The Harvard Business Review (HBR) published a new article on the Erb Principles for Corporate Political Responsibility by Ed Dolan. The author is a senior fellow at the Niskanen Center, and holds a PhD in economics from Yale University. How should companies participate in politics? For all the discussion about social responsibilities of corporations, there has been less discussion of how and whether companies should influence government. The article explores how the Erb institute’s guidelines are based around responsibility, legitimacy, accountability, and transparency.
Dolan claims the call for a return to strict division of labor, in which corporations leave the rules to government, to be too simplistic. For one thing, the author states, “there has never been such an arrangement to which we could return”. What is more, the right to petition the government for a redress of grievances is written into the US Constitution, and that right extends to citizens in their roles as entrepreneurs and corporate leaders.
According to Dolan, the Erb CPR principles do not take sides in the debate over social responsibility. “They are designed to appeal equally to the staunchest Friedmanite and the most progressive advocate of corporate ESG. What they do is lay out some broad guidelines for the political activities of corporations, regardless of their views on shareholder vs. stakeholder primacy."
The balance between free-market capitalism and constitutional democracy is always a delicate one. The CPR principles can help harmonize the two and allow for a much clearer dialog about companies’ participation in the democratic process. In Dolan’s words: “When corporations behave irresponsibly, illegitimately, unaccountably, and opaquely, then capitalism and constitutional democracy are effectively at war. Without a truce, there will be mutually assured destruction."