Commercial vs. Civic Commonwealth
- Article: Reframing the Commonwealth: Commercial or Civic. By Marvin T. Brown.
(This essay is now available in Michael Boylan, editor, Business Ethics, 2nd Edition (Wiley/Blackwell, 2013)
- 1 Text
- 1.1 The Privatization of the Commons
- 1.2 Adam Smith’s “Commercial Society”
- 1.3 The Legacy of Smith’s “Commercial Society”
- 1.4 The Privatization of Business Ethics
- 1.5 The Idea of the Commons
- 1.6 Commercial and Common Wealth
- 1.7 A Civic Platform
- 1.8 A Civic Commonwealth
- 1.9 Dealing with disagreements
- 1.10 Governing the civic commonwealth
- 1.11 Governing by persuasion
- 1.12 Governing by incentives
- 1.13 Governing by regulation
- 1.14 Conclusion
- 2 References
What do we really want from the businesses in our communities? Jobs? Affordable products? Safe workplaces? Good wages? Donations? Happiness? Perhaps we first need to ask: what kind of community do we want? Can we say we want our community to be wealthy—to enjoy a common wealth? And what would that entail? We can use Amartya Sen and Martha Nussbaum’s (2011) definition of human development to answer that question. They propose that human development can be measured by the capacity of a community’s members to acquire what they have reason to value. People may disagree about what that would include, but in general, it would at least include security, significant relationships, possibilities for self-development, and some control over one’s existence. If we did understand common wealth in this way, then what would be the role of business, and of business ethics, in such a community?
The idea of a commonwealth has been around since the 18th-century Enlightenment. One thinks of the British Commonwealth, the Commonwealth of Nations, or even the Commonwealth of Virginia. Four states in the USA are named commonwealths. For the most part, the notion of the common wealth has had a double meaning: a referential meaning of government and a more symbolic meaning of wealth-in-common. Perhaps one could combine these two meanings with the notion of a government for the common good (wealth). Uniting these two meanings of common wealth, however, is not as easy as it might seem. In fact, since the beginning of capitalism, we have lived in an economy where much of what was a common wealth has been privatized (Bollier 2003). Before we can understand the role that businesses, and business ethics, should play in our communities, we need to first understand what has happened to our common wealth and how we could build a new commonwealth for all of us. We begin with the 18th-century privatization of the commons.
The Privatization of the Commons
The economist Karl Polanyi called the privatization of the commons part of the “great transformation” of early capitalism (1957). Land that had been open for common use was “enclosed” by legislative acts beginning in the 15th century and continuing until the 18th. The land became the private property of the landowner.
Before the enclosures, commoners or peasants had various common rights. They included the right to access the fields and forests around villages for grazing livestock, gleaning leftover grain, gathering fodder for animals, as well as the right to wood and other materials for fuel. With these rights, many commoners were able to provide for their families by sharing land with others and taking on extra work when they needed to (Neeson 1993, p. 42). The enclosures resulted in the loss of these rights and most of the commoners either moved to the cities and became dependent on wages for their survival or immigrated to the colonies.
A similar enclosure or privatizing of the commons occurred in the American colonies. Stuart Banner describes the parallels between the English enclosure movements and the privatization of land in the Americas this way: Enclosure meant the conversion of an ancient system of property rights, in which individuals and groups often possessed rights to use particular resources scattered in various places, into the familiar modern property system, in which individuals possess all the resources within a given area of land . . . Indian property arrangements were similar in some respects to the English common fields. The combination of individual planting rights in particular plots of land and group resource-gathering right in the remainder would have reminded many English colonists of property systems back home. (Stewart 2005, p. 58)
Instead of sharing land with others, which was the practice of many native tribes, the Europeans believed that ownership gave them exclusive use of the land, and others were guilty of trespassing if they walked across it. Although these different enclosures happened centuries ago, their legacy continues to influence our views of what we share in common and what we own by ourselves. A key source of this ideology has been Adam Smith’s The Wealth of Nations (1776), where we find the promotion of what he called a “commercial society” (Smith 1944, p. 24).
