Corporate Engagement in the Political Process and Democratic Ideals

F. CHRISTOPHER EAGLIN

Introduction

This chapter takes up the question of whether and how large for-profit com­panies should engage in the political process from the perspective of demo­cratic ideals.

Management scholars have investigated how firms engage the political realm to improve financial performance, known as nonmarket strategy, but have given little consideration to the normative question of whether they should do so.² Some business ethicists have endeavored to address this nor­mative question, but exactly how firms should engage in the political process remains critically underexamined.³ This chapter seeks to help fill this lacuna by investigating whether our existing frameworks for corporate participation are appropriate both theoretically and practically.⁴ Drawing on real-world cases, I argue that these frameworks are insufficient to provide guidance to firms and that if we want to continue to allow active corporate participation in the political sphere, we ought to rethink the corporate form.

To begin, I briefly summarize the ways in which firms can and do enter the political space. Firms justify their pursuit of “nonmarket strategies,” de­spite any negative externalities they might create, by invoking the principle of shareholder value maximization.⁵ I examine the standard neoclassical rea­soning and argue that it fails to justify political participation of firms and therefore cannot provide guidance for appropriate firm behavior in the polit­ical sphere.

By examining the failure of the Boeing 737 Max, I argue that the restricted technical advisory role that Hussain and Moriarty seek as a remedy to the collaborative view of Palazzo and Scherer does not adequately safeguard against the sorts of concerns that one would imagine they seek to avoid. I put forward three shortcomings of the advisory view. First, the technical role they prescribe opens the door for temptation for corporate capture of regula­tors, which many firms leverage to their advantage. Second, even if firms had the best of intentions, the close relationship engendered by providing on­going advice creates the opportunity for corporate capture through implicit bias. To overcome these first two challenges, I argue that we must consider revising the structure of the firm to make it more internally or externally democratic. The third shortcoming I advance, that we might in fact find a close relationship between public and private actors advantageous, requires a more thorough investigation beyond the scope of this chapter. I conclude by speculating on how future research could help us develop this line of inquiry.

Corporate Nonmarket Strategy

The nonmarket strategy literature⁶ seeks to identify how firms undertake po­litical and social activities and how those activities shape the institutional and social context of competition to their advantage.⁷ Corporate political ac­tivity (CPA) is a category of nonmarket strategies that firms can pursue to manage political institutions or influence political actors in ways favorable to the firm.⁸ Within CPA, firms can adopt two approaches.

Given the options available to firms, Stigler helpfully provides a taxon­omy of the benefits firms might hope to receive from engaging in the po­litical sphere.¹² According to Stigler, firms can seek direct subsidies for their industry, control entry of new rivals, encourage price fixing, and support

Corporate Engagement in the Political Process and Democratic Ideals 239 complementary industries while suppressing competitive ones. To achieve these benefits, Stigler argues that companies provide direct resources such as campaign contributions and more indirect benefits such as employing work­ers from a political party. As larger firms have greater resources that can be deployed over a longer time horizon, they are able to shift the competitive landscape in their favor, often leading to increased profitability and returns to their shareholders.¹³

It is through these “buffering mechanisms” that firms primarily influence political actors and institutions. There are two buffering strategies in par­ticular that are worth our attention: lobbying and campaign contributions. Drutman argues that over the last 40 years in the US, corporations have sys­tematically increased their lobbying presence in order to gain outsize influ­ence in the political process. As a result, oftentimes the influence of lobbyists determines the outcome of many legislative processes as they have extensive resources at their disposal to understand and communicate policy positions while legislative staff are overworked and underfunded in comparison.¹⁴

Beyond lobbying, firms have significantly increased their participation in the electoral process.

As both supporters and detractors perhaps expected, outside political spend­ing increased dramatically in the years following Citizens United. According to the Center for Responsive Politics (CRP), a non-profit organization that tracks U.S. political spending, in 2010, independent political groups spent $309.8 million in federal elections, while in 2012, 2014, and 2016, they spent $1.039 billion, $562.7 million, and $1.436 billion respectively. This outside spending dwarfed the official political party committees' spending, which by comparison raised only $189.6 million, $255.4 million, $199.9 million, and $246.2 million in 2010, 2012, 2014, and 2016 respectively.¹⁷

As firms pursue nonmarket strategies at escalating rates, the state ap­paratus appears to have weakened. Welfare policies have been criticized for

overreliance on outdated programs that are ill-fitted to the current needs of their citizenry.¹⁸ Aging populations burden health and retirement budgets while restricting public income. Decreasing unionization has undermined the power of labor to negotiate equitable wages and weakened social ties.¹⁹ Several governments have moved toward freezing or eroding the number of welfare benefits, changing the conditions for access or underinvesting in critical social and physical infrastructure.²⁰

Concurrently, many scholars argue that large firms have been able to ex­tract increasingly favorable terms from local, regional, and national govern­ments to undertake large investments that bring jobs to areas often at the expense of generous social programs.²¹ These concessions include tax breaks that last decades, the building of asset-specific infrastructure, relaxation of employment regulations, and direct subsidies, among other benefits.²² Var­ious firms also have moved operations from towns and cities in search of more profitable regulatory environments, leaving those communities bereft as they often depended on their presence as the primary economic engine.²³ Many researchers have argued that this absence leads to a host of negative social outcomes, including chronic unemployment, wage depression, skill displacement, and plummeting health metrics.²⁴ Coupled with the decline of unionization and other forms of social solidarity, some have argued that the cumulative effect of these business strategies helped to unravel the social fabric of many communities while at the same time draining governments of the funds to meaningfully address social dislocation.²⁵ As a result, there is a pervasive sense that firms have “rigged” the system in their favor, leaving the vast majority of the population at a severe disadvantage.²⁶

Neoclassical View of Firm and Politics

My contention is that the argument commonly given in the defense of the nonmarket strategies described above fails on its own terms to accommo­date corporate political behavior.

Corporate Engagement in the Political Process and Democratic Ideals 241 that managers have a clear mechanism to distinguish between viable alter­natives to determine which choice is better or worse for the firm:²⁸

The intuition behind this criterion is simply that (social) value is created when a firm produces an output or set of outputs that are valued by its cus­tomers at more than the value of the inputs it consumes (as valued by their suppliers) in such production. Firm value is simply the long term market value of this stream of benefits. Maximizing the total market value of the firm... is one objective function that will resolve the tradeoff problem among multiple constituencies. It tells the firm to spend an additional dol­lar of resources to satisfy the desires of each constituency as long as that constituency values the result at more than a dollar.²⁹

Jensen then contends that any negative externalities or natural monopo­lies should be addressed by the public bodies. Firms that endeavor to resolve externalities “will be eliminated by competition who chose not to be so civic minded or will survive only by consuming economic rents.”³⁰ According to Jensen, creating multiple objectives for managers, which the stakeholder theory of the firm requires, provides significant opportunity for managers to justify almost any action as viable, whether helpful or harmful to the profit­ability of the firm, for it might satisfy one particular stakeholder.³¹

Jensen employs the analogy of the football team to justify the single ob­jective of shareholder value maximization.

