CORPORATIONS AND CITIES: AN ETHICAL APPROACH

Marvin T. Brown, Ph.D.

When we look at most major cities today, it is hard to deny the growing disparity between those who benefit from current socio-economic trends and those disadvantaged by them.  In a recent essay on cities and globalization, Saskia Sassen addresses the question, “Whose City is it?” by exploring the continuing separation of the elite and the marginalized (1999).  She reminds us that global cities are not only great concentrations of corporate power, but also great concentrations of multiple cultures and of poverty.

These disparities, as seen and as lived, between the urban glamour zone and the urban war zone have become enormous.  The extreme visibility of the differences is likely to contribute to further brutalization of the conflict: the indifference and greed of the new cities versus the hopelessness and rage of the poor. (p.193)

  Last year, during a visit to Caracas, Venezuela, I saw a clear example of the kind of city she is writing about: fortresses for those with property, the lack of basic services for those without.  One finds similar trends in urban areas in the United States, even though they tend to be more invisible to the tourist, or in many cases, to the daily commuter who travels on the freeways that link suburban security and city pleasures.

What is the responsibility of corporations for this trend?  Or more precisely, how should we understand the relationship between corporations and cities?  The purpose of this paper is to examine the conditions for a conversation between cities and corporations that would address such questions.  Any description of these conditions, of course, will depend on the perspective from which one looks at the relationship between cities and corporations.  Instead of approaching this relationship from a financial or economic perspective, which seems to be the usual approach, I want to use an ethical perspective.  I am also approaching the city/corporate relationship from my limited experience as someone from the United States.  I assume that this will limit the scope of what I have to say, but I hope that the questions I raise will at least provide some food for thought.

           An ethical approach is also limited.  Ethics is concerned primarily with human conduct, and especially with the justification of decisions.  Using ethics to understand earthquakes or thunderstorms would not be very rewarding, since these events are not the results of decisions. We do not attribute moral agency to such occurrences.  Ethics, on the other hand, can say something about events or trends that are at least in part the result of human decisions.  It can say something about subjects and relationships that meet the conditions of moral agency.  Both cities and corporations seem to meet these conditions.

Corporations and Cities as Moral Agents

There are four key characteristics of moral agency: (1) a moral agent must have the capacity to make choices, (2) moral agents must have choices to make, (3) they must be able to justify their choices, and (4) the justification must appeal to normative criteria (Brown, 1991).  Most individuals, of course, exhibit these characteristics.  Do cities and corporations?  To see cities as moral agents is to focus on them as political entities.  City councils, boards of supervisors, and other governing bodies do make decisions.  They have some options.  They justify their decisions to their constituents by providing reasons that appeal to their various mandates.  These mandates or mission statements do function as normative criteria, that is, they express what the city “should” do, rather than merely saying what it does.  So it seems that cities can be seen as moral agents.  That does not mean, of course, that all their decisions are “moral.”  It does mean that their decisions could have been different, and that their justifications can be evaluated by various ethical standards.

Can we say the same about corporations?  Some ethicists, such as Manual Velasquez,  have argued that only individual persons should be counted as moral agents (1997).  For him, moral agency requires desires and motives.  Corporations do not have motives.  They do not have a desiring body.  Neither do cities nor states, and yet we have just seen that they can be interpreted as moral agents.  The question is whether corporations have the same necessary characteristics we used before to define the moral agency of cities: the capacity to make choices, options from which to choose, and guidelines they can appeal to when they justify their choices. 

Peter French’s notion of “corporate internal decision structures” (CIDs structures) gives us a way to talk about how corporations make collective decisions (1995).  Such decisions are made by persons throughout an organization’s structure who function as agents of the corporation, rather than as agents of their own interests.  Furthermore, their contributions to the decision making process are justified by the purposes of the corporation.  These corporate purposes may or may not parallel the motives of the various individuals involved in the process.  In any case, the reasons that justify corporate decisions will not rely on the interests of individuals, but on the purpose of the corporation. 

