• Robert Hinkley

Democracy Has A Problem: This is how to fix it

Updated: Feb 27

By Robert C. Hinkley

25 February 2022

A friend asked me, “Why can’t government do something about the spread of disinformation on social media?” My response was that, in a democracy, everything is legal until a law makes it illegal. New technology often harms the public interest in ways which were not foreseeable. Therefore, there are no laws which prohibit its use. It takes a while for damage caused by new technology to be recognized. Unless the person causing it voluntarily stops, the damage goes on until a new law is passed that makes it stop.

This is the genius of democracy. Our freedom isn’t subject to the whim of a monarch or dictator. It is only restrained when laws are passed by our elected representatives prohibiting behaviour that is recognized as harmful.

The success of democracy rests on two assumptions. First, it counts heavily on citizens voluntarily regulating themselves. They are expected to safeguard the public interest even though no law requires it. When this assumption fails, it is presumed that laws will be passed which prohibit the harmful behaviour.

Today, these underlying assumptions are subject to some doubt. The conditions which existed when the first liberal democracies were founded have changed in two important respects. First, due to advancement in technology, each citizen’s capacity to harm the public interest is now much greater.

Secondly, a whole new category of citizen has been introduced, the modern corporation. Unlike most individuals, companies are not self-regulatory or otherwise restricted by conscience. They are given all the rights of citizenship but are not expected to bear its obligations. Some do, but a great many do not.

Because corporations combine the actions of many individuals acting together and are backed by huge amounts of capital, they have vastly more capacity to inflict harm before a new law can be passed to make them stop. Consider climate change, tobacco deaths, and social media disinformation. All are the result of legal corporate behaviour. All are severely harmful. Each inflicts more harm every day than an 18th century farmer or shopkeeper could have caused in a lifetime.

Oddly, corporations only exist because governments have all passed laws allowing for their creation and operation. I say oddly because the laws which allow corporations to be created all dedicate them to the pursuit of their own interest (i.e., making money). That’s right, democratic government, which heavily relies on the socially responsible behaviour of its citizens, is also responsible for creating a class of powerful citizens which don’t self-regulate and have no obligation to protect the public interest.

For new laws to be passed, elected officials need to be convinced that there is a harm which needs to be stopped. The time it takes for this to occur that can extend to forever. Business interests often use their power to persuade our elected representatives that (i) their operations do no harm or (ii) the harm is either minor or excusable (i.e., a new law would be unwise because it will hurt the economy).

When new laws designed to eliminate harm are delayed and frustrated, democracy becomes unable to do its job--protecting people, the environment, and our communities. This isn’t limited to harms caused by high tech information platforms. It was present way before high tech arrived on the scene. For example, the dangers posed by greenhouse gas emissions have been known for decades. Yet, despite lots of talk about stopping global warming, democratic governments haven’t been able to pass the laws necessary. Similarly, they haven’t been able to stop the premature deaths of approximately 8 million each year caused by the tobacco industry.

Social media remains a huge source of disinformation contrary to the public interest because government hasn’t yet found a need or a way to stop it, and the platform providers are making so much money setting communities against each other, they won’t stop voluntarily.

This is the problem that 21st century business now poses for liberal democracy. As presently constituted, business doesn’t have the self-control to be a good citizen. Its mission to make money drives it to find ways to continue its anti-social behaviour.

If the last four decades have taught us anything, it should be that the solution does not lie in making government more accommodating to business. Growing the economic pie isn’t going to eliminate anti-social corporate behaviour. The solution lies in modifying business to make it less destructive and more compatible with democracy.

Modern business needs a conscience that will self-regulate its behaviour. Under existing law, it has none. Directors, the people responsible for managing business, are told by law they must act in the best interests of their company. Nothing tells them they must also protect the environment, the dignity of employees, the health of their customers or the welfare of our communities.

Some advocate for stricter lobbying and campaign finance laws to take money out of politics. This strategy, while logical and desirable, has been largely ineffective. I suggest we take a bolder approach and change the duty of directors to make them do both—make money and protect the environment, employees, customers, and our communities. The two goals are not mutually exclusive. If the law demands it, businesspeople will find ways to achieve both.

I call this strategy the Code for Corporate Citizenship. The beauty of the Code is that the law it proposes to modify is essentially the same all over the world. By each jurisdiction adding one phrase to the duty of directors, “but not at the expense of the environment, the public health and safety, the dignity of employees or the welfare of the communities in which the company operates,” the dynamics of corporate behaviour will change everywhere and forever.

I recognize changing the law everywhere has its challenges. However, making one identical change in the rules for how companies operate must be much easier than what we do now, trying to regulate each separate act of corporate anti-social behaviour one jurisdiction at a time. Further, our current strategy will become much more effective once directors are told they also have a duty to protect the public interest.

The Code will require companies to become good citizens by requiring and empowering the people who manage them to protect the environment and other elements of the public interest as well as merely act on behalf of shareholders. Government will have solved the problem for democracy that it created. Business will become much less predatory and much more valuable to everyone.

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