Jensen might not have anticipated how apt his example would be for our purposes. Rather than demonstrating the importance of an objective func­tion, I argue that this example actually illustrates how entangled playing the game and rule setting actually can be. While on the surface Jensen's analogy is seems reasonable, he overlooks a host of underlying factors that impact “winning.” Football teams play an active part in setting the rules of the game. They play in a league—in this case, the National Football League (NFL). It is a central organization they formed, fund, and control that determines how the game will be played down to the most granular minutiae. The NFL de­termines the number of games played per season, the length of the game, the time of day of play, and even more telling, how games will be refereed.

In fact, teams in the NFL are constantly creating, negotiating, and revising how the football game will be played while they are at the same time play­ing it. Even though rule setting and play of game happen on different time horizons, the process of determining the system of governance cannot be disentangled from the strategy that teams adopt to win. In addition, a small set of teams that form the NFL set the rules that college, high school, and amateur leagues seek to emulate.

I contend that firms behave in a similar manner. Firms, particularly large multinational ones, are at once maximizing shareholder value while at the same time determining the rules by which they can pursue this strategy. As the discussion of nonmarket strategy illustrates, firms are in constant con­versation with the political and social sphere regarding what constraints and priorities they themselves will face.³² In this way firms, particularly the largest and most well-resourced ones, determine how they will be governed. Given the available political tools, the focus on the single objective of share­holder value maximization has convinced many firms that they should bend the “rules of game” such that they might achieve even greater value.³³ In this light, it can be argued that it is rational for the largest firms to spend signifi­cant resources on political processes to ensure that they are the least encum­bered by regulations and best able to pursue profit maximization, no matter the negative externalities.

To help further illustrate my objection to the neoclassical view, let us con­sider a current example in which a firm is both playing the game while seek­ing to shape the playing field. Uber is a mobile ride-sharing service that uses sophisticated GPS technology to match drivers with riders.³⁴ The price of the trip is determined by a complex algorithm that considers distance, journey time, traffic, availability of other drivers, vehicle type, among other factors.³⁵ Many economists are fascinated by Uber as it is one of the few examples of a firm actively capturing consumer surplus in a competitive market clearing environment.³⁶ Many have argued that riders are better off with this model as opposed to a traditional taxi service that has static pricing and a limited fleet. Uber has generated significant revenue by offering customers the ben­efit of affordable prices, constant availability, and high flexibility.³⁷ This is the economic strategy Uber employs.

At the same time, Uber employs a political strategy to ensure that it can enact its economic one, a strategy that Pollman and Barry call “regulatory entrepreneurship.”³⁸ In many municipalities and states, taxi driving is a heav­ily regulated industry with mountains of legal statutes governing taxi usage. Pollman and Barry argue that Uber's political strategy is to dismiss, sidestep,

Corporate Engagement in the Political Process and Democratic Ideals 243 or actively undermine these regulations. Knowing that their economic strat­egy relies on creating political space to operate, Uber employs an army of lawyers to lobby legislators, fight unions, and influence local governments. To achieve widespread adoption and commercial success, one could argue that Uber knowingly and actively works to shape the political sphere so that it might access new markets and remain in business.³⁹

Interestingly, often when Uber enters a new market there are no regula­tions at all, given the relative novelty of the underlying technology and its rapid adoption.⁴⁰ One could argue that, in these liminal spaces, Uber influ­ences how those regulations will be crafted. Gao and McDonald argue that in nascent industries, effectively navigating and shaping regulatory policies is crucial for firm survival.⁴¹ Firms in nascent industries “cocreate” emerging regulation by actively anticipating, reacting to, and shaping the regulatory process. Governments often welcome this dynamic with firms as they require their technical assistance to determine the best regulatory approach balanc­ing the priorities of the firm and that of society. The Uber case suggests that firms can simultaneously pursue an economic and political strategy with great success, undercutting Jensen's single objective function argument.

However, the pursuit of both an economic and political strategy that I have illustrated is a contradiction of a central assumption of the shareholder maximization theory. Milton Friedman, in his canonical argument, strenu­ously makes the case that firms and politics must remain separate and that managers of firms are only responsible for making as much money as possible for their owners.⁴² Any social or political responsibility beyond this narrow remit is a failure of duty toward the owners. If managers were to dedicate re­sources for these purposes, he questions, how exactly should they determine how much to spend and on whom it should be spent. It requires the man­ager to assume political duties, as a legislator, executive, and jurist, which are clearly the province of the political process and elected officials. Asking managers to unilaterally make decisions on funding political priorities is a subversion of the appropriate separation of duties in a democratic system.⁴³

If Friedman is to be believed, then one must see the strategy of Uber as far outside its shareholder maximization mandate. Here, Uber acts as leg­islators, writing and shaping new regulations that will govern how it can operate. However, as I have shown, Friedman's theory provides little guidance on how firms should behave other than put the proverbial genie back in the bottle. More troublingly, as the examples of Uber and football intimate, this view tacitly encourages firms to maximize shareholder value through politi­cal channels if it might support their central objective. If we accept the deep

entanglement between business and politics and the weakening of the state apparatus, we must search for another approach to understand how firms should enter the public space.

Firms and Deliberative Democracy

The question remains whether and how firm participation in politics can be reconciled with democratic ideals. Palazzo and Scherer argue that firm par­ticipation can be justified through the framework of deliberative democracy. In their conceptualization, the current requirements placed on firms due to the withdrawal of the state apparatus merit their full inclusion in the de­liberative process. Hussain and Moriarty argue instead that these principles suggest firms should play a more limited advisory role. Here, I explore the collaborative view proposed by Palazzo and Scherer, rely on the critique of Hussain and Moriarty to demonstrate its shortcomings, and then outline the advisory view of political participation for firms.

Palazzo and Scherer, drawing on the work of Habermas, argue that the central motivating feature of deliberative democracy is the requirement that social activity that affects important issues of public concern must be regulated by the free, unforced, and rational deliberation of citizens. Under ideal conditions, deliberation has a “discursive quality” and proceeds in ar­gumentative form, where parties introduce proposals and offer various forms of information, reasoning, and argument in support of, or in opposition to, the proposal.⁴⁴ In this way an unforced consensus about what norms a soci­ety should adopt might emerge among members of a political community, which “will lead to more informed and rational results, will increase the ac­ceptability of decisions, will broaden the horizon of the decision maker, will provide mutual respect and will make it easier to correct wrong decisions that have been made in the past.”⁴⁵

Having laid out the theory of deliberative democracy, Palazzo and Scherer turn to our current climate, emphasizing that firms have increasing respon­sibilities in the public sphere.⁴⁶ In this context, firms—particularly multina­tional corporations (MNCs)—incur “public duties,” which if correct, under­mines the Friedman and Jensen view of separation of economic and political responsibilities. If the state apparatus were strong, perhaps firms could be ef­fectively regulated and sanctioned for socially unproductive practices. How­ever, in a world in which the nation state is weakened:

MNCs are in a position to effectively escape local jurisdictions by playing one legal system against the other by taking advantage of local systems ill-

Corporate Engagement in the Political Process and Democratic Ideals 245 adapted for effective corporate regulation and by moving production sites and steering financial investments to places where local laws are most hos­pitable to them.⁴⁷

If this is the case, Palazzo and Scherer argue, we must move beyond the Friedman style scope of firm behavior and search for a model of social con­nectedness. Such a model should establish moral legitimacy for corporate behavior that would consist of “moral judgments about the corporation's output, procedures, structures, and leaders.”⁴⁸ This legitimacy is to be built through the deliberative space and will allow society to interact with the “ex­plicit considerations of the legitimacy of capitalist mechanisms and corpo­rate activities by giving credit to the interests and arguments of a wide range of constituencies that are affected by the activities of (multinational) corpo­rations.”⁴⁹ Palazzo and Scherer conclude that firms ought to operate in politi­cal multistakeholder forums in two ways. First, they should operate with an enlarged sense of responsibility. Second, they must help solve political prob­lems in collaboration with state and civil society actors.

Hussain and Moriarty have offered what I believe to be a thoughtful and thorough critique of Palazzo and Scherer's argument. They accept the prem­ise that the changing role of firms creates a “democratic deficit” as firms take on multiple state-like functions but lack the accountability inherent in a representative process. They argue that the collaborative view encounters a fundamental problem as “it allows corporations to participate in governance arrangements in a policy-making capacity in much the same way as private citizens and political groups do.”⁵⁰ The key misstep here centers around dem­ocratic accountability, which ensures “that people in positions of authority make decisions that are consistent with the voting state of deliberative rea­soning in the public sphere” and “makes administrative officials answerable to citizens.”⁵¹ They note that the collaborative view does not require firms to alter their internal profit-maximizing procedures which would require “inward accountability.” Instead, firms only accept an “outward accountabil­ity” as they do not invite stakeholders into their internal deliberations “but rather move themselves out into the political processes of public policy.”⁵² This unidimensional accountability places firms in the position of supervis­ing authorities rather than just functionaries.

Palazzo and Scherer's view, according to Hussain and Moriarty, places firms in the position of both functionaries and supervising authorities as firms proactively participate in the deliberative process to determine policies while at the same time enacting those very policies. Hussain and Moriarty believe that this role as a supervising authority is inappropriate.⁵³ They argue

that the only supervising authorities that can participate in the deliberative process are those individuals or organizations “that are possibly affected by the decisions of a community” and “have equal chances to enter and take part” in the process.⁵⁴ To help us understand why firms do not qualify, they define a class of institutions that can participate in the deliberative process, a politically representative organization (PRO). A PRO is an entity that has a social purpose to serve as a vehicle for citizens to present their political views in social deliberation and must satisfy the following conditions:

[First], citizens must make decisions about joining, remaining in, or leav­ing the organization based in large part on the degree to which the organi­zation's expressed objectives match up with their own social and political commitments. [Second], the formal and informal practices of democratic decision making in society must assign the organization a certain role to play in the overall political process.⁵⁵

As profitability is their prime objective, firms do not fit this description and as such “cannot easily articulate and defend political viewpoints that may... lead to policies that would lower profits in the long run.”⁵⁶ Given that their primary function is not political, firms often represent a hetero­geneity of political interests between workers, managers, and shareholders. Therefore it is inappropriate for firms to participate in the deliberative pro­cess because they themselves are not members of the public, although their constituents might be. Hussain and Moriarty allow the inclusion of firms as technical advisers as they can provide valuable knowledge and skills critical to determining the most appropriate set of policies. However, they empha­size that firms may go no further, given their conflicting roles and interests.

Challenging the Advisory Role of Firms

Hussain and Moriarty's proposal that firms be included in the democratic process as technical advisers is inadequate as a guide for corporate action because it creates space for the sort of corporate malfeasance that one could reasonably assume they would seek to avoid. To understand why this might be so, I consider the case of the Boeing 737 Max to illuminate three difficul­ties with the Hussain and Moriarty argument. First, the technical adviser role opens the door for the temptation for corporate capture. Second, this role also creates a setting for implicit bias. To overcome the first two challenges, I contend that we ought to reconsider the appropriate corporate form. The third difficulty is more vexing. Suppose the state and society more broadly

Corporate Engagement in the Political Process and Democratic Ideals 247 would welcome a more active role for firms in the deliberative process? If the Palazzo and Scherer argument is untenable on theoretical grounds, we are left to search for other solutions. I conclude this chapter speculating on what those solutions might involve, practically and theoretically.

Several tragic events surround the development of the Boeing 737 Max airplane. Over a six-month period, two 737 Max flights crashed, one oper­ated by Lion Air and another by Ethiopia Airlines, causing the death of over 300 people. Technical investigations into these crashes led to the realization that a software program, the Maneuvering Characteristics Augmentation System (MCAS), malfunctioned, precipitating these calamities. A more thor­ough investigation uncovered that in fact this technical failure was a result of more complicated and troubling oversight on the part of Boeing and the government.⁵⁷

The crashes notwithstanding, Boeing has built a sterling reputation as an aircraft manufacturer known for reliability, safety, and integrity.⁵⁸ In 2018, Boeing was recognized as the most powerful brand in the aerospace and de­fense industry, with its brand value estimated at $20 billion.⁵⁹ Despite its hard-earned and assiduously maintained reputation, like many large con­glomerates, it responds aggressively to competitive pressure seeking to safe­guard its market share and remain highly profitable.

The Boeing 737 Max was developed as a competitive response to the re­lease of a new model by Boeing's primary competitor, Airbus. The Airbus A320neo was 15 percent more fuel efficient than other comparable Boeing aircraft in its class. As a result of its improved efficiency and other amenities, Airbus landed large contracts and significantly undercut Boeing business in this market segment.⁶⁰ In an effort to save a large contract with American Airlines, Boeing jettisoned a new model that would have taken an estimated decade to develop for a fast-tracked upgrade of the existing 737 aircraft.⁶¹ In order to match the efficiency of the A320neo, Boeing refitted the 737 model with a larger engine but had to add the MCAS program to adjust for excessive lift at takeoff. Boeing added this program without informing pilots or includ­ing additional training in order to deliver the upgraded models on time. It did so with the consent of the US regulator, the Federal Aviation Adminis­tration (FAA). In fact, several journalists in the wake of the crashes contend that Boeing has helped shape FAA policy on wide-ranging matters including safety, technical requirements, and traffic patterns.⁶² However, in this case, many believe that Boeing leaned on its relationship with the regulator to have the 737 Max expedited and brought to market early.⁶³ Multiple reports controversially suggest that the FAA shielded Boeing by deflecting criticism from pilots who raised concerns about MCAS before and after the crashes.⁶⁴

Whatever the case, it was only when public outcry mounted internationally that the FAA finally grounded the 737 Max.⁶⁵

In this context, let us consider the first difficulty that I argue might arise from the technical advisory role, which is a temptation for corporate capture. Hussain and Moriarty assume that firms in the technical advisory role would not be tempted to use that role to pursue their own end. As the discussion above demonstrates, this assumption might be unreasonable. The role of technical adviser allows firms to develop a deep and lasting relationship with government as providing technical advice in practice involves constant and dynamic contact. This constancy allows firms to shape policy in many cases. Within this context, it seems unreasonable to assume that firms, whose ob­jective is to generate and sustain profits, will not use a technical advisory role to their advantage. This impetus is particularly forceful when firms face competitive pressure and view their political relationships as an asset to be utilized. This dynamic undoubtedly took place with the development of the 737 Max. After decades of developing a deep relationship with the FAA, Boe­ing leaned on the regulator to approve the new aircraft to ensure that it could capitalize on a large sales opportunity.

