Multinational firms are more than the totality of their employees and stockholders. Can a multinational, as an anonymous entity, be held responsible for what happens in the entire line of production, asks Daniel Warner. Do they have a soul to damn or a body to kick?This content was published on November 12, 2020 - 14:00
As part of anger against the 1%, many of the 99% are turning against multinational corporations such as Google, Apple, Facebook and Amazon. On November 29, the Swiss will vote on a referendum concerning corporate social responsibility.
Before deciding on the pros and cons of what’s on the ballot, we should consider the nature of corporate responsibility. Responsibility is both a legal and moral term that we use for individuals or groups. But in the case of multinationals, which more often than not hold the legal status of a Société Anonyme (S.A.), or corporation, we are being asked to judge the behaviour of an anonymous legal entity.
Is this possible? We know there are people in the corporations who make decisions. There are organisational charts depicting the corporate hierarchy that help us understand how decisions are made. When we talk about corporate social responsibility, however, we are not talking about individuals being held responsible; we are talking about the entire legal entity. Although we refer to the legal fiction in human terms – called methodological individualism – we cannot forget that a multinational is more than the totality of its employees and stockholders.
Can we hold certain people responsible for the activities of the larger group? Certainly in the case of the bankruptcy of Swissair, the head of the corporation, Mario Corti, as well as the boss of UBS, Marcel Ospel, were held responsible by the general public. Swissair itself was not held responsible. How could it be?
State responsibility is a similar problem. Can states be held responsible for their actions? If so, can individuals within the states acting as public officials be held responsible for their actions? The International Law Commission spent decades on this question with no definitive answer. While it is true that leaders of countries have been brought before tribunals for crimes, they have been brought before the tribunals for their individual acts or orders, not in terms of the entire state’s responsibility.
In practical terms, what would it mean to hold an entire state responsible for an act? At the Nuremberg trials and the current International Criminal Court, individuals, like the leaders of the former Yugoslavia, have been and are tried for their crimes. An entire state has not been tried.
There is the possibility of finding one answer in Geneva. At the World Trade Organization (WTO), states can be held responsible for violating trade agreements. And, if found guilty, a state may be fined. No individual is held responsible if a country’s policies have violated a trade norm. No trade representative or head of state has ever been held responsible for the actions of its government. Similar considerations happen in antitrust cases such as the current one against Google.
The corporate question
So what can we make of multinational responsibility? Can we hold individuals or the multinational responsible for the entire chain of production? In a famous case before the International Court of Justice, the question was how directly an order was given from the top: how much the leaders controlled what others were doing. A large multinational deals with a long list of suppliers. Can the main corporation be held responsible for the activities of all those involved in the production process?
These questions will be voted on by Swiss citizens on November 29. I hope we all feel that corporations and multinationals should be held responsible for what they do, including the consequences of their actions. No one likes to see oil pollution from industry prospecting. No one wants to see young children working in virtual slave conditions for meagre wages. We feel that these situations are unacceptable.
But the question of responsibility for those situations goes beyond feelings. The legal fiction of a corporation or state confuses our moral judgments. Most Swiss companies are S.A. – public companies - for legal reasons. They are Anonyme – anonymous - so they can avoid individual personal responsibility. That is how the system functions. Corporations, in a famous phrase, have “no soul to damn: no body to kick”.
Call for accountability
So the question of multinational responsibility goes beyond individuals since the multinational is not human. Multinational responsibility is fundamentally a legal question, which leads to many technical questions about jurisdiction. Where is the illegal act taking place? Where is the chain of command? Who can be held accountable? Under which laws? Who is to judge?
The fact that Swiss citizens will be voting on this is a sign that a significant number of people want multinationals to be held accountable. There is an obvious call for transparency to pierce the veil of legal fiction. Anonymity may be a legal status, but for a large segment of the population multinational corporations no longer respond to common moral judgments.
The failure of the International Law Commission to arrive at concrete recommendations for state responsibility shows the complexity of the problem. But, that doesn’t mean, by analogy, that multinationals should not be held accountable, in one form or another. If no one person should be above the law, corporations should not be above the law or moral judgment. There are facts behind legal fictions. There are ways of holding corporations responsible. Multinationals can be damned; they can also be kicked.
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