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The Ontological and Moral Status of Organizations

Published online by Cambridge University Press:  23 January 2015

Christopher McMahon
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Abstract:

The paper has two parts. The first considers the debate about whether social entities should be regarded as objects distinct from their members and concludes that we should let the answer to this question be determined by the theories that social science finds to have the most explanatory power. The second part argues that even if the theory with the most explanatory power regards social entities such as organizations as persons in their own right, we should not accord them citizenship in the moral realm. Rather we should accept moral individualism, the thesis that only individual humans can have rights and duties. The moral status of corporations and other organizations is often thought to depend on their ontological status. In particular, it is thought to depend on whether they can be said to exist as distinct entities, and especially as persons distinct from the individuals who are their members. In this article I argue that the two questions are actually independent of each other. No matter what the ontological status of organizations, they should not be accorded citizenship in the moral realm in their own right.

Type
Articles
Information
Business Ethics Quarterly , Volume 5 , Issue 3 , July 1995 , pp. 541 - 554
Copyright
Copyright © Society for Business Ethics 1995

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References

Notes

1 This article is taken, with minor changes to make it self-contained, from, “Moral Principles and Social Facts,” Chapter Three of my book, Authority and Democracy: A General Theory of Government and Management (forthcoming from Princeton University Press). Copyright Princeton University Press.

2 Methodological individualism, on one interpretation, is the claim that the best explanations for social phenomena are explanations that refer only to nonsocial properties of individuals, such as what they want and what they believe about their environment. It is sometimes objected to methodological individualism that we cannot explain social phenomena without ascribing to individuals beliefs and desires that have an irreducibly social content, a content that can only be expressed with social concepts—for example, a desire that a certain party win the election. But even if this is so, it does not follow that our explanations commit us to the existence of anything beyond individuals and their properties. It may be that we can only explain certain kinds of religious behavior by ascribing irreducible beliefs and deires concerning gods, but we do not thereby commit ourselves to the existence of these gods. For an account of methodological individualism see Steven Lukes, Individualism (Oxford: Blackwell, 1973), Chap. 17.

3 Recent discussions of the ontological and moral status of organizations include Anthony Quinton, “Social Objects,” Proceedings of the Aristotelian Society, Suppl. Vol. 76 (1976), pp. 1–27; David Copp, “Collective Actions and Secondary Actions,” American Philosophical Quarterly, Vol 16 (July 1979), pp. 177–186, and “What Collectives Are: Agency, Individualism and Legal Theory,” Dialogue, Vol. 23 (1984) pp. 249–69; Thomas Donaldson, Corporations and Morality (Englewood Cliffs, NJ: Prentice-Hall 1982), Chap. 2; Peter French, Collective and Corporate Responsibility (New York: Columbia University Press, 1984); Patricia Werhane, Persons, Rights and Corporations (Englewood Cliffs, NJ: Prentice-Hall, 1985), Part I; Meir Dan-Cohen, Rights Persons and Organizations (Berkeley: University of California Press, 1986); Larry May, The Morality of Groups (Notre Dame: University of Notre Dame Press 1987); Michael Keeley, A Social Contract Theory of Organizations (Notre Dame: University of Notre Dame Press, 1988).

4 See Gilbert Harman, “Inference to the Best Explanation,” Philosophical Review, 74 (1965), pp. 88–95. Inference to the best explanation is a form of nondeductive inference. The basic idea is that if the truth of some proposition P is part of the best explanation, given certain background conditions, of other things that we take to be the case, we have some reason to regard P as true. (Here I am following David Brink, Moral Realism and the Foundations of Ethics [Cambridge: Cambridge University Press, 1989], p. 169).

5 Things that there is no good reason to talk about, such as ghosts, are also fictions. The point in the text is simply that we cannot regard everything that we have good reason to talk about as really existing. It matters whether the reasons are theoretical or practical.

6 Legal personhood may just be a matter of the ascription of rights, rather than personal attributes such as memory and intention, to entities of a certain sort. See French, Collective and Corporate Responsibility, Chap 3. As several writers have pointed out, a locus of activity carried out solely by machines guided by a computer could have the status of a legal person. See Werhane, Persons, Rights and Corporations, Chap 1, and Dan-Cohen, Rights, Persons and Organizations, Chap. 3. The question of whether the practical purposes of the legal system would be best served by ascribing the fictional status of person to such a locus of activity is different from the theoretical question of whether the behavior of some computers might be best explained by regarding them as persons.