Adam Smith’s “Commercial Society”
The book’s title is already revealing. Why the wealth of “nations,” and not the wealth of the “commons,” or the wealth of the “commonwealth”? Smith does use the term “commonwealth” in Book V of The Wealth of Nations: “Of the Revenue of the Sovereign or Commonwealth” (1944, p. 747). Book V has little to do with either the commons or with wealth, but rather with the costs involved in the government protection of the commercial society. Smith’s use of the term “nation” appears to refer much more to a social grouping than to the political state. At the beginning of Book V, he writes of four different nations: the nation of hunters, the nation of shepherds, the nation of husbandmen, and then the nation of Smith’s time: “a civilized nation.”
These four “nations” require different levels of government (the sovereign or commonwealth) because they have different amounts of property. The evolution of these four types of nations is a story of the evolution of property—from a hunter nation that does not accumulate property to a “civilized nation” that is characterized by property and property relations. This nation is the last stage of human evolution, wherein, as Smith writes: “Every man thus lives by exchanging or becomes in some measure a merchant, and the society itself grows to be what is property called a commercial society” (1944, p. 24). In Smith’s “commercial society,” all properties—labor, land, or money—are owned by individuals. The commons is effectively eliminated in Smith’s “economics of property.” The only “commons” one can find here would be the market itself, or to use Smith’s phrase, the invisible hand. The common, in other words, has become the commercial.
The Legacy of Smith’s “Commercial Society”
The connection of a civilized nation with a commercial society has erased, for the most part, the commons of our communities. It created an economic framework that focuses on “me, myself, and I,” rather than on “we.” Wealth, for the most part, is measured by the exchange of commodities and only those who have commodities to exchange can have a “piece of the action,” so to speak. The commercial market includes anything that can be transformed into something that can sell and excludes everything else. In this framework, instead of seeing families and communities, one sees a labor market; instead of seeing the natural living planet, one sees real estate; instead of seeing money as credit for economic growth, one sees money as a commodity in financial markets. Even our participation in higher education, in this commercial society, becomes a means to increase the property value of our knowledge, skills, and gregariousness.
In this commercial commonwealth, businesses have found an accepting framework for focusing on cheap products and high profits. Yes, they may engage in various programs to meet their responsibilities to stakeholders, but, at their core, they see themselves “in business” to increase the value of what they own. In this world, individuals may be rich or poor, depending on their effort and luck, but the commons is either ignored or taken for granted.
The overlooking of what we share in common, and the assumed independence of the commercial from the political, has created a commercial framework not only for businesses, but also for much of business ethics. In contrast to the Western origin of ethics in the civic realm, this can be seen as a privatization of business ethics.
The Privatization of Business Ethics
In the history of ethics as a discipline, it began as a civic or public ethic. In the first textbook on ethics, Aristotle’s Nicomachean Ethics, Aristotle writes that since ethics is an inquiry into the good for man, not only as an individual but also for the community, it is a sort of political science (1999, p. 2). Most people in the field of business ethics have not followed Aristotle’s view of ethics as belonging to politics. The ethicist Robert Solomon wrote the following in his popular book, Ethics and Excellence (1993, pp. 123–4): The very structure of our society, its ample leisure and personality, are created by business, by the way business spurs and makes productivity possible and the way it distributes the goods throughout society and the world. Indeed, the values of our society—for better or worse—are essentially business values, the values of “free enterprise,” the values of necessity and novelty and innovation and personal initiative. But that does not mean that is it “everyone for himself or herself,” a “dog-eat-dog world, or a world in which “everything goes.” To the contrary, it is a world defined by tacit understandings and implicit rules, a practice defined, like all practices, by mutual understandings and underlying trust, and justified not by its profits but by the general prosperity it brings about.
Solomon’s reference above to “mutual understandings and underlying trust” shows his awareness of the role of what we will see later as the reality of the commons, but what is most significant about his statement is its assertion that “the very structure of society” is “created by business.” In fact, both the implicit commons and the explicit social structures have been privatized. Solomon is not alone, of course. Many in business ethics believe that we should not think beyond what is called the “business case for ethics,” which is that businesses should not have any obligations that harm their “bottom line.” Maybe we should not expect anything else as long as the default framework for business ethics is a commercial society.
