline of society into which some policy or other (e.g., a legal requirement for some form and/or degree of workplace democracy, or a broad legal permission for corporations to organize their internal governance however their leaders see fit) must be placed. Which policies are best (or at least acceptable) from the perspective of justice might depend on which other policies have been chosen to fill other slots. A policy that permits corporations to adopt any internal governance arrangements that its leaders see fit, or at least permits the adoption of a wide range of such arrangements, is, however, no less a part of the broad (coercive) outline of society that determines the structure of the private sphere within which individuals and private associations must act than would be a policy that substantially constrains the range of internal governance arrangements that are available to corporations.
3. WHAT DOES RAWLSIAN THEORY IMPLY FOR CORPORATIONS?
I have argued that any question about whether legal restrictions should be placed on the internal governance structure and operations of corporations is a question about what the content of (a part of) the Rawlsian basic structure should be. I have also claimed that Blanc and Al-Amoudi are committed to a Coercive Account of the basic structure, despite their claim to endorse a Profound Effects Account (Blanc & Al-Amoudi, Reference Blanc and Al-Amoudi2013: 507; see note 29).Footnote 31 In addition, it seems to me that Singer’s (Reference Singer2015: 71–72, 75–78) claim that the political liberalism that characterized Rawls’s later work entails a Coercive Account of the basic structure is correct. Determining what Rawlsian theory implies for corporations, then, requires asking what the principles of justice, and the fundamental commitments of political liberalism that are taken to support those principles, imply about the legal restrictions and permissions that should apply to corporate activity, including matters of internal corporate governance.
Singer (Reference Singer2015: 69) suggests that Rawls’s political liberalism commits him to treating corporations in roughly the same way that he treats churches and similar private associations, and that this means that virtually any restrictions on their internal governance arrangements will be ruled out. The thought seems to be that such restrictions could be justified only on grounds that are ruled out by political liberalism, such as comprehensive moral commitments regarding how individuals in voluntary associations ought to relate to each other. On this view, Rawls’s (Reference Rawls1993: 291) commitment to reasonable pluralism entails that the freedom of association guaranteed by the first principle of justice includes the right to organize corporations with any internal governance structure that the members might choose. And if this is correct, then the kinds of worries that motivate Blanc and Al-Amoudi to argue that Rawlsian theory can support mandating some form and/or degree of workplace democracy in societies lacking strong welfare states (such as that the absence of both a strong welfare state and workplace democracy measures will tend to provide inadequate social bases of self-respect to many citizens) will not be able to provide a justification for mandating workplace democracy measures, given the priority of the basic liberties in Rawlsian theory.Footnote 32
This argument, however, neglects a key feature of Rawls’s political liberalism that, once recognized, makes it clear that the answer to the question whether justice requires that the law treat corporations roughly like churches and other voluntary associations depends, at least in part, on empirical matters. This is the case even if it is true that the value of freedom of association provides some reason to avoid imposing restrictions on their internal governance.