Even if we agree that a corporation has the capacity to make choices, we may still wonder whether it really has different options.  If corporations can say that they could not do otherwise, because of the “iron law of the market,” for example, they should not be considered moral agents.  Does this make sense?  Would you agree that in United States tobacco companies “had to” lie about increasing the amount of nicotine in their cigarettes?  Would you agree that the apparel industry “had to” use sweat shops?  If so, they could not be held accountable for their actions.  It seems to me that these actions resulted from choices.  Corporate behavior is different from the behavior of the weather.  The corporations just mentioned really could have done something else. 

One way of thinking about the difference between weather patterns and corporate conduct is to use the distinction between causal and decisional conditional sentences.  Causal conditionals are sentences like: “If the clouds are thickening, then it will rain.”  It assumes a causal relationship between the antecedent and the consequent, or we could also say, between the condition and the consequent.  Decisional conditions are different.  “If the clouds are thickening, then we should go inside.”  This condition again has consequences, but the consequences are based on agents interpreting the conditions and drawing their own conclusions from them.  The thickening clouds did not make them go inside.  They decided to.  For moral agents, in other words, the move from conditions to consequences is never necessary. The consequences could have been otherwise. 

In the world of moral agency, things do not just happen.  Whatever happens at least has the mark of agency--a mark that acknowledges an effort to make the best decision in one’s particular circumstances.  Levi Strauss and Company, for example, did not have to keep their head quarters in San Francisco, especially when other companies were leaving for the new industrial parks in the suburbs.  They chose to remain.  Others chose to leave.  Their choice can be evaluated by appropriate ethical standards, just as we can evaluate the choices make by city councils or governments.

So, the first thing we can say about the conversation between corporations and cities is that it takes place between two moral agents.  Both are decision makers.  But what kind of relationship exists between moral agents?  Since they are both moral agents, one could say that the relationship should be one of respect and mutual recognition.  This answer is not false, but it does not get at the particular relationship between corporations and cities.  To understand this relationship, we need to examine our assumptions about the relationships among moral agents.

Relationships among Moral Agents

Many of us--conditioned by Western culture--usually assume that relationships among moral agents are not only relationships between equals, but also relationships that the agents have chosen.  We have in our heads a mental model of self-contained individuals who establish relationships with others for their own benefit.  This human image has its roots in the Enlightenment view of the self as a self-contained entity, who makes rational contracts with others.  As Virginia Held has argued, this human image is largely an illusion.  In fact, each one of us spends our life dependent on others.  In her book, Feminist Morality (1993), she has suggested that instead of interpreting relationships from the image of “economic man,” we should use the “mother-child” relationship.  Does the mother-child relationship come closer to our experiences?  It does allow us to acknowledge our experiences of caring and being cared for, or of being “in” relationships.  Which image we choose will make a difference:

If we begin with the picture of rational contractor entering into agreements with others, the natural condition is seen as one of individuality and privacy, and the problem is the building of society and government.  From the point of view of the relation between mothering person and child, the problem is the reverse.  The starting condition is an enveloping tie, and the problem is individuating oneself.  The task is to carve out a gradually increasing measure of privacy in ways appropriate to a constantly shifting interdependency (p.208).

Where should we begin our thinking about the relationship between corporations and cities?  With two separate agents, and then work at discovering what connections they will accept?  Or with a relationship that serves as the foundation of their independence?  I think we may create a picture that is closer to reality by following Held’s suggestion to begin by exploring each agent’s dependence on the other, instead of each one’s independence from the other.

