Fiduciary Loyalty as Kantian Virtue
Forthcoming in Andrew Gold & Paul Miller eds. 'Philosophical Foundations of Fiduciary Duties' (OUP, 2014).
26 Pages Posted: 14 Sep 2013 Last revised: 25 Feb 2014
Date Written: September 12, 2013
In this paper, I argue that the term ‘loyalty’, as it is used in the context of fiduciary duties, has two senses: one, technical, in which ‘loyalty’ stands for the requirement that fiduciaries act only in the best interests of their principals. In this thin sense of the concept, the duty to be loyal embodies a ‘juridical’ moral duty, i.e. a duty to act in a certain way which can be legitimately enforced by the state. The other ‘thick’ sense of ‘loyalty’ implies a specific emotional and intellectual orientation towards one’s principals. It is an attitude towards another person in which selfless action comes easily, and exploitation of weakness is unthinkable. By invoking this rich concept of loyalty the courts of equity advise fiduciaries that the serious commitment they took upon themselves calls for the adoption of an unusual disposition. A detached and purely instrumental approach to her relationship with the principal may get the fiduciary to abide by her legal duties. But this unique position of great power over other people, combined with an information gap that renders detection of abuse quite unlikely, generates a temptation for wrongdoing that can be very hard to overcome. And this is true even for an honest, well-intentioned fiduciary.
Cultivating a sense of loyalty to the principal is therefore the right step for a conscientious fiduciary. The paper seeks to show that the recommendation to adopt a stance of fully-fledged loyalty can be incorporated into a Kantian analysis of the fiduciary duty. The fiduciary position is a space of selflessness – an arena where morally commendable actions are naturally called for. It would have been a great drawback for the interpretation of loyalty suggested here if it meant that the fiduciary who adopts it thereby gives up all the moral bildung potential of the fiduciary relationship. But, as we saw, such narrow reading of the Kantian framework, according to which loyalty cannot motivate morally praiseworthy actions, is unwarranted. Kant himself encourages his readers to make a strategic decision to cultivate these emotions which may help them perform their duty, and instil harmony in their inner landscape. The loyal fiduciary is a perfect example of an agent who is acting in accordance with this recommendation: given the great difficulty of resisting the temptation to use her position to benefit herself, she engages in emotional self-coaching which aims to nurture a sense of loyalty to her principal that will make it emotionally difficult for her to work behind his back. Her concrete actions out of loyalty are thus informed by a policy which she adopts out of deep respect for the moral law together with an acute awareness of our shortfalls as human beings. This combination of commitment to the moral law with humbleness is what makes the loyal fiduciary a morally virtuous agent.
Keywords: Fiduciary duties, Kantian Ethics, loyalty
Suggested Citation: Suggested Citation