The entire political liberal project takes as fundamental premises the free and equal status of citizens (Rawls, Reference Rawls1993: xviii, 3–4, 14) and the requirement that citizens in a just society must be capable of relating to each other as free and equal (xliii). Because of this, policies that are necessary to ensure that citizens can relate to each other as free and equal, and in particular, policies that are essential to the ability of citizens to view each other as political equals within a system of social cooperation for mutual advantage, are, at least generally, required as a matter of justice. This is true even if they place some constraints on freedom of association.Footnote 33
This feature of political liberalism provides the grounds on which political liberals can, in conjunction with plausible empirical claims, defend potentially significant differences in the way that the law ought to treat corporations and how it ought to treat other private associations, such as churches. It can, for example, be plausibly argued that while permitting churches to refuse to ordain female clergy may not, in at least some empirical conditions, undermine the ability of men and women (including those who are members of churches that do not ordain female clergy) to view and relate to each other as free and equal citizens, permitting corporations to discriminate against women in hiring for any positions would, in virtually any conditions, undermine the ability of citizens to view and relate to each other as free and equal.Footnote 34 Corporations play a substantial role in determining who gains access to valuable employment opportunities, and in at least most societies, employment has significant effects on how individuals relate to each other. Because of this, it can be argued that allowing corporations to decide which persons to include as members and which to reject, without any legal restrictions, would tend to undermine the foundational values of political liberalism in a way and/or to an extent that allowing other private associations to determine their membership free from legal restrictions might not.Footnote 35
An argument of this general form could be made about, for example, policies mandating some form and/or degree of workplace democracy. It seems at least plausible that, in some empirical conditions, the absence of the ability for workers to participate, at least to some degree, in the governance of their workplaces could undermine the ability of, for example, high-level executives and low-level workers to view and relate to each other as free and equal citizens. For example, as Blanc and Al-Amoudi might claim, in a society without a strong welfare state, in which inequalities in income and wealth are large and workers have little opportunity to pursue alternatives to working in firms, ensuring that employees are able to exercise some influence over the internal governance of the firms in which they work might make a significant difference to the prospect that citizens will, as a general matter, be able to relate to each other as free and equal. When it is true that enacting a requirement that firms adopt some form and/or degree of workplace democracy would make a significant positive difference to the likelihood that citizens will be able to relate to each other as free and equal, there will be a strong case that can be made, within the framework provided by Rawls’s political liberalism, for enacting such a requirement.
This highlights the way in which, on a political liberal view, empirical conditions play a role in determining which policies ought, as a matter of justice, to be adopted with regard to the regulation of corporate governance. If I am correct, then Singer has substantially overstated the extent to which the political liberalism that Rawls adopted in his later work constrains the range of corporate governance regulations that could, in principle, be permitted or required as a matter of justice. At least under certain empirical conditions, the fundamental commitment to the free and equal status of citizens, and the need for citizens to be capable of relating to each other as free and equal, can provide strong grounds in favor of regulations on the internal governance of corporations.
Importantly, however, this conclusion does not in any way support Blanc and Al-Amoudi’s view that whether corporate governance law is part of the basic structure itself depends on empirical matters. Once again, corporate governance law is no less a part of the basic structure in conditions in which considerations of justice, all things considered, provide reason to refrain from enacting restrictions (e.g., because the ability of citizens to view and relate to each other as free and equal is sufficiently secure and would not be promoted by enacting restrictions, and considerations of freedom of association provide some reason to limit restrictions) than it is in conditions in which considerations of justice support enacting them.
4. DOES IT MATTER WHETHER CORPORATIONS ARE PART OF THE BASIC STRUCTURE?
I have argued that Rawlsian theory, even in the political liberal form that characterized Rawls’s later work, can support substantial regulation of the internal governance of corporations by the basic structure, at least in certain empirical conditions. At least often, then, Rawlsian theory will be able, at least to some extent, to account for the kinds of concerns that motivate Blanc and Al-Amoudi’s argument, namely that the behavior of corporations can have substantial effects on individuals’ access to justice-relevant goods, such as opportunities for meaningful work and a decent share of income and wealth. On the Rawlsian view, as I have argued it should be understood, there is reason to adopt policies restricting the range of permissible corporate governance arrangements when, and only when, such policies will make a significant enough positive difference to the ability of citizens to view and relate to each other as free and equal. Some of the plausible reasons that policies that increase opportunities for meaningful work or reduce income inequality might sometimes make a difference to the ability of citizens to view and relate to each other as free and equal include 1) that those who have access to opportunities for meaningful work may be more likely to possess the self-respect necessary to view themselves as equal participants in society and 2) that limiting inequalities in income may tend to limit the kinds of inequalities in opportunities for political influence that can undermine the ability of citizens to view and relate to each other as free and equal.
Consider, however, that even in the absence of policies mandating that corporations adopt certain internal governance arrangements that would promote justice-relevant values, corporations could, in principle, promote those values voluntarily, perhaps by adopting the very internal governance arrangements the mandating of which by the basic structure might be called for. The internal governance arrangements of corporations are not, I have argued, themselves part of the basic structure (even though they might permissibly be regulated by the basic structure). Because of this, Institutionalism implies that corporations cannot be required, as a matter of justice, to voluntarily adopt any particular internal governance arrangements, even if their doing so would promote justice-relevant values just as much as their being forced by the basic structure would (recall the discussion of Carly in section 1).