7 For an account of the relation of supervenience see Jaegwon Kim, “Supervenience and Nomological Incommensurables,” American Philosophical Quarterly, vol. 15 (1978), pp. 149–156.

8 I mean the notion of kinds being equated with one another to encompass both analytic reductions claiming that statements using kind-terms of one sort have the same meaning as statements using kind-terms of the other sort, and contingent type- identities such as “Water = H20.”

9 Thus those interested in extraterrestrial life sometimes maintain that life could be based on silicon-based compounds, rather than carbon-based compounds as it is on earth.

10 It might be useful to distinguish weakly social terms from strongly social terms. Weakly social terms describe relations between individuals, but relations that cannot be reduced to relations specifiable in nonsocial—for example, psychological—terminology. An example would be a relation between individuals arising from the fact that they occupy certain offices in an institution. Strongly social terms describe social phenomena without mentioning individuals. ‘Riot’ is a strongly social term. Although neither sort of term can be reduced to nonsocial terms, descriptions employing only weakly social terms will have a more individualistic feel.

11 I shall assume that anything that is properly regarded as an agent or a person—in the sense that so regarding it best serves explanatory purposes—is also properly regarded as an organism (that is, as alive). Being alive encompasses such things as having a good and being in some respects self-directed, but need not involve the ability to reproduce. Thus artifacts and even machines such as computers could be organisms in this sense. This is important for the organizational case, since organizations are plausibly regarded as artifacts. For discussion, see French, Collective and Corporate Responsibility, Chap. 7.

12 For some references, see Keeley, A Social Contract Theory of Organizations, Chap. 2.

13 See A Social Contract Theory of Organizations.

14 In “Collective Actions and Secondary Actions,” David Copp argues that in certain circumstances the actions of an individual or group of individuals can be regarded as constituting an action of a collective. Copp’s larger view is that collectives are spatially discontinuous concrete wholes that have person-stages as parts. See “What Collective Are.”

15 “Let us view the organization as a coalition…. In a business organization, the coalition members include managers, workers, stockholders, suppliers, customers, lawyers, tax collectors, regulatory agencies, etc.” Richard Cyert and James March, A Behavioral Theory of the Firm (Englewood Cliffs, NJ: Prentice-Hall, 1963), p. 27.

16 The law of corporations gives shareholders the right to elect boards of directors, but does not regard the directors as their agents. Further, it is difficult for shareholders to exercise this right of elective appointment effectively. So regarding them as mere investors may be appropriate.

17 See Ronald Dworkin, Taking Rights Seriously (Cambridge: Harvard University Press, 1977), pp. 179-83. Dworkin is specifically concerned with the political case, where what is at issue is being treated as an equal by the government, but (with the possible exception of contexts shaped by central personal concerns) morality in general can be said to require equal consideration.

18 For a similar view, see Alan Hamlin and Philip Pettit, “Introduction” in Hamlin and Pettit eds. The Good Polity (Oxford: Blackwell, 1989), pp. 1-13. Moral individualism constitutes a rejection of the view of Peter French. He regards corporations as “full-fledged members of the moral community, of equal standing with the traditionally acknowledged residents, human beings.” And he says, “Corporations as moral persons will have whatever privileges, rights and duties as are, in the normal course of events, accorded to all members of the moral community.” Collective and Corporate Responsibility, p. 32. Gilbert’s, On Social Facts came to my attention too late to be taken into account, but I believe that the arguments I shall give for denying moral citizenship to social entities apply to her plural subjects as well.

19 In In the Interest of the Governed: A Study of Bentham’s Philosophy of Utility and Law (Oxford: Clarendon Press, 1973) David Lyons notes that there is evidence that Bentham intended his utilitarian standard as a parochial principal, applying only within the community of the agent. See pp. 24-7.

20 For a related distinction between two interpretations of utilitarianism see Will Kymlicka, Contemporary Political Philosophy (Oxford: Clarendon Press, 1990), Chap. 2.

21 Werhane notes that a similar point is made by Richard Konrad. See, Persons, Rights and Corporations, p. 35.

22 This is not to deny that sometimes a nonmember may have a reason to contribute to the benefits the members of an organization receive by virtue of their membership.

23 John Ladd, “Morality and the Ideal of Rationality in Formal Organizations,” Monist, vol. 54 (1970), pp. 488-516. For criticism of Ladd’s view, see Kenneth Goodpaster, “Morality and Organizations,” in Ethical Issues in Business, T. Donaldson and P. Werhane, eds. (Englewood-Cliff, NJ: Prentice-Hall, 1979) pp. 137-44.