Business ethics, in other words, has tended to work within the framework of a commercial society rather than a civic society. Operating in this commercial framework has not prevented ethicists from recognizing the existence of the commons, as we noticed in the quote from Robert Solomon, but we must say that it has not facilitated perceptions of what we actually do hold in common or share with each other. It has operated, in other words, mostly within the framework created by the enclosure of the commons, which has led us to focus on what we own and relationships among owners, not relationships among commoners or citizens.
The truth of the matter, however, is that we need many things we cannot own, and much that we do claim to own actually comes from a common resource. The ideas in this essay, for example, draw on common knowledge about business and society that many have contributed to and are now available to anyone who visits a library, goes on-line, or talks with colleagues. Music, stories, rituals, and many other things that enrich (en-rich) our lives are part of our common wealth. In fact, much that our commercial markets now threaten—air quality, fresh water, ecosystems, and even the planet—are commons that belong to all of us. For the sake of a viable future, it is time to renew our connections to the commons.
The Idea of the Commons
In its broadest sense, the “commons” refers to things that cannot or should not be exclusively owned. The commons is the polar opposite of commodities. A widespread image of the commons is a pasture used by several, but owned by no one. This was the image used by Garrett Hardin in his famous piece on “the tragedy of the commons” (1968). He argued that if there were several shepherds using a common pasture each one’s self-interest would lead him to increase his flock of sheep and, if each one did the same thing, the pasture would be overgrazed and destroyed. The “tragedy,” according to Hardin, was that what looked like an abundant resource from an individual point of view was actually a limited resource from a bird’s-eye view. The lesson from Hardin’s narrative seemed to be that the best way to manage the commons was by ownership.
In the 1990s, the economist Elinor Ostrom demonstrated that Hardin was mistaken. She investigated communities that had used and protected what she called common polled resources for hundreds of years (Ostrom 1990). In her research on governing the commons, she found numerous cases where communities did share a commons to everyone’s benefit. Her first case, in fact, described how the citizens of a village in Switzerland had set up rules for sharing a common pasture. One of the rules was that no one could put more cattle on the pasture than they could care for in the winter (1990, p. 61). This community, and others as well, did not experience the commons as a “tragedy,” but as a source of wealth.
Ostrom’s research serves as one of the foundations for current conversations about the commons. David Bollier’s work is another. He makes a clear distinction between a market economy and gift economy (Bollier 2003, p. 48). Bollier makes the following distinctions between the two economies: in a market economy, relations are impersonal and based on property relations. In a gift economy, relationships are personal and based on caring and meeting people’s needs. A gift economy is based on trust in personal relations in contrast to the market economy that is based on trust in the market (the invisible hand).
As Mark Brown has pointed out, not all gift economies are based on personal relations:
- Science is a gift economies based on impersonal relations and motivated not by “caring and meeting people’s needs,” but by (at least in part) egoistic efforts to establish and enhance one’s reputations among colleagues. The greatest honors go to those who give the most, and people “give” not to specific personal others but to the abstract community as a whole. (Brown, personal communication)
Some of the most thought-provoking ideas about the commons have come from thinkers who see the creative sharing and innovation on the Internet as a commons. Michel Bauwens, the Founder of the P2P [peer to peer] Foundation has given a new perspective of the commons that focuses on the processes of sharing.
He writes that P2P processes:
- produce use-value through the free cooperation of producers who have access to distributed capital: this is the P2P production mode, a “third mode of production” different from for-profit or public production by state-owned enterprises. Its product is not exchange value for a market, but use-value for a community of users. are governed by the community of producers themselves, and not by market allocation or corporate hierarchy: this is the P2P governance mode, or “third mode of governance.”
- make use-value freely accessible on a universal basis, through new common property regimes. This is its distribution or “peer property mode”: a “third mode of ownership,” different from private property or public (state) property. (Bauwens 2005)
These three premises ensure that the mode of production is open to all those who have something to contribute to the process, the community is self-governed, and that the product itself is not something that becomes a commodity, but remains useful for others who can benefit from it. Bauwens is searching not for the rules that will protect the commons, but for the common processes that will make such rules unnecessary.
