The Social Subcontract: Business Ethics as Democratic Theory

• Published date: 01 June 2023
• DOI: http://doi.org/10.1177/10659129221108353
• Author: Abraham Singer,Amit Ron
• Date: 01 June 2023
• Subject Matter: Articles

Article

Political Research Quarterly

2023, Vol. 76(2) 654–666

© The Author(s) 2022

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DOI: 10.1177/10659129221108353

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The Social Subcontract: Business Ethics as

Democratic Theory

Abraham Singer

1

and Amit Ron

2



Abstract

What does democracy demand of business? We argue that an answer to this question requires an understanding of the

sorts of ethical obligations businesses have more generally. Against approaches that understand the duties of business in

terms of citizenship or f‌iduciary obligation, we propose and develop the notion of subcontractor duties. We conceive of

commercial activity as a social subcontract, in which businesses are empowered to exercise their judgment in pursuit of

parochial interests, but for broader social reasons. Such license, however, puts businesses in a position to use this

judgment in ways that unduly inf‌luence broader political processes. Given this, business ethics should be seen as in-

dispensable for normative democratic theory, as it offers a conception of how business leaders should discharge their

discretionary power in a manner least offensive to democratic principles. Drawing on a pragmatist understanding of

democracy, we contend that businesses must respect, and avoid undermining, the formal and informal processes that

characterize democratic politics. We conclude with rough sketch of what this looks like in practice, listing three broad

sets of desiderata that a social subcontract seems to demand of businesses vis-`

a-vis democracy.

Keywords

business ethics, democratic theory, functional differentiation, corporate political activity, markets, corporate social

responsibility

Democratic theorists have, by and large, not engaged

much with business ethics. This silence is in many ways

understandable. As entities that are established to pursue

prof‌it and compete f‌iercely in markets, businesses are

inclined to approach democracy and democratically

enacted law as obstacles to navigate, or as opportunities to

affect a favorable social and regulatory environment, in

pursuit of their particular, sectoral, or class interests.

Democratic theorists, in turn, see businesses as potentially

threatening to democracy, given their power to skew

policy outcomes, inf‌luence the procedures that structure

the policy process, and affect how we, as a society, de-

liberate upon such issues generally. Business ethics, on

such a view, would seem toothless against such threats at

best. At worst, it would provide a sort of “woke-washing,”

invoked to morally camouf‌lage businesses’prof‌it-driven

aims.

Yet, despite the power of legal structure, f‌inancial

incentives, and market discipline in inducing strategic and

instrumental orientations, businesses’behavior is not fully

determined by such forces. Even leaving aside the nor-

mative status of such constraints and pressures (itself a

business ethics topic) questions regarding what

constitutes the corporate interest, how to balance tradeoffs

amongst the various goals, and which strategies to use to

pursue these goals are open questions, inevitably shaped

by extra-strategic values and normative commitments.

Given that there is inevitably a need for normative

judgment, questions regarding how businesses ought to

exercise this judgment when engaging in politically

signif‌icant activities are theoretically important. Fur-

thermore, due to the power of such business actors and the

pervasiveness of deliberation, contestation, and other

politically signif‌icant activities, such questions are prac-

tically inescapable.

These questions are also considerably more compli-

cated than is commonly thought. Is it democratically

1

Dept. of Management, Quinlan School of Business, Loyola University

Chicago, Chicago, IL, USA

2

School of Social and Behavioral Sciences, Arizona State University,

Glendale, AZ, USA

Corresponding Author:

Abraham Singer, Dept. of Management, Quinlan School of Business,

Loyola University Chicago, 820 N. Michigan Ave.Chicago, IL 60611, USA.

Email: asinger2@luc.edu