Skip to main content Accessibility help

There Is No Rawlsian Theory of Corporate Governance

  • Abraham Singer (a1)

The major aim of this article is to show that John Rawls’s theory of justice cannot be applied effectively to questions of business ethics and corporate governance. I begin with a reading of Rawls that emphasizes both the critical and pragmatic nature of his theory. In the second section I look more closely at the notion of society’s “basic structure” and its place within Rawls’s theory. In the third section, I argue that “the corporation” cannot be understood as part of this basic structure and is not, therefore, a subject of justice for Rawls or his interpreters. Finally, I show that Rawls’s inability to speak to the corporation is a weakness, regardless of one’s particular view on the corporation. I conclude by considering what Rawls’s theory helps us to understand about the problems involved in integrating corporate governance, business ethics, and political philosophy.

Hide All
Abizadeh, Arash. 2007. “Cooperation, Pervasive Impact, and Coercion: On the Scope (not Site) of Distributive Justice.” Philosophy & Public Affairs 35(4): 318–58.
Alchian, Armen A. 1977. Economic Forces at Work. Indianapolis: Liberty Fund.
Alchian, Armen A., and Demsetz, Harold. 1972. “Production, Information Costs, and Economic Organization.” American Economic Review 62(5): 777–95.
Alchian, Armen A., and Demsetz, Harold. 1973. “The Property Right Paradigm.” The Journal of Economic History 33(1): 1627.
Armour, John, Hansmann, Henry, and Kraakman, Reinier. 2009. “What Is Corporate Law?” In The Anatomy of Corporate Law: A Comparative and Functional Approach, 2nd. ed., edited by Kraakman, Reinier, Armour, John, Davies, Paul, Enriques, Luca, Hansmann, Henry, Hertig, Gerard, Hopt, Klaus, Kanda, Hideki, and Rock, Edward, 134. Oxford: Oxford University Press.
Arnold, Samuel. 2012. “The Difference Principle at Work.” The Journal of Political Philosophy 20(1): 94118.
Barry, Brian. 1973. “John Rawls and the Priority of Liberty.” Philosophy & Public Affairs 2(3): 274–90.
Bebchuk, Lucian A., and Fried, Jesse M. 2006. Pay without Performance: The Unfulfilled Promise of Executive Compensation. Cambridge: Harvard University Press.
Benhabib, Seyla. 1986. “The Generalized and Concrete Other: The Kohlberg-Gilligan Controversy and Moral Theory.” Praxis International 5: 402–24.
Bishop, John Douglas. 2008. “For-Profit Corporations in a Just Society: A Social Contract Argument concerning the Rights and Responsibilities of Corporations.” Business Ethics Quarterly 18(2): 191212.
Blair, Margaret M., and Stout, Lynn A. 1999. “A Team Production Theory of Corporate Law.” Virginia Law Review 85(2): 247328.
Blanc, Sandrine, and Al-Amoudi, Ismael. 2013. “Corporate Institutions in a Weakened Welfare State: A Rawlsian Perspective.” Business Ethics Quarterly 23(4): 497525.
Bowie, Norman E. 1999. Business Ethics: A Kantian Perspective. Malden, MA: Blackwell Publishers.
Brock, Gillian. 1998. “Are Corporations Morally Defensible?Business Ethics Quarterly 8(4): 703–21.
Chambers, Simone. 2012. “Justice or Legitimacy, Barricades or Public Reason? The Politics of Property-Owning Democracy.” In Property-Owning Democracy: Rawls and Beyond, edited by O’Neill, Martin and Williamson, Thad, 1732. Oxford: Wiley-Blackwell.
Child, James, and Marcoux, Alexei. 1999. “Freeman and Evan: Stakeholder Theory in the Original Position.” Business Ethics Quarterly 9(2): 207–23.
Ciepley, David. 2013. “Beyond Public and Private: Toward a Political Theory of the Corporation.” American Political Science Review 107(1): 139–58.
Cohen, G. A. 1997. “Where the Action Is: On the Site of Distributive Justice.” Philosophy & Public Affairs 26(1): 330.
Cohen, G. A. 2008. Rescuing Equality and Justice. Cambridge: Harvard University Press.