One would be particularly concerned about temptation for corporate cap­ture in what Karthik Ramanna calls “thin political markets.”⁶⁶ He argues that some of the most complex and essential policies that impact firm behavior and social well-being are determined in spaces where corporate managers are largely unopposed because of their own expertise and lack of public interest or awareness of the policy at hand. These process are shrouded in “techni­cal secrecy” because the subject matter might be too complex for nonexpert sources to meaningfully address, such as accounting standards or white­collar crime. In this space, firms set policy that has far-ranging implications for social welfare.⁶⁷ In these thin political markets, the temptation for cap­ture is overwhelming. As I have noted earlier, many firms would argue that it would be a failure of fiduciary duty to their shareholders not to influence the regulatory environment to help increase profitability. Therefore, if one wants to limit firm involvement to that of a technical adviser, one must also consider how the firm is structured so that its participation in an advisory capacity is limited not only by government but also by the firm's own inter­nal processes.

One might object to my argument by asserting that we should work to strengthen enforcement. Perhaps in an ideal setting, where both firms and governments are clear on their respective roles, that might be the case.⁶⁸ However, here I argue that we need both theoretical and practical solutions. Given the current spending by firms, the deep entanglement between firms

Corporate Engagement in the Political Process and Democratic Ideals 249 and politics, and the weakening of the state more broadly, it is difficult to imagine how this separation might be accomplished as one would need to strengthen not just government but multiple stakeholders in every single policy space, both currently existing and imagined. Even if one were to strengthen government significantly, as Gao and McDonald helpfully ar­gue, government would still require the technical advice of firms in many settings, which would create the temptation and opportunity for corporate capture leading to long-lasting social, political, and economic consequences.

There is a second and even more subtle corollary to the temptation for corporate capture: implicit bias. I rely on the work of Max Bazerman to il­lustrate this concept. Bazerman and colleagues introduce the idea of implicit bias into the management literature by arguing that one might be well in- tentioned but ultimately could act unethically because of implicit stereo­types, conflicts of interest, in-group favoritism, and overclaiming credit.⁶⁹ I am most interested in the second and third ideas that they present. Conflicts of interest arise as professionals “routinely... can convince themselves that their product or service is the very best option for a client, even when, ob­jectively, this is not the case.”⁷⁰ Boeing advocated for the 737 Max both on the basis that doing so was good for the company and that it was good for government. It is reasonable to believe that it is highly unlikely that Boe­ing thought it created a substandard product. However, the firm leveraged its relationship with the FAA to ensure the project proceeded even though, in retrospect, it is clear that the 737 Boeing Max had fatal design flaws. In this way the technical advisory role opens up corporate capture as firms can believe the advice they give is unconflicted even if it unfairly benefits them. This conflict stems from their inability to fully separate their profit-motives from their ethics. Through the channel of implicit bias, firms in the role of technical advisers will tacitly tilt political processes in their direction, which could create tangible harm for society.

Bazerman and colleagues highlight that the potential for conflict of in­terest is particularly concerning in concert with in-group favoritism or “the tendency of people to give preferential treatment to members of groups to which they belong and consequently put outsiders at a disadvantage.”⁷¹ Here I am actually concerned with government. The technical advisory role allows firms to gain the trust and favor of government such that over time, govern­ment naturally gravitates to those firms that provide substantive guidance over others that remain more neutral. This dynamic is at work in the Boe­ing case as it is clear that the FAA wants Boeing to succeed over its Euro­pean competitor Airbus. One could reasonably assume that the FAA knew that stalling or halting the development of the 737 Max would have allowed

Airbus to capitalize on the American Airlines contract. This “in-group favor­itism” often occurs with existing industries versus new entrants to the mar­ket as government has built a long-term relationship with the incumbent firms even if the new entrants have superior product offerings that are better suited to the needs of the public.⁷²

I argue that implicit bias works on both firms and the government through the technical advisory role. This channel could lead to clientelistic relation­ships at the expense of the public good, which Hussain and Moriarty might wish to avoid. One might respond to this concern that making firms and governments aware of this possibility would safeguard against the negative consequences. The challenge here, which research well documents, is that even if they are aware of implicit bias, individuals will not change behavior unless the terms of engagement or incentive structures themselves change.⁷³ Simply telling individuals to avoid implicit bias is rarely enough to meaning­fully change the outcome positively.⁷⁴

Given these two challenges, temptation and implicit bias, what friendly amendments might we make to the Hussain and Moriarty approach? As dis­cussed previously, I believe that the most fruitful path is to reconsider the structure of the firm. In the spirit of pluralistic experimentation, I offer two amendments that might help resolve these challenges. The first pragmatic amendment to overcome both temptation and implicit bias could be to sepa­rate political decisions from the ongoing management of the firm.

A firm that intends to engage in the political space could form an exter­nal committee, called the political engagement committee (PEC), comprised of selected employees, board members, shareholders, and a broader set of stakeholders such as union leadership, related nonprofit directors, or other community leaders. The PEC would meet regularly to consider, recommend, revise, and direct any political activity that the firm undertakes. The primary remit of the PEC would be to direct and monitor activities such as lobbying, campaign contributions, and interactions with regulators. These political ac­tivities are clear, discrete, and easily monitored.

Secondarily, the PEC also could consider how firm processes, products, and services might generate political and social consequences, in turn pro­viding guidance to the firm on how best to mitigate these risks. On a regular basis, the PEC would disclose to the public its membership, decision process, and any political participation. Most important, the PEC would have veto power over the defined set of political activities within its remit and would be incentivized to both consider the public good and the longevity of the firm. This structure would satisfy the concern for both inward and outward accountability that Hussain and Moriarty argue is critical.