I am not sure if common processes will be enough to secure “all that we share,” to use the title of a recent book edited by Jay Walljasper. All that we share turns out to be a long list.
It includes the following (Walljasper 2010, pp. 7–8):
- Air & water, the land, the Internet, parks, libraries, streets, and sidewalks, dance steps, the airwaves, holiday traditions, music, games, biodiversity, Famous stories, open-source software, the oceans, jokes, and outer space.
As you review this list, and perhaps add to it, you will find that some are abundant, and some are scarce. Some are things that belong to culture and society, such as music or games, and some belong to the biosphere. If we understand wealth as the capacity to acquire what we have reason to value, then many things on this list are sources of wealth. They are also quite different from our commercial wealth.
Commercial and Common Wealth
In a commercial society, what counts as wealth is what can be treated as a commodity in the market. In a common society, wealth will not be limited to what we can purchase, but will include all that we need for a good life. People will acquire much that they need through sharing and giving. Instead of focusing on the accumulation of property, the focus will be on the making of provisions. A common society will provide for one another though processes that are based on shared endeavors, as well as on individual efforts.
A common society will also allow us to recognize the planet as a living provider instead of only seeing its property value. Most importantly, instead of treating the planet as an object we control, we can see it as something to which we belong. This means that inhabitants of the planet can relate to one another not primarily as owners, but rather as members of a commons. \
These differences are not absolute. It would be a mistake to see the distinction between commercial and common wealth as an either/or choice. We need commercial activities and property ownership. I am not trying to do away with either one, but rather trying to put them in their place in a commonwealth that actually provides wealth for everyone. This requires a rejection of Adam Smith’s belief that a commercial society was the final stage of human evolution. We need to begin with what we have in common, and then to see how commerce fits with it. What kind of relationship, in other words, should we build between the commons and the commercial?
This may seem like the question for business ethics today. How can businesses function in such a manner that our common resources remain available to all? Can businesses help to make water, clean air, and knowledge available to all and owned by none? Well, it depends on your view of business.
Does business also belong to the commons? Not as we know it. In fact, business today is usually about the commodity market, about property relations. It belongs to commerce. It is commerce. If people share cars, for example, that would be bad for business, because people would buy fewer cars. Perhaps business and the commons are really mutual enemies, and they actually pose threats to each other’s existence. If we remain in a commercial framework for thinking about the role of business in society, we easily come to these conclusions. Another option is to create another platform, so to speak, on which we could stand and from this vantage point reconfigure the relationship between the commons and commercial. I want to suggest that we should construct a civic platform for developing a new framework for a contemporary commonwealth.
A Civic Platform
In terms of individual identity, we are all commoners, consumers, and citizens. As commoners, we share with others what is available to all. As consumers, we select commodities in the market based on our preferences. Most of us are probably quite familiar with the identity of consumers. Who does not like to go shopping? The identity of commoners is more challenging. In fact, there is a strong fashion in modern cultures not to be common, but to be special. This fashion, however, echoes the pervasiveness of the commercial culture that values what we “have,” instead of what we share in common. In any case, the most thought provoking is the third form of identity—our identity as citizens.
To be a citizen is to be a member of a city (that is actually its original meaning). In other words, you cannot be a citizen alone. Our identity as a citizen, to quote the political theorist Sheldon Wolin, “provides what other roles cannot, namely an integrative experience which brings together the multiple role activities of the contemporary person and demands that the separate roles be surveyed from a more general point of view” (2004, p. 389). This more general point of view is not to be found in the mind of the individual, but in conversations among citizens. It is the mutual learning from engagement in conversations with others that allows an expansion of each person’s knowledge as well as the creation of collective knowledge. We can assume that such conversations have been occurring, in some fashion, in many different communities. The patterns and expectations that civic conversations create and maintain can serve as a platform for seeing the economy itself as a mixture of the common and the commercial, or a civic commonwealth.
