AuthorMasconale, Saura


Corporations are increasingly taking stands on a wide range of social issues: gun control, gender and race, immigration, abortion. Scholars have praised this development as the rise of responsible capitalism. Popularized accounts have attacked the "woke corporation" as ideological, elitist, and fraudulent. Both views examine the new "corporate activism" as a corporate governance matter. This Article, instead, focuses on the "activism "part. It argues that corporations' new political engagement on divisive aims of society has turned them into "supercitizens" (given their size and complexity) and attempts to understand what the normative implications are.

We first show that corporations can be (super)citizens while remaining "good corporations," i.e., value-maximizing entities. Due to the asset price effects arising from the "moral portfolio" choices of today's largest investors, activism makes corporations more appealing to investors and hence more, not less, competitive. But "good corporations" cannot also be "good citizens." Because of the exclusionary nature of activism--one cannot stand on both sides of a highly-charged social issue--and current equity reconcentration patterns, value-maximizing corporations have incentives to choose activist initiatives that exclusively cater to the majoritarian investor demand. This "corporate conformity" violates essential principles to which good citizens are held. It undermines the political freedom of stakeholder minorities (especially among employees) and jeopardizes political equality in the public adjudication of divisive issues.

We conclude by discussing potential remedies, but we warn that whether we want good corporations or good supercitizens might have become the new divisive--and quite intractable--issue of the day.

TABLE OF CONTENTS INTRODUCTION I. THE ACTIVIST CORPORATION A. The Rise of Corporate Activism 1. Classic CSR-ESG 2. Divisive Activism B. Scholarly Theories 1. CSR-ESG Studies 2. Missing Taxonomy C. "Woke Accounts" II. ACTIVISM AND SUPERCITIZENS A. The Corporation qua Supercitizen 1. Performativity and Citizenship 2. Formative Activism B. The Corporation qua Good Citizen 1. Good Citizens, Political Freedom, and Political Equality 2. Bad Citizens III. THE PRODUCTION OF MORAL GOODS A. A Pluralistic Morality Market? B. Moral Goods' Production Calculus 1. Moral Identities and Production Constraints 2. Majoritarian Moral Demand 3. Moral Portfolios C. Corporate Conformity IV. CAN GOOD CORPORATIONS BE GOOD CITIZENS? A. Freedom Test B. Equality Test 1. External and Internal Equality 2. Formal and Substantial Equality 3. Equality Losses V. BETTER SUPERCITIZENS A. Why Self-Correction is Unlikely B. Moral Neutrality and other Mandates C. Importing Democracy 1. Whither Democratic Model? 2. Disclosure and Self-Implementation CONCLUSION INTRODUCTION

Corporations have changed. On this much, everybody agrees. Forget Milton Friedman's mantra that the only "[s]ocial [responsibility [o]f [b]usiness [i]s to [increase [i]ts [p]rofits." (1) Now, corporations are set to change the world, one pressing social issue at the time. From gun control to gender equality, immigration to criminal justice reform, abortion to free speech--the scope of the new "corporate activism" keeps growing. (2) Meanwhile, socially responsible investing has reached a staggering $40 Trillion (3) worldwide and this figure is only projected to rise. (4)

So activism is the new hot corporate topic. But what is it?

On the one hand, academic studies have largely framed corporate activism as a new expansionary phase of classic corporate social responsibility (CSR); (5) the response to growing stakeholder demand for a broader social role of the corporation. (6) It is the rise of a new sustainable corporate model, capitalism that has finally turned responsible, they say. (7) On the other hand, a growing chorus of skeptics is labeling what they disparagingly call the "woke corporation" a "scam"--a mix of CEO opportunism, left-wing elitism, and radical ideology. (8) Most importantly, these critics say, the "woke corporation" betrays the purpose for which corporations were originally established: to increase the overall wealth by successfully providing goods and services. (9) Still, both accounts examine activism exclusively through the lens of corporate governance analysis; activism is another dimension of what corporations should--or not--do qua business organizations.

