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Welcome to the corporations and democracy conference.
My name is Anat Admati.
I'm the Faculty Director of the Corporations and Society Initiative,
CASI, at Stanford Graduate School of Business, and
the Chair of the Organizing Committee of this conference.
I worked closely with fellow CASI Faculty Director Paul Pfleiderer with our director
Graham Steele.
And with program committee members from partner institutions, the Center for
Democracy Development and the Rule of Law at Stanford, Stanford Law School.
The Stigler Center for the study of the economy in the state at
the University of Chicago Booth School of Business.
The Ira M Millstein Center for Global Markets and
Corporate Ownership at Columbia Law School.
The division of research and faculty development at Harvard Business School,
and the Blavatnik School of Government at the University of Oxford.
Democracy appear to be in a crisis.
Trusting democracy is low.
Many people are angry and feel the system is rigged.
Some want corporate leaders and philanthropists to solve society's
problems since the governments are seem to be failing.
What is wrong, what is happening, and what should we do?
The challenge of democratic governance and of the power of balance
of power between corporations and governments dates way back.
In the 18th century, the East India Company used violent and oppressive means
to displace local government, monopolize trade, and impose abusive taxation
in India until the British government took the company's control away.
In the US, James Madison was suspicious of anonymous corporations as vehicles for
invisible wealth and political influence.
He believed that corporations do not have the natural rights of citizens and
should have only specific rights given by charter.
On democratic governance he said a variation of this in the Federalist 51,
if humans were angels, no government would be necessary.
And he added since humans also control governments, in finding a government
to be administered by humans, the great difficulty lies in this.
You must first enable the government to control the governed, and
in the next place oblige it to control itself.
How do we fit corporations created freely for
any purportedly legal purpose into a democratic governance framework?
For millions of shell corporations that may cover up crime and crime and
corruption to multinationals with complex structures and
more resources sometimes indeed more power than many governments.
What rights relative to humans should corporations have and why?
What is or should be their impact on political processes,
democratic institutions, and societies?
And when it comes to accountability must be oblige to corporations as
Madison said to do for governments to control themselves?
And if so, how and why?
Do our democratic governments hold corporations and
the humans acting on corporations behalf properly accountable to the citizens that
these governments should serve?
If not, why is that and what should we do?
The overarching question is, how can citizens in a democracy prevent abuses of
power by people in government, and in the private sector, and make democracy work?
Much needed answer to this question remains pretty much elusive.
Many of us attending and participating in this conference have academic positions in
the social sciences in the law.
Why do we academics have so little to say on these important issues?
Why can't we clear more of the fog and help society find a path forward?
I believe a key reason for that is that most academics are too detached and
the academic disciplines too fragmented.
Many academics are unaware of the issues or
unmotivated to use their tools to engage across institutional and
narrow disciplinary and even sub disciplinary silos, or outside academia.
This conference aims to raise awareness and break silos, so we can do better.
We're bringing together people across barriers and try to make some progress.
We will not be able to achieve too much in the short time we have,
but we hope the conversations continue and lead to more and useful action.
Before I embark on today's session, I'd like to introduce Dean John Levin,
of the Stanford Graduate School of Business, and
Dean Jenny Martinez of Stanford Law School to make introductory comments.
Thank you.
>> Thank you Anat.
I'm delighted for the opportunity to welcome everyone to this event.
Here in the United States, it's often possible to take for
granted the institutions that underpin business and economic activity.
The rule of law, the enforcement of contracts,
the regulatory state, even democracy itself.
Yet modern corporations and
economic exchange exists only because of these institutions.
And of course the alliance runs both ways, in providing jobs,
driving innovation and fostering improvements and standards of living.
Corporations contribute to a sense of trust in our economic system and
in the social contract that sustains the institutions of democracy in the modern
economy.
Corporations also have the power to shape institutions by affecting legislation and
regulation through the political process, by influencing people's beliefs and
attitudes.
And through their operating decisions to foster more or
less trust in our economic system and the social contract.
Today, we face a deficit of trust that threatens the social contract.
There are many reasons for this deficit, fear about economic opportunity,
political division and polarization, a lack of faith in government to tackle
big problems or even to execute basic functions.