A Civic Commonwealth
A civic commonwealth can be created and maintained by the decisions, actions, and policies that emerge from civic conversations among citizens about how we should provide for all. These conversations must both recognize the differences between the commercial and the common, and yet still integrate the two. This process of integration depends on answers to three questions: (1) How should we design an economy that makes provisions for everyone? (2) How should we deal with disagreements among citizens? and (3) How should we govern a civic commonwealth?
An economy that provides for everyone
As we have seen, common wealth is inclusive, while commercial wealth is exclusive. How do we integrate these two types of wealth into our economy? We can begin by examining how we actually gain access to the things we have reason to value. Some of the things we value, such as practical wisdom or community celebrations, can be acquired through sharing—a gift economy. Others can be shared through mutual coordination. Groups agree to take turns to use parks, have street fairs, and so on. People will acquire what they have reason to value, in other words, in a variety of ways.
Many provisions originate in the commons, and are transformed into consumer products by the commercial. From a civic perspective, the commercial functions as a transformative process of changing common resources into provisions for our families and communities. Food, for example, comes from the earth, lives in a common biosphere, and is processed and distributed in common spaces (cities and infrastructures). The commercial belongs to this process of making food available for all, from farming to processing, shipping, and selling in markets. From a civic perspective, however, food should not be treated only as private property.
Imagine a farmer who decides to burn a cornfield instead of harvesting it and sending it to market. Has not he destroyed our common wealth? Of course, from the perspective of commercial wealth, the corn is his private property. But from a civic commonwealth framework, the corn belongs to the commons, and should be brought to market. There, the farmer can ask for a good price for the corn and receive his due for his work, and even honor for taking care of the land for this and future generations. Actually, the movement from the cornfield to the table involves many agencies that together comprise what can be called a system of provision.
For those of us who live in urban cities, most common resources become available to us only through elaborate systems. To get a drink of water in San Francisco, for example, we rely on a complicated water system that brings the melted snow from the Sierra mountain range on the other side of the state. In the greater San Francisco Bay Area, from Santa Rosa to Santa Cruz, we are around 8 million people. Every morning, there is food for almost all of us. It comes from local, regional, national, and international sources. In the best of times, our milk and apples could come from within California. Our bananas will not, neither will some other products. In fact, the “food system” is a vast and multidimensional system that includes many different organizations from the land to the grocery store and restaurant. In a nutshell, the food system transforms things from the land (a commons) into products (through commerce) that provide daily nutrition for all of us.
At the core of any system of provision—whether it is food, housing, or healthcare—there should be citizens deliberating about the design of the system. Such civic conversations can occur in any of the organizations that have a stake in the system, from farmworkers to research scientists. All the key stakeholders of this system can be seen as engaged in the civic process of directing the whole system toward its goal of making provisions for all. We actually can imagine three concentric circles here. The inner circle is composed by civic conversations. This circle is surrounded by the basic activity of a civic commonwealth: human providers transforming natural provisions into accessible provisions for our families and communities, and then an outer circle of the key stakeholders of the system. Figure 2.1 shows these concentric circles for the food system.
Other systems of provision, of course, have other stakeholders, and yet most have some of the same. Banks, for example, have an important role in most systems of provisions, from housing to healthcare, because most systems need credit and money as a means of exchange. A good bank is one that fulfills its systemic function. The system of provision, in other words, determines the bank’s purpose. It would be a mistake if the bank were to take the debt that it received from extending credit and turn it into a commodity that it could sell for a profit in a financial market. Banks, like other stakeholders in the system of provision, find their purpose in their contribution to the success of the whole system to which they belong.
And what is a good system? A good system, I would suggest, fulfills its purpose, fits in with other systems, and protects the significant characteristics of its parts. So a good food system provides good food for people, does it in such a way that it fits in with larger social and natural systems (promotes justice and sustainability), and protects the labor, land, and investments that energize the system. Moving any system of provision toward these general ideas of the good is possible through the strategies of persuasion, incentives, and regulation. Before we review these three forms of governing, we need to address our second question: how to deal with disagreements (see Brown, 2003).