This Article takes a different tack, defending a shift in focus from the "corporate" part to the "activist" part of corporate activism. Corporations now take stands on, and contribute to, overall and divisive aims of society. Corporate governance analysis is too narrow to capture the implications of this novel corporate "performativity." (10) Activist corporations do what citizens do--they engage with society's focal points of moral and political disagreement. (11) This suggests that we should start studying corporations (also) qua citizens--in fact, supercitizens, given their size and complexity-and import elements of democratic theory in the debate around corporate activism. (12) Doing so exposes the concern of woke accounts as misplaced: the issue with the activist corporation is not whether it can continue to be a good corporation, which maximizes economic value. We demonstrate that activism is economically efficient. But our study also warns against excessively optimistic conclusions, showing that efficient activism might be incompatible with what we expect from good citizens in a well-functioning democracy and while corrections might be available, they do not come cheap. Thus, we might have to accept that we can have either good corporations or good supercitizens, but not both.

As a positive matter, our theoretical apparatus shares the prevailing academic view that activism responds to a novel moral demand coming from the marketplace. (13) Today's corporations increasingly produce what we call "moral goods." (14) But in combining the study of the corporation qua business organization with that of the corporation qua citizen, we depart from a fundamental assumption shared by academic studies of corporate activism: that the activist corporation delivers universal benefits, benefits that are recognized, understood, and valued by all citizens/stakeholders. (15) This assumption might be valid for classic CSR initiatives: being employee-friendly, reducing pollution, supporting philanthropic causes, etc.--all initiatives that can be conceptualized as providing means to implement societal choices supported by broad consensus in the liberal state. (16) But the activist corporation is concerned with the choice of a society's divisive ends--on which individuals can legitimately be expected to disagree (17)--not the means to implement shared ends.

This novel taxonomy of corporate social engagement (18) is crucial to the study of activism, along both the political and economic dimension. As a matter of political theory, first, it grounds the claim that activism has formative force. In a performative conception of citizenship, (19) what matters is what citizens "do," not what they "are." Hence, the contribution to divisive overall ends re-inscribes the corporation as a subject engaged in the "doing" of citizenship. More precisely, activism has transformed the corporation into a "supercitizen," and not just because the corporation has "numbers" that gives it an unmatched capacity for "substantial aggregation of wealth." (20) The corporate citizen is "super" because it is a citizen that is formed by an ordered collection of stakeholder-citizens. Unlike citizens at large, who stand as equals in their interactions, an order exists among stakeholder-citizens. This order is a reflection of both the corporation's hierarchical structure and the role played by economic power in organizing internal corporate relationships.

Second, under the above taxonomy, the normative analysis of corporate activism cannot abstract away from the question of whether activist corporations are also "good citizens" that abide by the principles of political freedom and political equality. (21) Freedom and equality are the principles that govern the "doing" of citizenship; hence, one cannot be a good citizen if she violates the rules and norms that entail these principles, because one would be infringing upon the freedom and equality of other citizens. (22)

The question of good corporate citizenship connects the political and economic parts of our analysis. For the first-order issue in unpacking the complexity of that question is understanding how corporations choose their citizenship performatives: how they decide which divisive moral goods to produce. This inquiry takes us back to the study of the corporation qua business organization, (23) exposing three economic factors that have been so far overlooked in the study of the economics of corporate activism. First, divisive moral goods are exclusionary. A corporation cannot produce at once moral good x (catering to, say, an individual with progressive preferences, e.g., a policy in favor of gun control) and what we term the "contrarian" moral goody (catering to, say, an individual with conservative preferences, e.g., a policy against gun control), because this would destroy the corporation's ability to satisfy the moral demand of either individual and hence destroy the value to the corporation of either good. (24)

Second, because of this exclusionary feature, corporations can only capture the majoritarian, rather than the universal, economic demand for moral goods. This, on the one hand, explains corporations' partisan engagement as economically rational, rather than the product of CEO opportunism, as argued by woke accounts. On the other hand, it suggests that under the asset price effects of investors' moral portfolio choices, (25) investors' moral preferences have a disproportionate impact in the...

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