Corporate Engagement in the Political Process and Democratic Ideals 251

One might note that governance committees on corporate boards and regulatory affairs departments already exist, particularly in large firms.⁷⁵ While this is certainly the case, the key difference of the proposed PEC is the inclusion of external voices on a semi-independent body. The PEC has no fi­duciary responsibility other than to ensure that its related firm engages with the public sphere responsibly and ethically as opposed to the board of the firm or any internal department. The external presence, I argue, will create a more contested, thoughtful, and dynamic decision-making process.⁷⁶

One can see how such a committee might have helped to avoid the Boe­ing 737 Max tragedy. By externalizing political activity, Boeing would have undergone a much more rigorous scrutiny of the new aircraft and would have been less able to lean on the regulator to expedite the process. There is rea­son to believe that the multistakeholder committee could have potentially delayed the development process, which would have either prompted further design changes or perhaps a restructuring of the deal with American Airlines altogether. Furthermore, employees and pilots wary of the new aircraft could have voiced their concerns to an independent body overseeing the political implications of business decisions as opposed to the current system in which those concerns could have been dismissed in favor of profitability.

In this way, the committee proposal might help firms become more like PROs through the PEC. The political decision-making process would be clear and independent, allowing employees to make decisions about joining, re­maining, or leaving the firm based on whether their own individual com­mitments align with firm behavior, a criteria Hussain and Moriarty set forth.

The recommendation of an external body to govern political engagement is neither small nor insignificant. The establishment of a PEC invites ques­tions of the allocation of fiduciary responsibilities between shareholders and stakeholders. Empowering the PEC to direct the political strategy of a firm allows external stakeholders to have a meaningful say in the profitability of a company, which at the present moment is reserved for shareholders.⁷⁷ Con­sider the Uber example. As constructed here, the PEC would have enormous sway over Uber's ability to operate and generate revenue as Uber employs both an economic and political strategy. The PEC would govern Uber's politi­cal strategy, which has opened and shaped a number of markets for its prod­uct offerings. Most likely an Uber PEC would heavily curtail its “regulatory entrepreneurship,” which would come in conflict with its current sharehold­ers. Given this scope of powers, the implementation of a PEC would mostly likely require a new legal framework that would formalize the powers de­scribed herein and assign liability responsibilities.⁷⁸

Another approach to solving the corporate capture problem might be to

consider changing the composition of the shareholders rather than chang­ing the decision-making powers at the level of governance. Therefore, the second amendment I suggest to overcome temptation and bias would be to consider democratizing the firm. By democratization, I mean adopting a model in which the firm is both run and owned by its employees. This struc­ture provides a number of benefits that would assist our concerns. I rely on famed political and economic philosopher Joshua Cohen to provide a useful roadmap to understand the appropriate dynamic between capital and what he terms a deliberative democratic order.⁷⁹ Cohen argues that a truly demo­cratic society requires a socialist organization of capital. He does not refer to the communist schemes of the twentieth century in which social ownership of the means of production is rationalized based on the search for the opti­mal development of productive forces. Rather, he argues that the deliberative view of democracy requires a commitment to socialism “where democracy is understood to be an association that realizes the ideal of free deliberation among equal citizens.”⁸⁰ He lays out four arguments for the socialization of capital to provide what he calls “an unifying structure for a family of con­siderations” that leads from a commitment to democratic association to a commitment to a form of socialism.⁸¹ I will use these arguments to shed light on how internal democratization might overcome corporate capture and im­plicit bias.

The first argument he calls the “parallel case.” Here the argument for worker self-management stems from the same principles that justify demo­cratic governance. Workers are in cooperative economic activities, and, like their political counterparts, they should be governed by rules that they have the capacity to assess and change based on their ability to deliver mutual advantage for the participants.⁸² The second argument, the psychological ar­gument, borrowing from John Stuart Mill, states that the principle of self­government develops character and a sense of the common good, which democratic work would also do. Social arrangements are malleable and their improvement is subject to the efforts of individuals. Working toward their improvement “builds an active character.”⁸³ This effort develops a “capacity to judge in terms of the common good and a desire to act on such judge- ments.”⁸⁴ The two arguments here justify democratic governance of the workplace based on individual improvement, or more colloquially, they ad­vocate for “making better people.”

The next two arguments consider the relationship of the firm to the broader society. The structural constraints argument contends that “the private control of investment importantly limits the democratic character of the state by subordinating the decisions and actions of the state to the

Corporate Engagement in the Political Process and Democratic Ideals 253 investment decisions of capitalists.”⁸⁵ Investment decisions impose “con­straints on the collective choices of citizens,” therefore public control of investment is the appropriate remedy.⁸⁶ The resource constraint argument posits that an unequal distribution of wealth within capitalism “limits the democratic character of politics undermining the equal access of citizens to the political arena and their equal capacity to influence outcomes in that arena.”⁸⁷ Individuals and organizations with significant economic resources can unfairly impose their political will on the broader populace as economi­cally deficient individuals and organizations are severely disadvantaged in these negotiations. The structure and resource constraints argument pres­ents a compelling narrative for the socialization of capital in that inequality severely hampers the ability of a democracy to attend to the needs of all and instead focuses on the projects of the very few.

Having made these arguments, Cohen reminds us that a deliberative de­mocracy is rooted in the ideal of a social order constructed by public argu­ment among equal citizens. If we take this ideal seriously, a society in which equals set the agenda, propose alternative solutions to problems, support those solutions with discernible reasons, and conclude by selecting some alternative, then only a socialist firm structure will provide such a society with worker arrangements that can satisfy the deliberative requirements.⁸⁸ He argues that a socialist realization would require “public control of invest­ment in which public owned means of production are operated by worker managed firms.”⁸⁹

Cohen's argument nicely illustrates how democratic-run firms would materially contribute to strengthening the deliberative process and, in our case, would limit temptation and bias. I argue that Cohen's parallel case and psychological arguments, which focus on the internal environment, could help overcome overt temptation. The psychological argument would work to improve the character of firm managers who in turn would be able to more readily recognize instances of corporate capture and, critically, restrain themselves from undermining public priorities. The parallel case argument aids managers in understanding the process of government and therefore tacitly encourages them to accept its goals, directives, and constraints.⁹⁰

I contend that the resource and structural constraints arguments, which focus on the external environment, more directly assist in overcoming im­plicit bias as they address systemic concerns for firms. The structural argu­ment aligns the incentives of the firm and the state, thereby limiting the temptation and opportunity to tilt the playing field toward the interests of firms over the state. The resource argument goes deeper by rectifying broader inequality, which in turn will disincentivize firms seeking to capture addi-

tional rents for managers and shareholders at the expense of the general public. The recommendation to democratize the firm might seem more radi­cal than the first option, the PEC, but one could argue that it would be a more long-lasting and durable fix to temptation and implicit bias.

There are two primary objections commonly voiced against democratiza­tion of firms. First, many scholars wonder if the proposal for firm democra­tization would adequately address the difficulties it seeks to remedy. While it is unclear if this proposal is sufficient to overcome the enormity of the concerns I have outlined above, it is presented as a robust one among many that might address these difficult social, political, and economic challenges in concert and conversation with other proposals put forward within this book.⁹¹ It is the search for viable alternatives that is critical to overcome our current predicament, and this proposal is manifestly one of them.

