Corporate Responsibility in a Free and Democratic Society

Abstract:     
Do corporations have any social responsibilities? Those who have argued both sides of this debate have failed to focus their attention sufficiently on the common law rules governing market relations, especially the law of torts, contracts, and property. This article argues that these three foundational legal institutions are all premised on a fundamental obligation of attentiveness. Actors are obligated to attend to the likely consequences of their actions on others and refrain from actions that impose unreasonable risks of harm or which impose harms that individuals are entitled to be protected against. If this is so, then the argument that corporations cannot reasonably respond to vague duties of social responsibility becomes less powerful, given the pervasive duties of all market actors to consider whether they could justify their harm-producing conduct to an impartial decision maker - in other words, whether they could explain their actions as reasonable. We want clear rules to give us guidelines about what we are and are not allowed to do. But we also want a fuzzy edge of substantive standards to induce us to think before we act - to be attentive to the ways in which our actions affect others. Such fuzzy edges create appropriate incentives to think about the effects of one's actions on others and to consider the judgments that others would make about the justice or appropriateness of our own conduct, given the impact it will have on others who, after all, have equal rights. And we care so much about this that we have enshrined it in the basic law governing the market system.

Accepted Paper Series