Wikileaks & Mastercard: Should Companies Do Government’s Bidding?

The controversy over Wikileaks has raised the question of whether companies should do government’s bidding. One popular suspicion is that Mastercard, Visa, and PayPal stopped acting as conduits for donations to Wikileaks not on principled grounds, but rather due to government pressure. If that’s true, is it ethically acceptable for business to act that way, as a tool of government? I’m not talking about government contractors, including military contractors like Blackwater, though I suppose the comparison is not entirely ridiculous. I’m thinking broadly of companies (ones not in the employ of government) helping to enact public policy or to implement the will of government more generally.

From a moral point of view, the question has to hinge in part on the moral quality of the particular thing business is being asked to do, and that may in turn hinge in part on the moral character of the particular government involved. Think, for example, of the controversy over Google participating in censorship in China. Many people thought it was wrong for Google to implement government policy in that case because they believe the Chinese government’s censoring of its citizens’ internet access to be morally problematic.

It’s worth pointing out that there are times and places where participating in implementing government objectives has been seen as unobjectionable, even patriotic. During both World Wars, companies were expected to participate in the ‘war effort’ by ramping up production, by shifting production to products needed for the war, and by conserving key raw materials. And that sort of active, corporate civic responsibility isn’t limited to times of war. Note that the US Department of Homeland Security expanded its “If You See Something, Say Something” to…

…hundreds of Walmart stores across the country – launching a new partnership between DHS and Walmart to help the American public play an active role in ensuring the safety and security of our nation.

I think it’s also instructive here to consider the relationship between “the state” (roughly, the government) and society. Many people are happy to think of corporations as instruments of society — that’s what motivates much of the CSR movement. We think it right for businesses to be environmentally responsible because we, as a society, value the environment. We want to conserve our resources, and we expect business to do its part. But the democratic state, like it or not, is a legitimate instrument of society. Now, government (including democratic government) is notoriously imperfect. As Churchill said, democracy is the worst system in the world, except for all the rest. But it’s hard to see how you can approve of (or insist upon) corporate implementation of social objectives and at the same time object entirely to corporate implementation of government objectives when those objectives are the reasonable objectives of a relatively-legitimate government.

In the end, it seems to me that if the behaviour in question is not intrinsically unethical (as Microsoft and Yahoo helping China’s government spy on dissidents arguably was) and if the behaviour doesn’t violate the firm’s fiduciary obligations to its shareholders, then it is at least permissible (though not necessarily obligatory) for a business to help implement public policy.

4 comments so far

  1. Wibble on

    Tech companies are being forced into politicised situations where any decision will both enrage and inspire customer loyalty in equal measure. Naturally they are keen to avoid this but it’s no longer possible as a direct consequence of the freer information flow they helped to facilitate. Business and politics, always close, are now becoming inseparable.

    I think it’s better for long-term stability to develop a strong and ethically consistent company ethos if you don’t already have one, and stick to it

  2. James Gaa on

    This is certainly a big issue. One of the problems is that the government, democratic or not, does not always act in socially responsible — or even legal — ways. An example of this problem is the telecommunications companies who secretly cooperated with the US government after 9/11, to spy on US citizens.

    I have a secondary issue,Chris. You claim near the bottom that “the firm” has a fiduciary duty to the shareholders. Is this an ethical or a legal claim? It it’s ethical, then (needless to say) it’s controversial, in light (e.g.) of the CSR literature you mention.

    If it’s a legal claim, then it’s also questionable. First of all, there’s the question of who is “the firm”, who would have these duties? If it’s, say, the board of directors, then it’s quite dubious. In Canada, at least, the Supreme Court has ruled that the board has a fiduciary duty to the corporation, and not to any specific group. (The case was about an alleged fiduciary duty to creditors, but the Court didn’t confine itself to rejecting this particular alleged fiduciary duty.) Since it’s reasonable to view management as the agent of the board, I’m wondering what law creates a fiduciary duty of the corporation (“the firm”) to shareholders, which is one specific group of stakeholders.

    The big quote from the case is: “At all times, [directors] owe their fiduciary obligations to the corporation,
    and the corporations’ interests are not to be confused with the interests of the creditors or those of any other stakeholder.”

    The case is:
    Peoples Department Stores Inc. (Trustee of) v. Wise, 2004

    Tapping my memory banks, the only situation that I recall in which (according to US law this time) the board has a fiduciary duty to shareholders is when the company is being dissolved, e.g, liquidation in bankruptcy. In that case, they have a duty to maximize the value of the firm’s assets, for the benefit of the shareholders.

  3. Chris MacDonald on


    You caught me being sloppy. My understanding is the same as your regarding directors’ fiduciary duties.

    I had cast the issue in terms of “the firm’s” obligations to shareholders primarily because the blog entry generally was about whether the firm (as a whole) should promote public policy. The point I was really trying to make, but stated badly, was that obligations to (at least) shareholders is a reasonable constraint on a firm’s behaviour.


  4. […] December 13, 2010 Wikileaks & Mastercard: Should Companies Do Government’s Bidding? […]

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