Cohen, Marc A. 2010. “The Narrow Application of Rawls in Business Ethics: A Political Conception of Both Stakeholder Theory and the Morality of Markets.” Journal of Business Ethics 97(4): 563–79.
Crane, Andrew, Matten, Dirk, and Moon, Jeremy. 2008. Corporations and Citizenship. Cambridge: Cambridge University Press.
Donaldson, Thomas, and Preston, Lee E. 1995. “The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications.” Academy of Management Review 20(1): 6591.
Donaldson, Thomas, and Dunfee, Thomas W. 1999. Ties That Bind: A Social Contracts Approach to Business Ethics. Boston: Harvard Business School Press.
Easterbrook, Frank, and Fischel, Daniel R. 1991. The Economic Structure of Corporate Law. Cambridge: Harvard University Press.
Fama, Eugene, and Jensen, Michael C. 1983. “Separation of Ownership and Control.” The Journal of Law and Economics 26(2): 301–25.
Fligstein, Neil. 2010. “Politics, the Reorganization of the Economy, and Income Inequality, 1980–2009.” Politics & Society 38(2): 233–42.
Freeman, R. Edward. 2002. “A Stakeholder Theory of the Modern Corporation.” In Perspectives in Business Ethics, edited by Hartman, L.P., 171–81. Boston: McGraw-Hill.
Freeman, R. Edward, and Evan, William M. 1990. “Corporate Governance: A Stakeholder Interpretation.” The Journal of Behavioral Economics 19(4): 337–59.
Freeman, R. Edward, Harrison, Jeffrey, Vicks, Andrew, Parmar, Bidhan, and Colle, Simon de. 2010. Stakeholder Theory: The State of the Art. Cambridge: Cambridge University Press.
Friedman, Milton. 1962. Capitalism and Freedom. Chicago: University of Chicago Press.
Gauthier, David. 1974. “Justice and Natural Endowment: Towards a Critique of Rawls’s Ideological Framework.” Social Theory and Practice 3(1): 326.
Gould, Carol. 2004. Globalizing Democracy and Human Rights. Cambridge: Cambridge University Press.
Greenfield, Kent. 2006. The Failure of Corporate Law. Chicago: University of Chicago Press.
Gutmann, Amy. 1985. “Communitarian Critics of Liberalism,” Philosophy & Public Affairs 14(3): 308–22.
Hacker, Jacob S., and Pierson, Paul. 2010. Winner-Take-All Politics. New York: Simon & Schuster.
Hampton, Jean. 1980. “Contracts and Choices: Does Rawls Have a Social Contract Theory?Journal of Philosophy 77(6): 315–38.
Hansmann, Henry. 1996. The Ownership of Enterprise. Cambridge: Harvard University Press.
Hansmann, Henry, and Kraakman, Reinier. 2000. “The End of History for Corporate Law.” Georgetown Law Journal 89: 439–68.
Harsanyi, John C. 1975. “Can the Maximin Principle Serve as a Basis for Morality? A Critique of John Rawls’s Theory.” American Political Science Review 69(2): 594606.
Hartman, Edwin M. 2001. “Moral Philosophy, Political Philosophy, and Organizational Ethics: A Response to Phillips and Margolis.” Business Ethics Quarterly 11(4): 673–85.
Heath, Joseph. 2009. Filthy Lucre: Economics for People Who Hate Capitalism. Toronto: Harper Collins.
Heath, Joseph. 2011. “Business Ethics and the ‘End of History’ in Corporate Law.” Journal of Business Ethics 102(supp. 1): 520.
Heath, Joseph. 2014. Morality, Competition, and the Firm. Oxford: Oxford University Press.
Heath, Joseph, Moriarty, Jeff, and Norman, Wayne. 2010. “Business Ethics and (or as) Political Philosophy.” Business Ethics Quarterly 20(3): 427–52.
Hsieh, Nien-hê. 2005. “Rawlsian Justice and Workplace Republicanism.” Social Theory and Practice 31(1): 115–42.
Hsieh, Nien-hê. 2008. “Justice in Production.” Journal of Political Philosophy 16(1): 72100.
Jensen, Michael C. 2000. Theory of the Firm: Governance, Residual Claims, and Organizational Forms. Cambridge: Harvard University Press.
Jensen, Michael C. 2002. “Value Maximization, Stakeholder Theory, and the Corporate Objective Function.” Business Ethics Quarterly 12(2): 235–56.
Jensen, Michael C., and Murphy, Kevin J. 1990. “Performance Pay and Top-Management Incentives.” Journal of Political Economy 98(2): 225–64.