The second objection that many raise, in particular many economists and business practitioners, centers on potential enormous efficiency losses. The objection is that given the potential upheaval to the current system that such a proposal would have, how much economic efficiency would we lose by en­couraging widespread firm democratization. There are three primary diffi­culties with the efficiency concern. First, there are a number of alternative proposals for resolving the challenges of corporate capture and implicit bias, yet they all require an oligarchic top-down coordinated effort rather than a grassroots democratic one.⁹² As I have argued above, if one believes the delib­erative democratic framing, then the solution should seek to increase equal­ity, not diminish it. Second, the question of whether the democratization of the firm would create efficiency losses is in large part an unanswered empiri­cal query. Further experimentation and comparative analysis is required to determine if there would be large-scale efficiency losses, in which economic spheres, and over what time horizon. It is plausible that this form might be most effective for companies of particular scope and size. Such rigorous exploration would then inform how society might mandate democratiza­tion and under what conditions. Third, it is worthwhile considering that by adopting internal firm democratization the polity might gain on a number of dimensions, even if there were significant efficiency losses as the argu­ments put forward by Cohen suggest. Surely the need for economic growth and firm optimization should be balanced against the maintenance of rights, creation of space for individual and community flourishing, and general so­cial stability.

Returning to the advisory view of corporate engagement, there is a third and more intractable difficulty with the Hussain and Moriarty perspective. How should we consider the fact that the FAA has a legitimate reason to

Corporate Engagement in the Political Process and Democratic Ideals 255 develop a deep and lasting partnership with Boeing? Boeing is a major eco­nomic contributor to the US economy and has assisted in developing many technologies with the support of government that have been transforma­tional for our society. Asking socially and economically productive firms such as Boeing to disengage from this deeper collaborative process robs so­ciety of tangible benefits. Palazzo and Scherer attempt to construct a theory of engagement that takes this dynamic into account, but their proposal ulti­mately falls short, as Hussain and Moriarty cogently argue.

Another line of inquiry might be to consider the role of the economy in a just society. Robust deliberative systems need effective and productive economies to function. If we hope to achieve an egalitarian ideal, individuals need the space to pursue their independent projects, which oftentimes firms provide. Additionally, social welfare programs provide a baseline of support that comes through large tax transfers funded in large part by firms and their shareholders and senior managers. Given the deep reliance on firms and their economic resources, one wonders if it could be reasonable to seek their con­sent and even active participation in the deliberative process.

Rebecca Henderson outlines a compelling argument that we might need this collaboration to achieve lasting peace.⁹³ She cites three historical exam­ples: Denmark at the turn of the twentieth century, Germany in the post­World War II years, and Mauritius post-independence in the 1960s. The examples suggest political and business elites arrived at a mutually agree­able, deliberative-style arrangement ensuring prosperity for their prospec­tive countries. They did so to avoid further unrest and bloodshed. In each case, firms retained autonomy but also agreed to generous tax transfers and worker protections. It is my suspicion that this underlying agreement be­tween those representing political and economic power is in fact what en­ables the deliberative process to move forward. If one considers the concerns of Hussain and Moriarty, they perhaps are arguing that we must restrict firm behavior in part because we cannot trust firms to participate meaningfully and equitably in the deliberative process, which given our current climate is imminently reasonable.

However, another way to approach this lack of trust might be to consider exploring how those who hold the majority of economic resources would and should consent to the deliberative process, given their integral role in its de­velopment and perpetuation. Therefore, a fruitful avenue for future research would be to explore how these two parties develop a binding social contract. One perhaps could argue that the unraveling of state power, the overreach of firms, and populist discontent in the US at the present moment is in part a result of a failure to maintain a viable social contract between economic and

political elites. To my understanding, political philosophy and business eth­ics have few theoretical tools to assist us in investigating this line of inquiry. I recommend that new research focus on how we might understand this dynamic and its importance in supporting a deliberative economic system. Furthermore, as we develop and revise our philosophical tools to investigate this space, we also should consider the implications for firm behavior: How should they interact with the state, for what might they advocate, and what do they owe their employees and the body public more generally?

Conclusion

In this chapter, I have examined three theories for how firms can engage in the political process from the perspective of democratic ideals. The neoclas­sical view advocates for the complete separation of firms and the political process. The collaborative view proposes complete integration between firms and politics. The advisory view asks firms only to participate in the delibera­tive democratic process as technical advisers. The last theory, forwarded by Hussain and Moriarty, is the most satisfying yet remains inadequate given the potential for corporate capture through temptation and implicit bias. I have proposed two potential amendments to the corporate form to assist in overcoming these challenges. The first is an external fix through the es­tablishment of an independent committee that will oversee a firm's politi­cal actions. The second is an internal fix, the complete democratization of the firm. There is also a deeper challenge to the advisory view to speculate about—namely, that to investigate how firms can have a deeper relationship with the deliberative process we ought to theoretically investigate the way in which we understand how social contracts between economic and political elites are formed and sustained over time. I contend that it is only through this final investigation that we might find a truly satisfying answer to how firms should engage in the political process and understand their commit­ments more broadly to deliberative democracy.

Notes

I thank Nien-he Hsieh, J. Peter Scoblic, Sophus Reinhert, Matthew Weinzerl, Kriston McIntosh, and the organizers and participants of the Political Economy and Justice workshop for very useful feedback on previous drafts.

1. Many scholars have addressed this topic. For the business ethics perspective, see for, example, Sandrine Blanc and Ismael Al-Amoudi, “Corporate Institu-

Corporate Engagement in the Political Process and Democratic Ideals 257 tions in a Weakened Welfare State: A Rawlsian Perspective,” Business Ethics Quarterly 23, no. 4 (2013): 497-525; and Guido Palazzo and Andreas Georg Scherer, “Corporate Legitimacy as Deliberation: A Communicative Frame­work,” Journal of Business Ethics 66, no. 1 (2006): 71-88.

2. For a review of nonmarket strategy, see Kamel Mellahi, Jdrzej George Frynas, Pei Sun, and Donald Siegel, “A Review of the Nonmarket Strategy Literature: Toward a Multi-Theoretical Integration,” Journal of Management 42, no. 1 (2016): 143-73; and Felix Oberholzer-Gee and Dennis A. Yao, “Integrated Strategy: Residual Market and Exchange Imperfections as the Foundation of Sustainable Competitive Advantage,” StrategyScience 3, no. 2 (2018): 463-80.

3. I rely primarily on the following for the discussion in this chapter: Andreas Georg Scherer and Guido Palazzo, “Toward a Political Conception of Corpo­rate Responsibility: Business and Society Seen from a Habermasian Perspec­tive,” Academy of Management Review 32, no. 4 (2007): 1096-120; and Waheed Hussain and Jeffrey Moriarty, “Accountable to Whom? Rethinking the Role of Corporations in Political CSR,” Journal of Business Ethics 149, no. 3 (2018): 519-34.

4. This chapter adopts the pluralistic experimental approach to reforming the political economy rather than proposing radical or foundational change. This approach follows other contributions in this book, including the chap­ters by Deva Woodley, Rebecca Henderson, and Dani Rodrik and Charles Sabel, which will be referenced later.

5. There has been increasing acknowledgment among scholars in recent years that there has been considerable “scope creep” for firms in pursuit of share­holder value maximization. For an overview see Lynn A. Stout, The Share­holder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public (Berrett-Koehler Publishers, 2012).

6. There is a large literature within economics and management that examines corruption and political engagement of firms. This literature primarily fo­cuses on the valuation of particular connections rather than exploring types of political activity and why firms might adopt them. For a good analysis for the economic reasons for corruption, see, for example, Pranab Bard­han, “Corruption and Development: A Review of Issues,” Journal of Economic Literature 35, no. 3 (1997): 1320-46. For an estimation of the value of political connections, see, for example, Raymond Fisman, “Estimating the Value of Political Connections,” American Economic Review 91, no. 4 (2001): 1095-102; Asim Ijaz Khwaja and Atif Mian, “Do Lenders Favor Politically Connected Firms? Rent Provision in an Emerging Financial Market,” Quarterly Journal of Economics (2005): 1371-411.

7. Mellahi et al., “A Review of Nonmarket Strategy Literature,” 144.

8. Mellahi et al., 146.

9. Mellahi et al., 150.

10. Bridging strategies are almost often referred to as corporate social respon­sibility (CSR). For an ethical overview of CSR, see Elisabet Garriga and

Domenec Mele. “Corporate Social Responsibility Theories: Mapping the Territory,” Journal of Business Ethics 53, no. 1-2 (2004): 51-71. For a review of the impact of CSR on firm performance, see Michael E. Porter and Mark R. Kramer, “The Link between Competitive Advantage and Corporate Social Responsibility,” Harvard Business Review 84, no. 12 (2006): 78-92.

11. Mellahi et al., “A Review of Nonmarket Strategy Literature,” 151-52.

12. George Stigler, “The Theory of Economic Regulation,” BellJournal of Econom­ics and Management Science 2, no. 1 (1971): 3-21.

13. Stigler, “The Theory of Economic Regulation,” 5-7.

14. Lee Drutman, The Business of America Is Lobbying: How Corporations Became Politicized and Politics Became More Corporate (Oxford University Press, 2015).

15. Nien-he Hsieh and Victor Wu, “Making Target the Target,” Harvard Business School No. 9-317-113 (2017): 4.

16. Hsieh and Wu, “Making Target the Target,” 4.

17. Hsieh and Wu, 6.

18. Blanc and Al-Moudi, “Corporate Institutions in a Weakened Welfare State,” 498-500.

19. Ryan Nunn, Jimmy O'Donnell, and Jay Shambaugh, “The Shift in Private Sector Union Participation: Explanation and Effects,” Brookings, August 22, 2019.

20. Blanc and Al-Moudi, “Corporate Institutions in a Weakened Welfare State,” 501.

21. Scherer and Palazzo, “Toward a Political Conception of Corporate Responsi­bility,” 1097-100.

22. See, for example, Florian Wettstein, Multinational Corporations and Global Justice: Human Rights Obligations of a Quasi-Governmental Institution (Stanford University Press, 2009).

23. For an overview, see, for example, Margaret Cowell, Dealing with Deindustrial­ization: Adaptive Resilience in American Midwestern Regions (Routledge, 2014).

24. For this dynamic in urban settings, see William Julius Wilson, When Work Disappears: The World of the New Urban Poor (Vintage, 2011).

25. For a compelling analysis of business tax incentives on US state economic development, see Soledad Artiz Prillaman and Kenneth J. Meier, “Taxes, In­centives, and Economic Growth: Assessing the Impact of Pro-Business Taxes on US State Economies,” Journal of Politics 76, no. 2 (2014): 364-79.

26. For an analysis on the rise of economic and cultural populism in the US, see Ronald F. Inglehart and Pippa Norris, “Trump, Brexit, and the Rise of Popu­lism: Economic Have-Nots and Cultural Backlash,” Harvard Kennedy School Working Paper No. RWP16-026 (August 2016).

27. Stephen M. Bainbridge, “Corporate Purpose in a Populist Era,” UCLA School of Law, Law-Econ Research Paper 18-09 (2018).

28. Michael C. Jensen, “Value Maximization, Stakeholder Theory, and the Corpo­rate Objective Function,” Business Ethics Quarterly (2002): 235-256.

29. Jensen, “Value Maximization,” 240.

30. Jensen, 241.

31. For a seminal discussion on stakeholder theory, see Thomas Donaldson and Lee E. Preston. “The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications,” Academy of Management Review 20, no. 1 (1995): 65-91.

32. In this book, in their chapter on "Building a Good Jobs Economy,” Rodrik and Sabel present a compelling positive argument that encourages the cocreation of regulation. I very much agree with the need for firms and gov­ernment to dynamically coevolve to tackle difficult private and policy issues. However, I caution about the danger of corporate capture (as discussed later in this chapter).

33. Many have commented upon the social costs of shareholder value maximi­zation theory. See for example Lynn A. Stout, The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public (Berrett-Koehler Publishers, 2012).

34. For an in-depth look at Uber pricing and strategy, see Le Chen, Alan Mislove, and Christo Wilson, "Peeking Beneath the Hood of Uber,” in Proceedings of the 2015 Internet Measurement Conference (ACM, 2015), 495-508.

35. For a review of early regulation of Uber, see Geoffrey Dudley, David Banister, and Tim Schwanen, "The Rise of Uber and Regulating the Disruptive Inno­vator,” Political Quarterly 88, no. 3 (2017): 492-99.

36. For an investigation of the consumer surplus captured by Uber, see Peter Cohen, Robert Hahn, Jonathan Hall, Steven Levitt, and Robert Metcalfe, "Using Big Data to Estimate Consumer Surplus: The Case of Uber,” National Bureau of Economic Research, NBER Working Paper No. 22627 (2016).

37. Cohen et al., "Using Big Data to Estimate Consumer Surplus,” 3.

38. Uber is not alone in shaping its regulatory environment. Other major tech­nology firms such as Airbnb, Tesla, and others are engaging in this practice with varied results. For an overview, see Elizabeth Pollman and Jordan M. Barry, "Regulatory Entrepreneurship,” Southern California Law Review 90 (2016): 383-448.

39. Pollman and Barry, "Regulatory Entrepreneurship,” 385-400.

40. Brishen Rogers, "The Social Costs of Uber,” University of Chicago Law Review Dialogue 82 (2015): 85.

41. See Cheng Gao and Rory McDonald, "Shaping Nascent Industries: Inno­vation Strategy and Regulatory Uncertainty in Personal Genomics,” working paper (2019). It should be noted that this line of inquiry is also explored heavily in Rodrik and Sabel in "Building a Good Jobs Economy” in this book.

42. Milton Friedman, "The Social Responsibility of Business Is to Increase Its Profits,” in Corporate Ethics and Corporate Governance, ed. Walther C. Zimmerli, Markus Holzinger, and Klaus Richter (Springer, 2007), 173-78.

