Government & Politics

Are Businesses Undermining Democracy?

A Stanford conference explores the many ways that corporate leaders wield power over government.

February 02, 2021

| by Bill Snyder


Former U.S. Treasury Secretary Steven Mnuchin at hearing. REUTERS/Mary F. Calvert

“There is an urgent need for business schools to tackle the challenge of creating a proper balance of power between corporations, governments, and citizens,” says Professor Anat Admati. | REUTERS/Mary F. Calvert

On December 7, 2020, 450 people gathered online for a three-day Stanford Graduate School of Business event titled the Conference on Corporations and Democracy. The conference was sponsored by Stanford GSB’s Corporations and Society Initiative, along with six other schools and centers at Stanford University, the University of Chicago, Columbia University, Harvard University, and the University of Oxford.


The driver behind the event was CASI director Anat R. Admati, the George G.C. Parker Professor of Finance and Economics at Stanford GSB. In this interview, Admati discusses how the conference aligned with CASI’s broader mission.

How did the conference fit into the goals of the Corporations and Society Initiative?

The initiative engages broadly on issues involving governance, trust, and accountability that arise in the interaction of corporations and society. In democracies, society acts through democratic processes and institutions. Governments, which enable corporations to exist, set and enforce rules for everyone within their jurisdictions. While CASI is a joint effort of students and faculty, we engage with alumni and others at Stanford and beyond. This student-led blog describes some of our activities for the broad community. We also organize small group discussions for students and engage with policymakers and media. Also, in collaboration with the Stigler Center at the University of Chicago Booth School of Business, we recently started a Workshop on Corporations and the State geared to faculty and doctoral students.

The Conference on Corporations and Democracy fit perfectly into CASI’s goals because it brought together experts and practitioners across multiple areas of business, law, and policy to discuss the balance of power among corporations, governments, and individuals. In line with these goals, the conference was made accessible to the public and promoted civic engagement. It also provided opportunities to collaborate with other schools and centers and to break down silos, all of which we hope to continue doing.

What main themes and takeaways emerged from the sessions?

The overarching goal of the conference was to explore the interactions between corporations and government and consider how these interactions may undermine democracy. We aimed to diagnose problems and bring us closer to solutions that ensure democracy produces competent, effective, and uncorrupted governments. Reaching that goal requires engagement across different academic disciplines.

We started by discussing the evolution of corporate legal rights. The experts agreed that corporations need certain legal rights to serve society, but corporate rights have expanded excessively and now include many civic rights intended for humans. While some people propose constitutional amendments to address issues around corporate rights in the U.S., the panelists argued that legislation and better judicial decisions would be more fruitful approaches.

The next three sessions explored the many ways corporations affect democratic processes, such as elections, policymaking, and the flow of information to citizens. Some of these ways are subtle and almost invisible to the public. But in each area, when the interests of corporations and corporate leaders conflict with the interests of other stakeholders, corporate engagement and impact can distort the outcomes and harm democracy. Better disclosure of political spending and more engagement in policy by objective experts, including academics, would help correct potential distortions. Media companies and internet platforms present new and unique challenges for democracy, because of the tension between free speech and the companies’ business models. Europe has taken a lead in finding ways to regulate internet platforms, but the discussion is just starting in the U.S.


Business schools should practice and promote civic-minded leadership if they want to restore trust in capitalism as well as in democracy.
Anat Admati

The conference concluded with two sessions on accountability and justice. Are corporate governance practices, combined with laws and law enforcement, effective in deterring corruption and corporate wrongdoing? Do democracies deliver basic justice under the law in the corporate context? The consensus was that the answer to all of these questions is “no,” and participants called for improving corporate governance mechanisms as well as laws and enforcement.

The conference made clear that there is an urgent need for business schools to tackle the challenge of creating a proper balance of power between corporations, governments, and citizens — and it pointed to specific ways to do so through research, teaching, and other engagements. We in academic institutions are privileged with knowledge and expertise, and we can and should do more to hold power to account.

One panelist mentioned that some professions, including law and medicine, have formal codes of conduct. Business doesn’t. Should it?

I strongly favor having such codes and creating appropriate oaths for corporate leaders and business school graduates. Those working for governments swear to protect and defend the constitutions, and we must change the norms in the private sector, because corporations and their leaders often wield power over society that surpasses the power of democratic governments.

Should there be more emphasis at the university level to educate students about ethical issues in business? How is Stanford meeting that challenge?

We do need more discussions of ethical issues across the entire curriculum, but ethics is not enough. In a 2019 Harvard Business Review piece, I argued that business schools should practice and promote civic-minded leadership if they want to restore trust in capitalism as well as in democracy. Civic-minded leaders appreciate the importance of effective governance and the role that government plays in promoting social well-being and preventing social harm. They also understand that a properly functioning democratic government creates an environment where businesses can thrive while also maximizing the benefits they brings to society. CASI’s work with all of the Stanford GSB communities — through policy engagement and this conference in particular — exemplifies these ideas. I’m hopeful that we at Stanford can lead positive change in this direction.


Explore the full video coverage of the event below or visit the conference website for the program, individual session videos, and more.

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