Overcoming constraints imposed by fiduciary duties in terms of justice as a “Leadership Challenge that Matters”

Abstract

This paper focuses on the issue of justice as a challenge facing business and society. I advance a simple deductive argument based on two premises. The first emerges out of theories of justice and holds that fairness, as a foundational basis for justice, demands impartiality or the avoidance of bias. The second emerges out of fiduciary law and holds that the duty of loyalty owed by managers to serve the interests of investors is fundamentally partial or biased. The conclusion is the troubling fact that the fiduciary duty of loyalty owed by managers to serve the interests of investors appears to be incompatible with the demands of justice. Having presented this, I describe the impartiality tools of Rawls’ veil of ignorance and Adam Smith’s impartial spectator and discuss how these might be applied in this context. I speculate that while Smith’s impartial spectator is absolutely incommensurable with managers’ fiduciary duty of loyalty, Rawls’ veil of ignorance might be used to imagine a synthesis between this duty of loyalty and the impartiality demands of justice – in theory at least. And finally, as a parting shot, I wonder whether the real “Leadership Challenge that Matters” isn’t the gap between theory and reality.