The Business Corporation as a Political Actor

Project Information

CORPORATOCRACY

Grant agreement ID: 865165

DOI

10.3030/865165

Project closed

EC signature date 17 December 2019

Start date 1 September 2020

End date 31 August 2025

Funded under

• EXCELLENT SCIENCE - European Research Council (ERC)

Total cost

€ 2 000 000,00

EU contribution

€ 2 000 000,00

Coordinated by

UNIVERSITEIT UTRECHT
Netherlands

Periodic Reporting for period 4 - CORPORATOCRACY (The Business Corporation as a Political Actor)

Reporting period: 2025-03-01 to 2025-08-31

Summary of the context and overall objectives of the project

The CORPORATOCRACY project addressed the political status and legitimacy of business corporations, from the perspective of political theory/philosophy. The most dominant understanding of the position of corporations is that they are purely commercial and therefore private actors. In this paradigm, their purpose should lie in maximizing long-term shareholder value. This paradigm has been influentially defended on the basis of ‘agency theory’ in economics, and also had an important influence on the law-and-economics-movement. Public or social interests connected to what and how corporations produce goods and services, in this paradigm are protected through public regulation, monitoring and enforcement. Over the last decades, this paradigm has been criticized as inadequate for today’s economies, due to a variety of circumstances. The project focused on what new paradigm could replace the shareholder-value based paradigm – this was the main impetus for the project. The main objective was to develop a political theory which rethinks the legitimacy of corporation’s status in light of these new situations.This topic's societal relevance lies in exploring new ways of dealing with corporate power and addressing concerns about the way corporations externalize social and environmental costs to society. The project explores various alternative ownership and governance routes to hold corporations to account for the social and environmental costs.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

Main results:

Work on the corporate constitution (first subproject) researched how to analytically interpret the legitimation of corporate power, in relation to particular economic and political values and in relation to juridical theories of the corporation embedding these values. Also it researched the historical emergence and features of various paradigms for understanding corporate purpose and the normative justification of corporate power. The subproject worked out a proposal for a new mechanism for strengthening corporate accountability to citizens and a new analytical framework for identifying trade-offs in establishing multi-stakeholder governance. .

Work on corporate democracy (second subproject) investigated the justifications for the existing focus on workers’ in the debate about workplace democracy and concluded that there are no principal reasons for this focus. Also, it engaged in a closer examination of the Berlin expropriation movement and its place and significance for the general corporate reform debate. Finally, it defended the position that strikes can be a valuable instrument in fighting worker disillusionment and disenfranchisement within democratic corporations.

Work on social justice & corporation (the third subproject) investigated how to theoretically define and legally execute corporate responsibility for structural injustices, such as climate change. It researched existing accounts of corporate responsibility for structural injustice in business ethics based on a dominant framework of Iris Marion Young, and criticized them for not being sufficiently sensitive to power dynamics and provided an alternative based on a different interpretation of Young’s work. This included an exploration into the structural connection between corporations and gender and racial injustices (particularly in the legal context).

Work on transnational corporations (the fourth subproject) involved investigating economic production as a space for realizing specific ideas of freedom and analyzed the multinational firm’s specific effects on the freedom of sovereign political communities. Moreover, it developed a diagnostic and normative account of the wrong of value extraction, especially as practiced by corporations. Finally, work on this subproject involved an inqruiy into the property incidents in primary energy to be held by corporate firms and an analysis of the specific ways corporations are constrained to adopt incorrect evaluative views of nature.

Work on the economic/political theory of the firm (fifth subproject) problematized the influential state/firm analogy which political theorists have long relied upon to theorize corporate power. Moreover, it has developed a novel normative account of worker resistance through the analysis of shirking, individual/collective resistance, and labor rights. Finally, it developed proposals for new governance mechanisms to democratize social media corporations through purpose reform and citizen assemblies, as well as an examination of the normative implications of a political account of corporate power for antitrust law.

Exploitation and dissemination: Various events were organized for dissemination. First, due to the Corona pandemic, a series of online speaker events was held in 2020-2022 which attracted a good number of participants (video registrations on the website). After that, three larger (on-site) workshops where scholars presented work in progress (March and May 2022, June 2023), and a Final Conference (May 2025); as well as a range of smaller events. These connected participants from a variety of disciplines to the project team. Further disseminations happened when team members have been on research visits to universities at Sankt Gallen (Switzerland), Oxford (UK), Brown University, (USA), Princeton (US), Barcelona (Spain). The final stage of dissemination is in the publications in the academic literature. To date, 45 publications have been published or accepted (with 20+ still under review), appearing in academic journals such ‘Journal of Politics’, ‘Journal of Law and Political Economy’ and ‘Journal of Business Ethics’. Finally, two dissertations were successfully defended (available open access).

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

The following is a non-exhaustive list of some of the key philosophical achievements of the project, that have pushed the state-of-the-art in the philosophical literature forward. First, it developed a concession theory which makes space for incorporators’ private purposes (i.e. a key contractualist element) in starting a corporation. On this basis, it proposed to integrate the analysis of market failures (especially externalities) into concession theory. This resulted in a rejection of both mono-fiduciary theories of corporate duties (prevalent in the economic literature) as well as unstructured multi-fiduciary duties (prevalent in stakeholder theory); and an endorsement of alternative (non-shareholder-oriented) modes of ownership for corporations. Second, in its democratic theory branch, the project questioned the basic conviction that motivates much of the literature in the workplace democracy literature in political theory, namely that workers (and only workers) are to be enfranchised in democratization because they are subjected to corporate rules. Based on the general literature on the all-affected principle, it argued that workplace democratization does not only mean giving voice to workers but giving voice to a wide range of people involved with the corporation. Third, in the social justice component of the project, the dominant assumption in the structural injustice literature of the separation of political and legal responsibility was challenged. As a consequence, a new way of holding corporations accountable for their contribution to structural injustice in the form of legal action and class-action lawsuits was brought into both structural injustice and business ethics literatures.

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