The Dependence of Corporations and Cities on Each Other

A corporation’s dependence on a city can be explored by thinking about the corporation as being “in” the city: not exactly like a child in a home, but just as dependent.  This dependence can be exposed by imagining, for a moment, corporations without cities.  Take away the laws that protect them, or even take away law enforcement, and the whole system falls apart.  Take away the moral communities that develop people who tell the truth, keep their promises, and expect others to do the same, and it becomes difficult to tell the difference between their behavior and the behavior of thieves.  Take away the order of stable societies, and corporations will leave if they can.  If they cannot leave, they will have to develop their own stability through the hiring of guards and security forces.  Here, unfortunately, we do not need to use our imagination.  The development of corporate fortresses in many cities has already happened.  Still, until corporations are allowed to have their own judicial system, educational system, and can sustain many other public goods, they remain dependent on the city and the state in which they reside.          

In sum, corporations are dependent on cities and governments for the laws that protect them, for regulations that preserve their markets, for inspections that monitor their competition, and for the public goods that enables them to operate in good faith. Corporate development, in other words, depends on conditions that are not under corporate control.  In spite of the ideology of “private” enterprise that assumes an independence from public resources, in fact, modern corporate existence depends on public  resources.

Major cities today, of course, also depend on corporations.  Corporations provide most of the economic base for a city’s development.  They also provide jobs for a city’s workforce.  The importance of corporations can be seen in the cut-throat competition among cities in the United States to attract corporations by providing tax brakes or other incentives.  In a sense, cities are centers of trade and commerce.        

The relationship between corporations and cities is one of co-dependence.  They are dependent on each other.  But they are dependent on each other in very different ways.  How we interpret these differences will determine the framework of the conversation we are exploring  If we look at the dependence from a financial or economic perspective, for example, we will probably be drawn into a conversation about the various exchanges between corporations and cities.  We will ask whether the exchanges really meet the interests of each agent.  What about using an ethical perspective?  For ethics, the key relationship is not one of exchange between producers and consumers but one of joint action among moral agents.  Just as corporations are legal persons from a legal perspective, they are moral persons from an ethical perspective.  Just as the corporation is dependent on the law for its legal existence, so also is it dependent on the city for its moral existence.  Like individual human moral agents,  a corporate moral agent discovers its concrete obligations in relationships with others, and especially in its relationship with the city in which it operates.  To understand this aspect of corporations, we need to see what it means to say that corporations exist “in” cities.

The Significance of Corporations Being “in” Cities

To think of corporations “in” cities is to think in terms of a container-contained relationship.  The city is the container that contains corporations. We can think of this in a literal and a metaphorical sense.  Literally, major corporations have their “home office” somewhere, usually in a city.  Even the development of modern telecommunications has not yet changed this.  As Sassen points out in her book on The Global City( 1991), developments in financial services as well as increases in other “producer services” (services to producers rather than consumers) have led to more centralization, rather than less.  Even William Mitchell, in his recent City of Bits (1999), which quite uncritically extols the virtues of contemporary telecommunications and the future of a “virtual” city, acknowledges that there are “vigorous centralizing forces” even in the “world” of cyberspace (p.138).   Even if some corporations do become located in cyberspace, the people who work in them will have to be somewhere.  They will probably be where they can find the services they need, which will be “in” cities.

The container for corporations, however, is not only or most importantly a place.  True, cities are spaces that corporations occupy.  To see only this space as a scene in which corporations operate misses the moral agency of cities.  Corporations are not only in a city’s space.  They are also in a city’s continuing drama of developing itself.  Corporations exist “in” this drama as actors, usually with important roles, but they do not control the play.  The city directs the play.  Other actors are also on stage and have their parts.  The future acts of the play, of course, are not yet written.  There is a lot of impromptu acting.  And yet, the city as a moral agent and a political entity has the responsibility to direct the play in the general direction of becoming the kind of community it envisions.  The drama, in fact, is about the city’s efforts to fulfill its mission.