43. Friedman, "The Social Responsibility of Business Is to Increase Its Profits,” 178.

44. Scherer and Palazzo, “Toward a Political Conception of Corporate Responsi­bility,” 1107.

45. Scherer and Palazzo, 1107

46. Scherer and Palazzo, 1110.

47. Scherer and Palazzo, 1111.

48. Scherer and Palazzo, 1112.

49. Scherer and Palazzo, 1112.

50. Hussain and Moriarty, “Accountable to Whom?,” 521.

51. Hussain and Moriarty, 522.

52. Hussain and Moriarty, 525.

53. This argument poses a more fundamental challenge to the work of Hender­son and of Rodrik and Sabel in this book. Does the participation of firms in the cocreation of regulation or the political order more generally create an insurmountable democracy deficit? As I will argue later, we need to develop new tools to consider how to resolve the desire for cooperation but with the need for robust accountability.

54. Hussain and Moriarty, “Accountable to Whom?,” 526.

55. Hussain and Moriarty, 527.

56. Hussain and Moriarty, 530.

57. For a compelling overview of the events leading up to the crash, see Alvin Chang, Dion Lee, and Kimberly Mas, “The Real Reason Boeing's Plane Crashed Twice,” Vox, April 15, 2019, https://www.vox.com/videos/2019/4/15/ 18306644/boeing-737-max-crash-video.

58. There is a great deal of research that links the creation of a strong positive brand and financial performance. For a thoughtful empirical investigation, see Robert A. Peterson and Jaeseok Jeong, “Exploring the Impact of Adver­tising and R&D Expenditures on Corporate Brand Value and Firm Level Financial Performance,” Journal of the Academy of Marketing Science (2010): 677-90.

59. Brand Finance, Aerospace and Defence 25 (London, 2018).

60. David Gelles, Natalie Kitroeff, Jack Nicas, and Rebecca R. Ruiz, “Boeing Was 'Go, Go, Go' to Beat Airbus with the 737 Max,” New York Times, March 23, 2019.

61. Gelles et al., “Boeing Was 'Go, Go, Go' to Beat Airbus.”

62. See, for example, Stephen Mihm, “The FAA Has Always Played Cozy with the Aviation Industry,” Bloomberg, March 21, 2019.

63. D. Saint Germain, “The Boeing Debacle Is the Latest Example of Regulatory Capture,” Medium, March 15, 2019.

64. Associated Press, “Lawmakers Grill FAA Chief about Boeing 737 Max Safety Concerns,” May 15, 2019.

65. Thomas Kaplan, Ian Austen, and Selam Gebrekidan, “Boeing Planes Are Grounded in US after Days of Pressure,” New York Times, March 13, 2019.

66. Karthik Ramanna, “Thin Political Markets: The Soft Underbelly of Capital­ism,” California Management Review 57, no. 2 (2015): 5-19.

67. Ramanna, “Thin Political Markets,” 6.

68. As the neoclassical view would argue, the appropriate scope of government is to provide oversight. However, a great deal of firm lobbying is targeted to undermine this very capacity, therefore an alternative formulation is required. See, for example, Zhiyan Cao, Guy D. Fernando, Arindam Tripathy, and Arun Upadhyay, “The Economics of Corporate Lobbying,” Journal of Corporate Finance 49 (2018): 54-80.

69. Max H. Bazerman, Dolly Chugh, and Maharzin R. Banaji, "When Good People (Seem to) Negotiate in Bad Faith,” Negotiation 8, no. 10 (2005): 3-5.

70. Bazerman, Chugh, and Banaji, "When Good People (Seem to) Negotiate in Bad Faith,” 4.

71. Bazerman, Chugh, and Banaji, 5.

72. Bazerman, Chugh, and Banaji, 4.

73. Marianne Bertrand, Dolly Chugh, and Sendhil Mullainathan, "Implicit Dis­crimination,” American Economic Review 95, no. 2 (2005): 94-98.

74. Bazerman, Chugh, and Banaji, "When Good People (Seem to) Negotiate in Bad Faith,” 5.

75. Corporate governance committees as currently constituted have mixed results in curbing political activity of the corporation. For an argument that CEO political ideology overrides board influence, see Omer Unsal, M. Kabir Hassan, and Duygu Zirek, "Corporate Lobbying, CEO Political Ideology and Firm Performance,” Journal of Corporate Finance 38 (2016): 126-49. For ethical challenges that face corporate boards in engaging in political activity, see Nicolas M. Dahan, Michael Hadani, and Douglas A. Schuler, "The Gover­nance Challenges of Corporate Political Activity,” Business & Society 52, no. 3 (2013): 365-87.

76. Thank you to the editors for pointing out this concern.

77. This is true for both reforms to corporate governance such as benefit corpo­rations and employee-owned firms, as discussed below. B corps expand the scope of responsibilities for managers and directors but do not externalize responsibilities. See, for example, Suntae Kim, Matthew J. Karlesky, Chris­topher G. Myers, and Todd Schifeling, "Why Companies Are Becoming B Corporations,” Harvard Business Review 17 (2016).

78. This is an ongoing debate with the legal literature as to whether stakehold­ers should be granted fiduciary responsibilities. For a current investigation of incorporating different voices in corporate governance, see Andrew Keay, "Shareholder Primacy in Corporate Law: Can It Survive? Should It Survive?,” European Company and Financial Law Review 7, no. 3 (2010): 369-413. For a clas­sical argument against this approach, see Mark E. Van der Weide, "Against Fiduciary Duties to Corporate Stakeholders.” Delaware Journal of Corporate Law 21 (1996): 27.

79. Joshua Cohen, "The Economic Basis of Deliberative Democracy,” Social Phi­losophy and Policy 6, no. 2 (1989): 25-50.

80. Cohen, "The Economic Basis of Deliberative Democracy,” 26.

81. Cohen, 26.

82. Cohen, 27.

83. Cohen, 29.

84. Cohen, 29.

85. Cohen, 28.

86. Cohen, 28.

87. Cohen, 29.

88. Cohen, 32.

89. Cohen, 40-42.

90. For a full articulation of these arguments and their connection to labor, see Nien-he Hsieh, “Justice in Production,” Journal of Political Philosophy 16, no. 1 (2008): 72-100.

91. This approach tracks other contributions in this book in offering sugges­tions for experimentation that might be refined and enhanced over time. See, for example, the chapters on ''Polypolitanism'' and “Building a Good Jobs Economy.”

92. While recent statements by large investment funds are encouraging, hav­ing these deeply wealthy and elite entities lead the charge on addressing corporate malfeasance without democratic accountability raises many concerns. For early popular research on this front, see Kelsey Piper, “'Impact Investment' Funds Advertise Great Returns and Social Impacts. They Aren't Delivering,” Vox, December 19, 2018, https://www.vox.com/future-perfect/ 2018/12/18/18136214/impact-investing-socially-responsible-sri-report.

93. Rebecca Henderson, Reimagining Capitalism in a World on Fire (Public Affairs, 2020).

10