Dealing with disagreements
Would it not be nice if some “invisible hand” or “divine providence” took care of our conflicts and dilemmas, and somehow, behind our back, so to speak, would wring some good out of whatever we did? While the civic provides a platform for connecting the commons and the commercial, and allows the commons to be the foundation for the commercial, it does not resolve disagreements and conflicts about how we should design the different systems of provision that make up a civic commonwealth. There are differences of opinion about how all this should fit together, and no group has all the right answers or even the right questions. In fact, it is only by tolerating disagreement that the participants in civic conversations can both individually know more than they knew before and as a group see their way toward a course of action that is supported by the best contributions of all sides. To engage in this process, participants must take on the identity of citizens and members of a civil society that transcends their social differences, but does not erase them. Diversity is essential for making the best decisions possible.
The process of dealing with disagreement involves more than listening to and learning from different points of view. It also requires a common acceptance of the general principles that we outlined previously about a good system of provision—fulfills its purpose, fits in the larger whole, and protects the value and dignity of its parts. These general norms provide a common basis for dealing with disagreement (people will only effectively disagree with each other when they share some broader agreements) and also provide some normative standards for evaluating the different positions. Successful civic conversations, in other words, must be guided by civic norms.
Where do such conversations take place? They can occur in any of the organizations that are contributing to the goal of any system of provision. In fact, if we are to actually change from a commercial to a civic commonwealth, they need to occur in businesses and corporations as well as in nonprofits, government agencies, and voluntary associations. Civic conversations, in other words, are not limited to some special civic location, such as city hall, but rather are limited by the openness of different types of organizations to facilitate a civic identity and conversation in their offices and workplaces.
Facilitating such conversations would appear to be one significant contribution that business ethics could make not only to business but also to the work of designing effective systems of provision. This does not mean that we should make corporations “citizens.” Just as we do not name religious organizations or nonprofits “citizens,” nor should we give the name to corporations. They are not citizens, but we can institute civic conversations among their members. In fact, that may be one of the most important civic obligations of corporations. Businesses and corporations, in other words, should participate in the governing of a civic commonwealth, but they should also recognize the limits of their reach.
Governing the civic commonwealth
Governing is about steering systems of provision toward making provisions for all, and, at the same time, moving toward a just and sustainable economy. The old economics of property assumed that all we really had to do was to protect individual rights to property and most other things would take care of themselves. This has turned into one of the biggest mistakes in human history. It has placed our whole planet in danger. Through the privatization of land, labor, and money, we have stretched the bonds of human communities about as far as they can go. Considering this situation, one can sympathize with those who have given up on government, on democracy, and on our capacity for collective action. The fact is, however, the ship of state is heading toward disaster and we need to take hold of the steering tools we have and to change course.
Borrowing from Kenneth Boulding’s work on managing systems, we can posit three different types of steering mechanisms: (1) persuasion—getting people to share similar values and visions; (2) incentives—rewarding people for doing what needs to be done, and (3) regulations—forcing people to obey laws and regulations (Boulding 1989). Although all three are always present in any successful system, each one has its own possibilities. Unfortunately, corporations control many of these possibilities. If we are to move from a commercial to a civic commonwealth, we will need to make some changes.
Governing by persuasion
Contrary to what many may believe, persuasion is perhaps the most powerful of the three. Persuasion is what maintains the current emphasis on economic growth, even in the light of solid evidence that such growth is totally unsustainable. Corporations spend around 200 billion dollars a year in advertising. Shopping has become not only an American pastime, but even an important part of the American Dream. In light of the corporate control of the mainstream media, some people have given up on traditional educational institutions. Others see another option. For them, the Internet and social media offers a new means of educating citizens about what is actually happening in the world as well as new opportunities for engagement in making significant changes.
Still, the education we need is civic education. We need people to understand themselves as citizens, as members of the same generation whose decisions will affect future generations. It would certainly help if employees gained the rights of citizens in the workplace. That would require that they have a voice in the design of their workplaces and even a voice in the distribution of company profits. It would mean, in other words, a shift from property relations to civic relations at work. Some people in business ethics have argued for this, but it has not been a major theme (see Brenkert, 1994; Brown 2005; McMahon 1994). Perhaps it should become one.