The denial that corporations can be required to voluntarily and directly promote justice-relevant values (i.e., the aims prescribed by the principles of justice) is, however, at least somewhat puzzling, for reasons that extend beyond those that have been pointed to in arguments against the Institutionalist view about individuals’ obligations of justice (Cohen, Reference Cohen2000, Reference Cohen2008; Murphy, Reference Murphy1998). For example, at least many corporations can affect justice-relevant values to a much greater extent than any individual can, so that it seems especially odd to think that they can have no justice-relevant reasons to directly promote those values. Recall that Rawls (Reference Rawls1999: 7) claims that one central reason to hold that the basic structure is the primary subject of justice is that “its effects are so profound and present from the start.” It seems clearly correct to think that the fact that the behavior of a particular kind of entity or agent will have profound effects on justice-relevant values provides strong grounds for thinking that the behavior of entities or agents of that kind is subject to the principles of justice. And since it is undeniable that the behavior of corporations has profound effects on justice-relevant values, there are strong reasons to be skeptical of views that deny that corporations can be required to voluntarily promote those values.
A second reason that we should be particularly skeptical about the view that corporations cannot be required to voluntarily promote justice-relevant values is that they plausibly lack the kinds of morally relevant interests, such as an interest in pursuing personal projects and special relationships, that many (e.g., Scheffler, Reference Scheffler2005; Tan, Reference Tan2004) take to provide at least part of the grounds for denying that principles of justice apply directly to individuals.Footnote 36 It is reasonable to think that corporations lack these kinds of morally relevant interests (and, indeed, all morally relevant interests) because they are not, in themselves, experiencing subjects (though, of course, they have experiencing subjects as members). It is widely accepted that only experiencing subjects, that is, only those beings with at least the capacity for sentience, have morally relevant interests. And only those moral agents with morally relevant interests in pursuing projects and relationships can be thought not to be directly subject to the principles of justice in virtue of having those interests. Since corporations are not experiencing subjects, and therefore do not possess any morally relevant interests, one of the most plausible and widely appealed to reasons for denying that individuals are directly subject to the principles of justice cannot be appealed to in order to challenge the claim that corporations are directly subject to those principles.Footnote 37
It might be objected that corporations have commercial interests that provide grounds for rejecting the view that they can be obligated to directly promote justice-relevant values.Footnote 38 There are two important and related points to make in response. First, even if there is some sense in which it is true that corporations themselves have commercial interests, it is not plausible that these interests are morally relevant, since corporations are not experiencing subjects. But only morally relevant interests can provide reasons to doubt that moral agents can be obligated to promote important values that stand to be affected by their actions.Footnote 39 Of course, we can interpret the claim that corporations have commercial interests as referring to the interests of, for example, shareholders in the profits that the corporations might generate for them. Because these are interests possessed by experiencing subjects, they are plausibly morally relevant. But if this is how we interpret the claim that corporations have commercial interests that ground an objection to the view that they can be obligated to promote justice-relevant values, then the objection appears to amount to the claim that shareholder interests must always take priority over justice-relevant values in corporate decision-making. This claim, however, should seem no more plausible than the claim that shareholder interests should always take priority over any other morally important values, such as ensuring that employees are treated well, refraining from deceiving customers, or avoiding environmental destruction. And because it is widely accepted that corporations have obligations beyond maximizing profits for shareholders, this line of objection has no special force against the claim that corporations can be obligated to directly promote justice-relevant values.
A second point to note is that while the fact that corporations are typically structured to pursue profits within competitive markets regardless of the impact of their doing so on a range of morally important values gives us some reason to be skeptical that many will in fact choose to promote justice-relevant values when this would negatively impact profitability, it does not give us any reason to reject the view that they can be obligated to do so. Here as well, justice-relevant values are no different than any other values that are widely thought to ground obligations on the part of corporations to refrain from pursuing maximally profitable business strategies. The relevant question is about what can be required from an ethical perspective, and not about what corporations are in fact likely or unlikely to do.