A City’s Mission

Cities are communities with their own purposes.  In this sense, the relationship between corporations and cities is not one of equals.  Cities do not exist “in” corporations as corporations exist “in” cities.  The “work community” of a corporation exists “in” the civic community of the city.  To prevent confusion about the notion of “community” here, the term will be defined simply as those who participate in and are affected by the city’s success or failure in achieving its mission.  Although cities may have quite different missions, I am assuming that the basic mission is or should be informed by democratic principles.  In the United States, cities were chartered by the states in which they dwell with the right of home rule; that is, a city’s right to govern its internal affairs.  The Preamble of the San Francisco City Charter expresses what home rule entails:

In order to obtain the full benefit of home rule granted by the Constitution of the State of California; to improve the quality of urban life; to encourage the participation of all persons and all sectors in the affairs of the city and County; to enable municipal government to meet the needs of the people effectively and efficiently; to provide for accountability and ethics in public service; to foster social harmony and cohesion, and to assure equality of opportunity for every resident:  We, the people of the City and County of San Francisco, ordain and establish this charter as the fundamental law of the City and County.

              (San Francisco City Charter)

A modern city, of course, can be seen as a composite of different communities or neighborhoods, but this preamble shows, I think, a city that strives to be one community--one that ensures “equal opportunity for every resident” and fosters “social harmony and cohesion.”  Furthermore, it makes a claim for accountability and ethics in city government and public service.  No one would claim that San Francisco has always been true to this mission, but it does serve as a guideline that can be used to justify, or to critique, city policies and proposals. 

Given this mission, or some variation of it for other cities, what obligations do corporations have to ensure that they are not a hindrance to a city’s efforts to achieve its mission?  Some might want to step back from this question and ask if we really want corporations to relate to the city’s mission.  Corporations are so powerful that if they become involved, they could end up controlling city government.  We already have enough of that.  But is it possible for corporations not be to related to the city’s mission?  How can these powerful institutions be “in” a city and not affect the city’s ability to either fulfill or not fulfill its mission?  The question is not whether corporations should be related to a city’s mission, but what kind of relationship it should be.  Do corporations have any obligation to be responsive to and responsible for a city’s mission?  Do corporations have a responsibility at least not to hinder a city in achieving its mission?   Before we can answer these questions, we need to clarify our understanding of a corporation’s mission or purpose.

A Corporation’s Mission or Purpose

            Some might say that a corporation should determine its relationship to a city by what will improve its bottom line.  If there is some positive relationship between corporations and cities, this approach would argue, it is because it works to the advantage of corporations.  This view presents a serious challenge to the possibility of authentic conversations.  If it is true, then it is questionable if corporations can be taken as trustworthy partners in conversations about their role in achieving a city’s mission. 

If one were to invite “corporations” to a conversation, who would come?  Some corporate representatives?  And whom would they represent?  The corporation?  Or the stockholders?  Some would say the stockholders. Stockholders are interested in return on investment, so it makes sense that their representatives would be interested in the bottom line.  A corporation, however, is not simply an instrument for stockholders.  In United States law, in any case: “One of a corporation’s unique features stems from its separateness from the people who own it.  That is, a corporation exists in its own right as a legal person distinct from the shareholders.” (Davidson, 1987, p.836). 

Let’s say you are a large stockholder in an automobile company.  Could you walk into the company and pick out a car simply because you are an investor?  No.  The car does not belong to the investors.  It belongs to the corporation.  Furthermore, the profit from selling the car belongs to the corporation.  The corporation decides how much of the profit to use for expansion, how much to use for employee training, and how much to turn into dividends for investors.  To equate corporate purpose with the interests of investors ignores this distributive process completely, thus obscuring one of the most significant choices that managers face.  If the investor’s interest does not define a corporation’s purpose, what does?

Some might still define corporate purpose in terms of profit, but now define it as corporate profit.  To examine the strength of this view, we can look at what happens when a public institution is privatized.  Does its purpose change?  In the United States, for example, many formally “non-profit” and public hospitals have become “for-profit” and private.  Does this mean that a hospital’s purpose has also changed?  Or, does its purpose of providing good health care remain the same?  To argue that profit is not a corporation’s purpose is not to argue that profit is not a significant motive for individuals to invest in corporations, nor is it to argue that profit is insignificant for a corporation.  It’s just not what justifies a corporation’s existence.

To justify a corporation’s existence, we can use Aristotle’s notion of an agent’s function (Ethics Book I. 16.25-28).  If the function of the ship builder is to build good ships, or the flutist to play the flute well, as Aristotle suggests, then surely we can also ask about the social function of a modern corporation. One place to discover a corporation’s function is in its legal papers of incorporation, which entitle a corporation to exist.  Another source for an answer can come by examining what a particular corporation is designed to do well--what are its core competencies.  These competencies, of course, will differ with different corporations, but in general we can say that corporations develop competencies to produce and deliver goods and services.  From an ethical perspective, to do this well would be a corporations purpose, whether it is a “profit” or a “non-profit” corporation.

Certainly, any corporation’s product or service can either hinder or facilitate the city’s efforts to achieve its mission.  In many cases, however, it is not so much the specific purpose, but rather the consequences that follow from striving to achieve that purpose that have the most impact on a city’s community and mission.  For example, a corporation may see its function as providing fire proof materials for housing.  If it uses hazardous materials that contaminant a city’s water supply to produce the materials, then the impact on the community’s health may be more significant for society than the fire proof housing materials.  So, to understand how corporations fit with a city’s mission, we must consider not only its function, but also the consequences of fulfilling that function. 

Corporations and The City’s Mission

One could, of course, agree that corporations exist to provide goods and services through the marketplace, and still doubt if they are under any moral obligations to the city.  I think, however, there are some persuasive reasons for acknowledging a moral obligation to enter into conversations with cities--an obligation that can be grounded in what we have already said about corporations and corporate/city relationships.  Let’s begin with the moral distinction between doing good and not doing harm that would seem to apply to all moral agents.  As a moral principle, we can say:  “All other things being equal, moral agents should not do harm.”  Since we have already shown that corporations are moral agents, it follows that they have an obligation to ensure that their presence does not make it more difficult for the city to achieve its mission than it would be if they were not present.  The assumption here is fairly simple: If a moral agent can choose between doing harm and not doing harm--all other things being equal-- it can affirm its moral agency by not doing harm. 

There is another interpretation of corporate identity that may reinforce this conclusion.  As we said before, corporations are dependent on cities to enforce the laws and regulations that allow them to operate.  If cities enforce such laws, it seems that the laws must ultimately align themselves with the city’s mission, especially the mission of social harmony and cohesion.  If this is true, then we can say that while the letter of the law protects individual property rights, the spirit of the law protects social harmony, or we could also say, civic community.  If we can agree on these two dimensions of such laws, then it makes sense to argue that if corporations benefit from the letter of the law--the protection of their property--they have a moral obligation to be responsive and responsible to the spirit of the same laws--the protection of social harmony.  Do corporations have a responsibility to join in conversations about achieving the city’s goal of social harmony?  As moral agents and as beneficiaries of city services it seems they do.  They may also have an obligation because they promote and benefit from the same social and economic trends--especially those trends that are increasing the disparity between the rich and poor--that are making social harmony more difficult to achieve.  If this is true, then it certainly should become a theme of conversations between corporations and cities. 

Context and Issues

When one thinks of the forces of money and power that lie behind the current trends that are increasing the privileges of the privileged and the disadvantages of the disadvantaged, it is easy to let these trends function as the context in which we define what issues corporations and cities should address.  I think we should resist this temptation.  We need to affirm a political context--based on moral agency--for city and corporate conversations, because only then can these conversations approach such trends as issues that require action.  These trends are not like the weather--beyond our control.  They are continually reinforced or resisted by decisions made by corporations and cities.  We need to make this reality clear by constructing a context that is based on seeing cities and corporations as moral agents, on acknowledging corporate dependence on the civic community, and on corporations fulfilling their moral obligations to at least not to block, and perhaps even to support, a city’s efforts to fulfill its communal mission.  Ethics, at least in the Western Greek tradition, began by promoting a politics of public deliberation based on joint action, in the effort to promote what was good for the city and thereby what was good for all members of the city.  Its approach to the city/corporate relationship should remain loyal to that idea.

The Possibility of Effective Corporate and City Conversatio

Is such a conversation really possible?  On the one hand, it happens all the time.  Citizens from different background, in their backyards, lunch and dinner tables, and elsewhere do talk about city problems from a perspective something like I have described.  On the other hand, one wonders if there is strong enough leadership from the corporations or from cities to affirm the moral context I have described.

If the city is supposed to be the container for corporate activities, in the sense of providing the laws and framework for its existence, then sometimes it seems the container is leaking.  Practices of government corruption, egoism, and cronyism may make any ethical perspective seem idealistic and wishful thinking.  I grant that this is a problem.  But “so what?”

There are also groups and trends that run counter to these practices.  The development of trustworthy government is a struggle.  The shape that struggle takes, and its outcome, may well depend on our assumptions about the moral obligations of cities to develop a politics of inclusion.  Until there is some trust that a city council is committed to a city’s civic mission,  I would agree that the kind of conversations I envision would have little possibility.  In any concrete situation, however, the question is not whether a city has reached some ideal state, but whether it has crossed some threshold toward its mission that elicits trust and participation.  As it has been said many times, we get the type of leaders we deserve, so the question of city leadership is also a question of civic participation

If we turn to the other party of our conversation, we also find difficulties with many corporate leaders.  In many cases, the problems arise from their positions of privilege, which in spite of their good intentions leaves them unable to grasp the actual impact of corporate policies on others.  Instead of looking at how economic social systems work to their advantage and the disadvantage of others, they tend to assume that everyone’s place in society is a result of their individual efforts.  A financial consultant recently said to me that in the United States, anyone who really wanted to could find the five hundred dollars needed to get on the internet. Such statements reveal how far “out” those who have been excluded are: those inside do not even acknowledge the conditions of their existence.  Can such people learn to listen to others?  Only if they somehow learn to take the experiences of others seriously.  Only if they can imagine that others have different experiences than theirs.  This does not mean that corporate representatives must agree with whatever is said.  It does mean that they must be willing to enter into a joint endeavor for mutual understanding and action.

Once one has drawn a picture of what relationships “should” look like, there is always the question whether it can be realized.  This is not an either/or question.  It is a question about degree.  How much does the possible relationship between corporations and cities resemble the picture I have drawn?  Is it close enough to tip the scales in favor of developing the conditions for a public conversation about current trends?  My guess, and my hope, is that it is close enough.

Bibliography

Aristotle  Nicomachean Ethics (1962). trans. M. Ostwald. Englewood Cliffs, NJ: Prentice Hall.

Brown, M.T. (1991) Working Ethics: Strategies for Organizational Responsibility and Decision Making. San Francisco, CA: Jossey-Bass Publishers.

Castells. M. (1991),The Informational City.  Oxford: Blackwell Publishers.

Davidson, D. et al (1987) Comprehensive Business Law: Principles and Cases. Boston, Mass.: Kent publishing Company.

French, P. (1995) Corporate Ethics. New York: Harcourt Brace College Publishers.

Held, V. (1993) Feminist Morality: Transforming Culture, Society, and Politics. Chicago & London: The University of Chicago Press.

Holston, James, Editor (1999) Cities and Citizenship. Durham and London: Duke University Press. 

Mitchell, W. J. (1999), City of Bits: space, Place, and the Infobahn. Cambridge, Mass.: The MIT Press.

Sassen, S. (1991) The Global City: New York, London, Tokyo. Princeton, NJ: Princeton University Press.

_____(1999) “Whose City is It? Globalization and the Formation of New Claims,” Cities and Citizenship. ed. J. Holston, Durham & London, Duke University Press. p. 177-194.

mbrown@workingethics.com