If people spend most of their lives in organizations that do not recognize their civic identity, then these institutional denials of their civic rights may be more persuasive than all the books on business ethics. Crucial are the expectations of the groups in which we live and work. Most of us live up (or down) to group expectations, and if we are to use persuasion to change the systems in which we live, we will need to learn how to change expectations. Few would deny that corporations are governing (steering) our social lives today, but mostly from a commercial rather than a civic perspective, especially when it comes to using the second way of changing systems: incentives.
Governing by incentives
If some have difficulty understanding the power of persuasion, few will doubt the power of incentives. Isn’t it true that whoever has the money has the power? Here we need a bit of reflection. Power, in the modern world, does not really reside in money, but rather in organizations and systems. If you are the CEO of a large corporation, for example, you have power in your position, but if you leave the position, you leave the power. Also if one redesigns an organization’s structure, one also changes the power of different positions, and therefore also the structures of incentives.
Since electoral politics in the USA are currently structured so an individual’s money can buy capacity to reach voters, money does make a difference. Changing the process of elections could change this. Social media, for example, may provide an alternative means of communicating about the election that is not dependent on corporate incentives. In any case, perhaps there is no more important issue to address than the use of corporate incentives to influence government. In many ways, the power of regulation has become dominated by the power of incentives, which means that we still live in a world where the commercial dominates the civic. This must change if we are to have a viable future for everyone. The question is who should control regulation.
Governing by regulation
For regulation to be an effective means of governing, it must not be dominated by financial incentives, but rather grounded in civic norms. Perhaps we need to apply the principle of the separation of church and state to the relationships between corporations and governments. Just as the state should not become the servant of any religion, nor should it become the servant of corporations, or, more generally, the world of commerce. At the same time, corporations are also governing bodies, and their regulations (policies and procedures) that pertain to their function in a particular system of provision should not be taken over by government.
Government needs to protect not only the civic sphere, but also the civic character of market competition. When necessary, government should develop standards of corporate conduct to ensure that workers and others are treated as citizens. Government can also create an even playing field for business competitors by developing environmental and social standards that all competitors must follow. Corporations can also participate in the development of regulation in the system of provision in which they operate. In fact, knowledge from corporate experience can be very helpful in developing smart regulation for any system of provision. At the same time, corporations should not participate in systems of provision in which they do not belong, such as the system that provides us with our political leaders—our system of democratic elections. Regulations should maintain the boundaries between different systems of provision, and prevent agencies that have legitimate influence in one system from using that influence in another where they do not belong.
If we locate the role of regulation in the various systems of provision, then its primary role will be to protect the providers of wealth—planet and people—and to provide guidelines for all participants in these systems to fulfill their systemic function. The political community has resources for legitimizing and for enforcing its regulations: the Constitution, legislation, and law enforcement. As long as these instruments of regulation remain available, the state has the “power” to regulate corporations, if it has the will.
If we step back for a minute, we can say that human communities have three basic tasks: to provide for one another, to protect one another, and to find reasons for doing so. Persuasion, incentives, and regulation connect to these tasks. Persuasion maintains a meaningful world, whether by myths and rituals or corporate commercials; incentives motivate us to provide for one another, whether by norms of reciprocity or by selfishness; and regulations protect us, whether by protecting privileges or protecting equal opportunity. As a community, we must decide what types of persuasion, incentives, and regulations will enable to move us toward a mature and stable human community. This will require us to move from the current commercial commonwealth to a civic commonwealth.
Current research and reflection of the commons has given us a chance to actually develop a new understanding of “common wealth.” We live in a world of abundance. The sun shines on all the planet. It is the ultimate commons that gives our planet life. This living planet is the source of our common wealth, for this and future generations. Today, we cannot transform our common sources into human resources, however, without commercial enterprises. At the same time, we cannot survive if the commercial defines our life together. The work ahead, I believe, is the work of citizens, who through civic conversations give shape to a viable relationship between the commons and the commercial. Business leaders can participate in this work by exploring the role of their business in a particular system of provision. Ethicists and other can help to facilitate such conversations, so that the civic defines our commonwealth rather than the commercial.
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