A third reason to be skeptical of the view that corporations cannot be required to voluntarily and directly promote justice-relevant values can be seen by noting that both Singer’s and Blanc and Al-Amoudi’s discussions are at least in part motivated by a concern about the kinds of outcomes that the behavior of corporations can affect (Blanc & Al-Amoudi, Reference Blanc and Al-Amoudi2013: 516–18; Singer, Reference Singer2015: 84–85). This concern is, for example, why Blanc and Al-Amoudi suggest (despite their failure to endorse all of its implications) that we should accept a Profound Effects Account of the basic structure. And it appears to explain, at least in part, why Singer (Reference Singer2015: 88) holds, in light of his account of the implications of political liberalism, that we must “resist the impulse to reach for Rawls when dealing with the corporation.” In virtue of the fact that the behavior of corporations can have massive effects on justice-relevant values, it seems quite appropriate for this kind of direct concern for outcomes to play a central role in our thinking about what principles of justice imply with respect to such behavior.
This kind of direct concern for the profound effects that the behavior of corporations can have on what intuitively seem to be justice-relevant values stands in tension, however, with central components of Rawlsian theory. Recall that the pure proceduralism about distributive justice that Rawls endorses implies that nothing that private actors (i.e., actors that are not part of the basic structure) do can affect the extent to which the distribution of resources in society is just or unjust. Since corporations must, on Rawls’s view, be considered private actors, pure proceduralism implies that nothing that corporations might do with their vast wealth, within the constraints set by the basic structure (whether it is just or unjust), can make the resulting distribution of resources either more or less unjust. For example, imagine that leaders at dozens of major corporations suddenly become convinced that the levels of poverty and inequality in the contemporary United States are deeply unjust, and successfully work to get their firms to voluntarily adopt policies that substantially increase employment opportunities for those living in poverty, as well as wages for those hired. As a result of these efforts, vast numbers of Americans are lifted out of poverty, income inequality is reduced to a notable extent, and there is a clear increase in the extent to which citizens are able to view and relate to each other as free and equal.Footnote 40 For Rawlsians, these results cannot count as improvements with respect to justice, because they have not been brought about via changes at the level of the basic structure. And because they cannot count as improvements with respect to justice, there is no basis within Rawlsian theory for thinking that corporations can have justice-based reasons to adopt the policies that will bring them about. There cannot be justice-based reasons to do things that will make no difference with respect to justice.
On reflection, this implication should, I think, seem quite implausible. The kind of direct concern about the apparently justice-relevant effects of the behavior of corporations that has motivated many business ethicists to think about the relationship between political philosophy and corporate action, then, suggests that we should think that principles of justice apply directly to corporations, in the sense that corporations have justice-relevant reasons, and potentially justice-based obligations, to directly promote the aims prescribed by the principles of justice.Footnote 41 On this view, it does not matter whether corporations are, in any sense, themselves part of the basic structure; they have justice-relevant reasons, and potentially justice-based obligations, simply in virtue of their capacity to directly affect justice-relevant values.Footnote 42
It is important to note that accepting this conclusion does not commit us to thinking that corporations are obligated to do everything that they can to improve things with respect to justice. The justice-based reasons that apply to corporations might, in at least many cases, be outweighed by other reasons that bear on how they ought to behave, including, potentially, reasons to seek profits on behalf of shareholders.Footnote 43 This is because, once we give up the idea that the principles of justice apply only to the basic structure, the institutions of which have the sole purpose of realizing justice, we must accept that the reasons deriving from principles of justice that any agent has can, in principle, conflict with other reasons. And in these cases, what an agent ought to do, all things considered, will depend on how all of the competing reasons weigh against each other. In the case of the legally coercive institutions of the Rawlsian basic structure, the reasons provided by the principles of justice will rarely, if ever, be outweighed. On the other hand, for individual agents, and private associations such as corporations, they are more likely to be outweighed by other reasons that make it at least permissible for the agents not to be guided solely by considerations of justice. If my argument in this section is correct, however, then at least when certain state institutions are failing to do everything that they ought to do as a matter of justice, the reasons that other agents have to promote the justice-relevant values that are inadequately advanced elsewhere are likely to become correspondingly stronger.
It might be objected that, rather than thinking that corporations are obligated to directly promote justice-relevant values when state institutions fail to do so adequately, we should instead hold that all agents are obligated to contribute to efforts to make the relevant state institutions just.Footnote 44 This is the view that Rawls (Reference Rawls1999: 99) himself accepted about the obligations of individuals, and it is the one that it seems natural for Institutionalists to accept with respect to corporations as well.
The first important thing to notice about this view is that it may not be any less demanding than the view that corporations are obligated to directly promote justice-relevant values.Footnote 45 This is because transforming unjust institutions into just ones will generally be costly, requiring significant investments of time and resources. For those who are inclined to think that corporations cannot be obligated to directly promote justice-relevant values because doing so would tend to be costly to their bottom lines, then, holding that they are instead obligated to contribute to efforts to make state institutions just will not actually be an appealing alternative.Footnote 46 Consider, for example, the resources that a corporation would have to put into an effort to ensure that the state provides an adequate social minimum for all citizens in order to have even a chance of making a notable difference to its probability of succeeding. The same resources directed, for example, to increasing the wages of the corporation’s lowest-paid employees (where this comes at a net cost to the corporation) might do just as much, or possibly even more, to advance the justice-relevant value of providing people with a minimally decent standard of living.
Once we recognize that contributing to efforts to transform unjust institutions into just ones will often be at least as costly as promoting justice-relevant values directly, there do not seem to be any plausible reasons to deny that corporations can be obligated to do the latter. In addition, in many circumstances, a single corporation contributing to an effort to transform unjust institutions would likely be futile and amount to a waste of resources that could otherwise have contributed to justice-relevant values. If a corporation directs $1 million to a campaign to enact a social minimum provided by the state, its contribution is likely to do relatively little to actually promote justice-relevant values, as long as there are few or no others also contributing to the effort. Achieving institutional change requires large-scale cooperation and substantial resources, and in some cases, it is clear enough that a single contribution will not bring about any change in results. Alternatively, the corporation might direct the very same $1 million in a number of ways that would be virtually certain to directly and significantly promote justice-relevant values (e.g., increasing the wages of its lowest-paid employees). If a corporation can either direct resources to an effort to transform unjust institutions that is virtually certain to fail or direct them in a way that will certainly directly promote justice-relevant values to a significant extent, then for reasons that should be clear, it should do the latter. And if this is correct, then any Institutionalist account of corporate obligations of justice must be rejected.Footnote 47
Finally, it might be suggested that my argument in this section, even if it is successful, shows only that corporations can have obligations to directly promote justice-relevant values in nonideal conditions in which the institutions of the basic structure are less than fully just. This is because, it might be claimed, in a society with fully just institutions, justice will necessarily be ensured by those institutions, so that, apart from compliance with the laws imposed by the basic structure, there is nothing that corporations would be in a position to do that could either advance or undermine the realization of justice.Footnote 48 In light of this, it might also be suggested that I have failed to undermine any core Rawlsian commitments, because Rawls offered only an ideal theory of justice.
There are three important points to note in response to this concern. The first is that my target in this section is not Rawlsian theory at its most general level, but Institutionalism and the pure proceduralism that is typically associated with it. Institutionalism is, of course, a central feature of Rawlsian theory, but importantly, as Rawls (Reference Rawls1999: 99) himself notes, it has clear implications for nonideal theory. I have argued that one of these implications is implausible, and that this gives us reason to reject Institutionalism. If I am right about this, then one of Rawls’s core commitments is mistaken. The fact that it has been shown to be mistaken due to an implausible implication for nonideal theory in no way limits the force of the argument.