Krouse, Richard, and McPherson, Michael. 1988. “Capitalism, ‘Property-Owning Democracy,’ and the Welfare State.” In Democracy and the Welfare State, edited by Gutmann, Amy, 79106. Princeton: Princeton University Press.
Laden, Anthony. 2003. “The House That Jack Built: Thirty Years of Reading Rawls.” Ethics 113(2): 367–90.
Lipsey, R. G., and Lancaster, Kelvin. 1956. “The General Theory of Second Best.” Review of Economic Studies 24(1): 1132.
Malleson, Tom. 2014. After Occupy: Economic Democracy for the 21st Century. Oxford: Oxford University Press.
McMahon, Christopher. 2013. Public Capitalism. Philadelphia: University of Pennsylvania Press.
Mill, John Stuart. 1848/1987. Principles of Political Economy. Fairfield, NJ: Augustus M. Kelley Publishers.
Moriarty, Jeffrey. 2005. “On the Relevance of Political Philosophy to Business Ethics.” Business Ethics Quarterly 15(3): 455–73.
Moriarty, Jeffrey. 2009. “Rawls, Self-Respect, and the Opportunity for Meaningful Work.” Social Theory and Practice 35(3): 441–59.
Murphy, Liam B. 1999. “Institutions and the Demands of Justice.” Philosophy & Public Affairs 27(4): 251–91.
Néron, Pierre-Yves. 2010. “Business and the Polis: What Does It Mean to See Corporations as Political Actors?Journal of Business Ethics. 94(3): 333–52.
Néron, Pierre-Yves. 2013. “Toward a Political Theory of the Business Firm? A Comment on ‘Political CSR.’Business Ethics Journal Review 1(3): 1421.
Nozick, Robert. 1974. Anarchy, State, and Utopia. New York: Basic Books.
O’Neill, Martin, and Williamson, Thad, eds. 2012. Property-Owning Democracy: Rawls and Beyond. Oxford: Wiley Blackwell.
Okin, Susan Moller. 1989. Justice, Gender, and the Family. New York: Basic Books.
Orts, Eric W. 2013. Business Persons: A Legal Theory of the Firm. Oxford: Oxford University Press.
Pateman, Carole. 1970. Participation and Democratic Theory. Cambridge: Cambridge University Press.
Phillips, Robert A. 1997. “Stakeholder Theory and a Principle of Fairness.” Business Ethics Quarterly 7(1): 5166.
Phillips, Robert A., and Margolis, Joshua D. 1999. “Toward an Ethics of Organizations.” Business Ethics Quarterly 9(4): 619–38.
Rawls, John. 1971. A Theory of Justice. Cambridge: Harvard University Press.
Rawls, John. 1977. “The Basic Structure as Subject.” American Philosophical Quarterly 14(2): 159–65.
Rawls, John. 2001a. The Law of Peoples. Cambridge: Harvard University Press.
Rawls, John. 2001b. Justice as Fairness: A Restatement. Cambridge: Harvard University Press.
Rawls, John. 2005. Political Liberalism, Expanded Edition. New York: Columbia University Press.
Ron, Amit. 2008. “Visions of Democracy in ‘Property-Owning Democracy’: Skelton to Rawls and Beyond.” History of Political Thought 29(1): 89108.
Sandel, Michael. 1984. “The Procedural Republic and the Unencumbered Self.” Political Theory 12(1): 8196.
Scherer, Andres, and Palazzo, Guido. 2007. “Toward a Political Conception of Corporate Social Responsibility: Business and Society Seen from a Habermasian Perspective.” Academy of Management Review 32(4): 10961120.
Stanczyk, Lucas. 2012. “Productive Justice.” Philosophy & Public Affairs 40 (2): 144–64.
Toenjes, Richard H. 2002. “Why Be Moral in Business? A Rawlsian Approach to Moral Motivation.” Business Ethics Quarterly 12(1): 5772.
Whelan, Greg. 2012. “The Political Perspective on Corporate Social Responsibility: A Critical Agenda.” Business Ethics Quarterly 22(4): 709–37.
Winkelman, Joel. 2013. “A Working Democracy: Jane Addams on the Meaning of Work.” The Review of Politics 75(3): 357–82.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Business Ethics Quarterly
  • ISSN: 1052-150X
  • EISSN: 2153-3326
  • URL: /core/journals/business-ethics-quarterly
Please enter your name
Please enter a valid email address
Who would you like to send this to? *



Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed