Just War, Economics, and Corporate Boycotting: A Review of Dr. Ted Lechterman’s 2022 St. Cross Special Ethics Seminar

Professor Larry Locke (University of Mary Hardin-Baylor and LCC International University)

One of the more worrisome aspects of the modern concentration of resources in large corporations is that it often allows them to have societal impact beyond the capability of all but the wealthiest persons. Notwithstanding that disparity of power, much of modern ethical discourse remains focused on the rights and moral responsibilities of individuals, with relatively little analysis for evaluating and directing corporate behavior. Dr. Ted Lechterman, of the Oxford Institute for Ethics in AI, has identified this gap in modern ethics scholarship. At the 10 February, 2022, St. Cross Special Ethics Seminar, he stepped into the breach with some pioneering arguments on the ethics of corporate boycotts.

Individuals boycotting companies or products, as an act of moral protest, is widely regarded as a form of political speech. Individual boycotts represent a nonviolent means of influencing firms and may allow a person to express her conscience when she finds products, or the companies that produce them, to be ethically unacceptable. These same virtues may be associated with corporate boycotts but, while relatively rare compared to boycotts by individuals, corporate boycotts may also introduce a series of distinct ethical issues. Dr. Lechterman sampled a range of those issues at the St. Cross Seminar.

  • As agents of their shareholders, should corporations engage in any activity beyond seeking to maximize profits for those shareholders?
  • Do corporate boycotts represent a further arrogation of power by corporate management, with a concomitant loss of power for shareholders, employees, and other stakeholders of the firm?
  • Because of their potential for outsized impact, due to their high level of resources, do corporate boycotts (particularly when directed at nations or municipalities) represent a challenge to democracy?
  • Under what circumstances, if any, should corporations engage in boycotting?

Boycotting, particularly by individuals, has a history of being associated with positive social change. Dr. Lechterman cited the famous Montgomery Alabama bus boycotts of 1955 and 56 as an example of justifiable and productive boycotts. Less well known, Dr. Lechterman cited #StopHateForProfit as a current example of corporate boycotting. In that campaign, companies that advertise via social media committed to withhold business from Facebook and Instagram for one month in an attempt to pressure those firms to curb hate speech and misinformation on their respective platforms. The boycott was organized by the Anti-Defamation League, the NAACP, and other partners and was reportedly widely followed. In July, 2020, Stop Hate For Profit stated, “some of the most iconic brands in the world have pulled millions in ad dollars from [Facebook]”. The coalition also claims to have produced substantive changes within Facebook, and other social media companies, in response to the boycott. Sadly, history also provides negative examples of boycotting, such as the state-sponsored boycott of Jewish merchants in Nazi-era Germany, culminating in the infamous Kristallnacht on 9 November, 1938.

Dr. Lechterman’s focus on the unique issues raised by corporate boycotts is both timely and important for economic, political, and moral reasons. In the St. Cross Seminar, he addressed some of the issues raised by corporate boycotts and also explored when such boycotts might be morally justified.

The economic critique of corporate boycotts borrows from Milton Friedman’s seminal New York Times article in September, 1970, in which Friedman criticized corporate philanthropy as a failure of its agency responsibility to shareholders. Friedman argued that corporate philanthropy was a waste of shareholder assets and that, to the extent shareholders wanted to engage in charitable giving, they could do so at a personal level. To the extent corporate boycotts cause boycotting companies to pay higher prices for inputs, or to forego higher prices for their products, the first part of Friedman’s argument appears applicable. Shareholders might well criticize corporations for boycotting, and even cause the shares of the boycotting firms to trade off in the equity markets, causing a loss of value to the economy as a whole.

Dr. Lechterman recognized, however, that Friedman’s critique may be less powerful in its application to corporate boycotts under a more modern stakeholder theory of the corporation. Under that theory, the corporation must satisfy all its stakeholders, at least at some minimum level, in order to remain sustainable. To the extent employees or customers prefer for the corporation to engage in what would otherwise be uneconomic behavior, such as boycotts, those stakeholders may extract value from the firm if it fails to comport with their preferences. The #StopHateForProfit campaign is a good example of this dynamic. Advertisers on Facebook may have had to incur additional expenses to meet their advertising objectives without social media but did so in order to maintain the stakeholder equilibrium necessary to sustain their businesses.

The second part of Friedman’s argument might also be limited in the corporate boycott context. While shareholders may be equally equipped as corporations to donate monies to the charity of their choice, they may not be able to boycott the same organizations which corporations can. Facebook again is a potential example as an individual’s relationship to Facebook is typically that of a user, rather than a paying client like its corporate advertisers. Better examples would include wholesalers, industrial equipment manufacturers, consulting firms, data processing companies, and the myriad of other businesses whose clients are exclusively corporations, municipalities, or other large organizations. Individuals might have no ability at all to boycott these businesses in the product market.

The political critique of corporate boycotts, as noted in the issues delineated above, raises concerns both internally within the corporation and externally with the larger society. The internal concerns arise from the fact that most corporate activity is controlled by the corporation’s management. Managers enjoy a wide range of prerogatives over the corporation’s assets and may deploy them in pursuit of goals that may not be shared by all the firm’s stakeholders. Citigroup’s 2002 donation of $1 million to the 92nd St. YMCA in New York City was purportedly for the purpose of gaining admission for a star employee’s children to its prestigious pre-school. Similarly, boycotts by corporations may represent an accumulation of executive power that may be deployed for personal gain, rather than corporate or community benefit. Google’s 2019 curtailment of its Dragonfly browser in China, after protests by employees, indicates there can be diversion of interests between employees, managers, and other stakeholders of the firm. Corporate boycotts may allow managers to usurp the goals or political speech of the corporation’s other stakeholders by using the corporation’s assets and activities for their own priorities, rather than those of the other stakeholders.
Externally, when corporations choose to boycott states or municipalities they can bring their political voices into direct competition with the electorate. In 2021, Major League Baseball announced it was relocating its annual All-Star Game from Atlanta in response to new state election laws that critics believed would disadvantage urban voters, who might be disproportionally minorities. Dr. Lechterman highlighted the example from that same year of the City of Portland Oregon, among other organizations, boycotting purchases from Texas-based companies in response to the passage of state laws restricting access to abortion services. The #BoycottTexas movement pitted the interests of these organizations against a decision of the elected Texas legislature. While #BoycottTexas did not result in the state’s changing its abortion law, it nonetheless put pressure on the legislature and the governor. One could imagine a scenario in which such corporate influence from outside the community caused lawmakers to act contrary to the will of the electorate.

The limitation of these arguments against corporate boycotts would include the democratic systems designed to limit the powers of corporate managers and of lawmakers. Corporate executives serve at the pleasure of the corporation’s directors, who are elected by the shareholders. If corporate boycotts deprive shareholders of value to a sufficient extent, shareholders will call on their directors to dismiss those executives or curb their behavior. Lawmakers must periodically be elected to their positions and, if they succumb to pressure from corporate boycotts sufficiently to deprive the electorate of their representation, the electorate will presumably vote those legislators out of office.

Dr. Lechterman incorporates a pioneering approach to analyzing the moral justification of corporate boycotts by applying elements of just war theory, articulated by Augustine of Hippo, Thomas Aquinas, and others. The approach is logical and insightful when one interprets, as Dr. Lechterman does, corporate boycotts to be a kind of marketplace conflict. Contributing to a conflict in many contexts has the potential to cause unintended negative outcomes and the morality of that contribution, according to just war theory, requires the contribution to the conflict, and the contributor, to pass certain tests.

Dr. Lechterman’s criteria for whether corporate boycotts are morally permissible include:
1. Just cause – Corporate boycotts may only be used to further issues of critical moral importance.
2. Wise strategy – Boycotts must be part of a sophisticated, and well considered, strategy.
3. Harm calibration – The harm caused by the boycott must be proportional to the benefits it produces and the boycotters must be prepared to provide compensation to innocent victims.
4. Last resort – Boycotts are only permissible after more deliberative strategies have been exhausted.
5. Prospect of resolution – The boycotters’ demands must be clearly stated from the start with clear criteria for resolution.

Utilizing this evaluative scheme, Dr. Lechterman found the Montgomery bus boycotts satisfied all five criteria, while the #StopHateForProfit boycott might have only partially satisfied them.

While Dr. Lechterman’s criteria have a strong academic pedigree and bear evidence of being practically applicable, one of the open issues raised by his approach is the argument for limiting the criteria to the five he has enumerated. Additional criteria have historically been prescribed in the just war context. Should those criteria not also be applied to corporate boycotts? Thomas Aquinas and Augustine did not have identical criteria for a just war but both agreed that the war must be raised with right intentions. Because of their agency relationship to shareholders, corporations tend to act with the intent of earning profits. If, however, it were clear that a corporation was engaged in corporate boycotting purely out of a profit-seeking motive, or to improve its market position by undermining a competitor, would that be considered an appropriate intention? Neither Aquinas nor Augustine could be expected to support waging a war with the intent of making a profit, even if that war were in service of a morally acceptable cause.

Another requirement of both Aquinas and Augustine for a just war was that the war could only be waged by a legitimate authority. This criteria implicates Dr. Lechterman’s concerns about the internal and external political impact of corporate boycotts. If one determined that corporations were not a legitimate source for this kind of political speech, because of limited internal or external political accountability, then corporate boycotts would fail one of Augustine’s and Aquinas’ just war criteria without further analysis.

Legislating application of Dr. Lechterman’s criteria for corporate boycotts may also represent an opportunity for additional research. Enforcing limits based on his five criteria may be complicated by the lack of measurable specificity they contain. A forward step, however, could be requiring companies with publicly traded securities to disclose their boycotting activity in their mandatory quarterly financial statements, including the management’s analysis of the propriety of the boycott.

Dr. Lechterman has started us down what appears to be a very productive path, but that path would seem to stretch ahead of what he has been able to map out for us so far. Those who want to follow him on this pathway may want to review his recent book, The Tyranny of Generosity, which contains (among other things) a chapter on the ethics of corporate beneficence. They may also stay tuned for follow-up articles on business ethics that Dr. Lechterman expects to publish in the coming months.

  • Facebook
  • Twitter
  • Reddit

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use the <em>, <strong> and <blockquote> tags. Links have been disabled to combat spam.

Notify me of followup comments via e-mail. You can also subscribe without commenting.

Authors

Affiliations