The second point to note is that the rejection of Institutionalism has important implications within ideal theory as well. For example, because the rejection of Institutionalism implies that individuals and corporations have reasons to directly promote justice-relevant values, it implies that they can have such reasons even if the institutions of the basic structure are fully just. And plausibly, even the best possible institutions might sometimes allow important justice-relevant values to be less than adequately realized (this is an important reason to reject pure proceduralism). Institutional policy is necessarily coarse grained in certain important ways, so that even the best possible institutional designs may have cracks through which certain individuals’ entitlements of justice might fall. In these cases, the reasons that individuals and corporations always have to directly promote justice-relevant values where they can might generate obligations to do so, despite the fact that society’s institutions are as just as they can be.
Finally, there are reasons to think that some requirements of justice cannot necessarily be met through state policy alone, for reasons that extend beyond the fact that policy is inevitably coarse grained (Berkey, Reference Berkey2018). For example, if we think that it is a requirement of justice that everyone be provided with a minimum standard of health care, then it is a requirement of justice that there are medical personnel available to provide care for everyone (Stanczyk, Reference Stanczyk2012), and a requirement of justice that drugs are available and affordable for all who need them. There are, however, limits to what the state can permissibly do to ensure that these requirements are satisfied. It cannot, for example, force people to attend medical school against their will to address a shortage of doctors in poor rural communities (Berkey, Reference Berkey2018: 736–44). And plausibly, it cannot force corporations to produce drugs needed by poor patients with serious conditions rather than more profitable drugs that it can sell to wealthier patients with less serious conditions. Even in a society with ideally just institutions, then, we might have to accept that individuals and corporations have significant obligations to directly promote justice-relevant values in order to be able to account for highly plausible requirements of justice. An important advantage of the view I have defended is that it allows us to account for these requirements, and it is a serious disadvantage of Institutionalist views is that they do not.
5. CONCLUSION
In this article, I have argued that some recent discussions of Rawlsian theory’s implications for business ethics have mischaracterized the question of whether, and if so, in what sense, corporations are part of the basic structure of society. This question is properly understood as one about which slots into which laws affecting the internal functioning of corporations might be placed are part of the basic structure, and the answer that I have suggested is that all of them are. I then argued that once the structure of Rawlsian theory is clarified, we can see that its potential implications for the legal regulation of corporate governance arrangements are significant, while it can have no implications with respect to how corporations ought to voluntarily behave. We have reason, however, to care in a fundamental way about, for example, the lack of opportunities for meaningful work or the inadequate share of primary goods that some citizens possess. Because of this, I have argued, we have reason to think that corporations do have justice-based reasons to directly promote the aims prescribed by the principles of justice. We therefore have reason to reject the view that the principles of justice do not, in principle, apply to the internal affairs of private associations such as corporations. The fact that they are not part of the Rawlsian basic structure does not, from the perspective of justice properly understood, matter.
Acknowledgements
I am grateful to audiences at the 2017 Susilo Symposium on Ethics in the Global Economy, the 2017 Association for Social and Political Philosophy conference, the 2017 Society for Applied Philosophy conference, the 2017 North American Society for Social Philosophy conference, the 2018 Society for Business Ethics conference, and the 2019 MANCEPT workshops. Julian Jonker provided helpful written comments on an early draft. I have also benefited from discussions with Aaron Ancell, Ugur Aytac, Sameer Bajaj, Eilidh Beaton, Jelena Belic, Justin Bernstein, Vikram Bhargava, Sandrine Blanc, Mark Budolfson, Matt Caulfield, Chetan Cetty, Tom Donaldson, Colin Hickey, Nien-hê Hsieh, Rob Hughes, Michael Kates, Carl Mildenberger, Jeff Moriarty, Amy Sepinwall, Abe Singer, James Skinner, Patrick Taylor Smith, Alan Strudler, Christine Susienka, and Carson Young. I am grateful to the Edmond J. Safra Center for Ethics at Harvard University and to the Berggruen Institute for their support of this work.
Brian Berkey is assistant professor of legal studies and business ethics in the Wharton School at the University of Pennsylvania, where he holds a secondary appointment in the Department of Philosophy. He received his PhD in philosophy from the University of California, Berkeley in 2012. He works in moral and political philosophy, including environmental ethics and business ethics, and has published articles on moral demandingness, the site of justice, climate change ethics, collective obligations, effective altruism, and entitlements of justice for nonhuman animals.
