Democracy Cannot Survive Corporations That Have No Conscience

Photo by Samu Lopez

9 July 2026

The greatest threat to liberal democracy is not authoritarian government. It is a legal fiction.

Governments all over the world have allowed the formation of corporations with all the rights of human beings, but none of the obligations.  In human beings, those obligations are founded in conscience—something no corporation has.  Instead, existing law instructs directors only to pursue their company’s best interests. Then we express surprise when those corporations destabilise the climate, violate human rights, sacrifice the public health  or sow disharmony that divides community in pursuit of profit.

It’s a problem when corporations occasionally behave badly. It’s a much bigger problem when (i) their business models are discovered to be inflicting severe harm, (ii) they won’t stop voluntarily and (iii) government can’t pass laws to make them stop.  

Liberal democracy is built on a simple but powerful idea: people are free to do whatever they wish unless the law specifically prohibits it. That principle works when applied to individuals, but not so much when it applies to modern corporations.  Recently, this flaw has become exposed.

Corporations are unlike human beings. Since the late 19^th century, they’ve achieved immense economic power.  Much of it is due to the development of modern technology and capital markets. Technology and size give some of them the capacity to develop businesses which can harm in ways far more severely than any individual. 

The difficulty is obvious. In a liberal democracy, behaviour is lawful unless the legislature has previously enacted a law to prohibit it. When a new form of corporate behaviour begins causing serious harm, companies are generally free to continue it until governments finally act. During that often lengthy delay, directors can legitimately argue that abandoning profitable activities would breach their duty to the company and its shareholders.

History demonstrates the pattern repeatedly. Scientific evidence accumulates that a business activity is causing serious damage. Companies question the evidence, commission favourable studies, lobby governments, fund elections, launch public relations campaigns and argue that regulation would destroy jobs or economic growth. Years pass. Sometimes decades. Meanwhile, the damage accumulates.

The tobacco industry perfected the model. Fossil fuel companies refined it. Manufacturers of hazardous chemicals, addictive products and harmful technologies have followed similar paths. So do social media companies when they use algorithms to drive clicks that foster disharmony in the community.  Companies developing artificial intelligence pose a similar danger. 

None of this involves a flaw in the character of corporate leaders. It’s the result of  directors faithfully performing the legal duty the law has assigned to them.  That law encourages them to be poor citizens rather than good ones. In other words, in certain circumstances, the law makes corporations and democracy incompatible. 

Democracy assumes governments will pass laws to prohibit harmful conduct once the dangers of that behaviour become apparent. This is how government fulfills its purpose, protecting the public interest from severe harm. 

But large corporations possess extraordinary resources to delay the enactment of new laws. They employ lobbyists, lawyers, economists, advertisers and political consultants. They shape public debate, influence elections and challenge regulations in court. Because they are acting to protect their company’s interests, directors can justify these activities as entirely consistent with their legal obligations.

Climate change illustrates the consequences more starkly than any other issue. Scientists have warned for decades that greenhouse gas emissions threaten the stability of the Earth's climate. Yet global emissions continue to rise. Governments negotiate agreements. Conferences of the Parties (COPs) produce declarations. Targets are announced and postponed. Meanwhile, companies whose profits depend upon continued emissions continue producing, selling and burning fossil fuels.

This is not simply a failure of politics. It’s the consequence of a legal system that directs corporate managers to pursue corporate interests first and leaves protection of the public interest entirely to governments that must overcome relentless corporate resistance.

The answer is not to abandon capitalism or free enterprise. It’s to change the legal duty that guides corporate decision-making.

The law should continue to require directors to act in good faith and in the best interests of their companies. But that duty should be subject to one overriding limitation: directors must not pursue those interests by causing severe damage to the public interest.

Today, that would clearly include causing severe damage to the global environment through significant greenhouse gas emissions. It would also prohibit knowingly causing severe harm to human rights, the public health and safety, the dignity of employees or the wellbeing of the communities in which a corporation operates.

This principle would fundamentally change corporate decision-making. Directors would no longer be able to justify continuing behaviour that was inflicting severe harm merely because it remained technically lawful. Instead, they would have an overriding obligation to stop it.

Under that principle, managers will know that the board, reviewing proposals for any new facility or investment, will require more than just whether it “had been run by the lawyers” to confirm it was legal.  They will ask if it will result in the infliction of severe harm.  Further, they will require those managers to constantly monitor the company’s operations to ensure no such harm is emerging.  That’s a big change.

The law created the corporation and gave it unbridled power to pursue self-interest. Time has shown this to be a grave mistake.  The ongoing development of A.I. is only going to make a bad situation worse.  Only amending the law to give corporations something resembling a human conscience can solve this problem.

Until it does, democracy will continue to lose contests between the pursuit of corporate self-interest and the protection of the public interest. People will continue to lose faith in their elected officials and government. The choice before us isn’t between capitalism and regulation. It is between corporations with at least minimal obligations to protect the public interest and democracy without a future.