It is remarkable and deeply concerning that around 40% of Americans believe
we failed to carry out a free and fair democratic election this fall.
This challenge to trust and to the social contract demands the attention of business
and corporate leaders and all of us for the reasons I have articulated.
We all rely on the social contract and
bear significant collective responsibility for sustaining it.
On that measure, how are business leaders doing?
Arguably not so well.
In the latest Edelman Trust Report, more than half of global respondents
reported that capitalism does more harm than good.
So there's clearly work to be done.
At Stanford we have a long tradition of believing that we have an important role
to play in that work.
Through educating business leaders who take seriously their
social responsibility, to providing students who aspire to civic and
social leadership with effective management skills.
And through research that illuminates the interplay between business, and society,
and the political system.
In the last few years, we have re-energized our efforts in this area,
the corporations and society initiative,
which began four years ago under the leadership of a Admada Amati.
And is now co-lead with Paul Pfleiderer has been a crucial part of that effort.
And I'm just delighted that CASI has organized this event on corporations and
democracy at such an important time.
And I'm especially delighted it's being done in partnership with
Stanford Law School and peer institutions who plays similar importance on the issues
we're going to discuss.
So I thank the organizers, the panelists, and all of the conference participants.
I look forward to learning from you over the next few days.
And I would like to turn it over to Jenny Martinez,
the Dean of the Stanford Law School.
>> Thank you, John.
I'd like to start by thanking the business school and the corporations and
society initiative, and Professor Admati and the other organizers for
inviting Stanford Law School to participate in this conference.
The issues that are going to be discussed in the next several hours and
over the course of this conference are really central to the mission of
Stanford Law School.
As we prepare our students for leadership in both public and private sectors.
And in our study of the law are deeply engaged with questions of how public and
private institutions are structured and
their engagement is mediated through the mechanisms of law.
As you've mentioned,
this year has brought to the fore many challenges related to democracy.
Not only in the United States but
worldwide when we look at the struggles that many countries are having with
understanding how to achieve the goals of society, and
to regulate both public and private sector in furtherance of those goals.
Certainly we see in the United States this year with the pandemic and the election,
many issues about corporate responsibility and
the role of government in regulating corporations coming to the fore.
For example, with respect to the election, we saw many questions about social media
companies and their obligations with respect to democracy.
What are their obligations for the determining the truth or
falsity of the content that they offer?
What are the ways in which we should think about a constitutional framework for
free speech.
When decisions about what speech people hear is being made not by government
actors, but instead by large entities which have a great deal of power to
control the speech that people see.
But very few of the same types of accountability mechanisms that governments
would have.
How do we think about that in a structure that traditionally assumes
a very sharp division between public and private power?
Or in the context of the pandemic, the responsibility of corporations in
the economic sphere, as people struggled with loss of work,
people struggled with public health and safety measures.
And society grappled with the challenges in dealing with this unprecedented issue.
Or, for example, in the recent issues this summer around racial justice, and
the continuing lack of equality in American society.
And the role that both corporations in the private sector have to play
in addressing some of the historical differences that have led to ongoing
situations of injustice in United States.
The law plays a central role in all these questions, but
it doesn't operate in a vacuum.
Just thinking about some recent Supreme Court cases.
Last week the Supreme Court considered whether corporations can be held liable
for human rights abuses and a case involving allegations of the use, or
complicity in child slave labor by large companies that manufacture chocolate.
Or decisions about the role of corporate campaign contributions and
the ability of democracy to flourish in the face of large accumulations of
wealth and their influence on elections.
These are vitally important issues, and ones where as professor Admati suggested,
it's very important for us to break out of our silos and
to try talk across disciplines.
And for that reason, the law school is delighted to have so
many faculty from here and from other law schools participating in this dialogue.
Because I believe this kind of conversation is important to addressing
these very important issues that are fundamental to the flourishing of our
democracy and our societies going forward.
I hope this conference can encourage more opportunities for
collaboration in this type in the future.
So it's an amazing conference.
I wish I could stay for all of it.
But I look forward to participating in the parts that I can and
to hearing more about the ideas that come out of it.
So with that, thank you and enjoy.
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