A new constitutional settlement for big business

Abstract

Taking their cue from Adolf Berle, who argued that business derives its right to exist from a social contract that means it also has to assume certain responsibilities, the authors argue that such responsibilities should apply all the more to businesses in the foundational economy - the sheltered part of the economy that supplies, on the ground, the mundane but essential goods and services which are the infrastructure of civilised life: utilities, food distribution, retail banking, as well as health, education and welfare services. On the demand side, consumption and therefore revenue streams are secure for businesses that operate in this area, while, on the supply side, many of these activities are natural (local) monopolies and are usually sheltered from international competition. Instead of acknowledging this protected position, however, companies that operate in these fields often behave without responsibility and combine low risk with high profits. The authors suggest that, in return for such privilege, businesses in this sector should be required to play their part in the social contract through a social licensing system. Such a system would also have implications for regional policy since there is interesting potential here to think about the level at which such a licence would be negotiated.