Real Leaders

Big Tech And The Social Contract

The Age of Enlightenment gave us the notion of the “Social Contract” and governing mandates based on collective self-interest not divine right or brute force.

With large tech companies now standing shoulder to shoulder with government in terms of influence and power, we need a new social contract – one that can reconcile how powerful corporations and disruptive technologies fit into the model of collective self-interest. 

Corporate hegemony of American society wasn’t necessarily part of the plan. In fact, Thomas Jefferson expressed hope that America would “crush at its birth the aristocracy of our monied corporations.” It is a moot point now, given the level of co-dependence that exists between large companies, our government and society.  Over the years the players change, but the game remains the same. 

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At the turn of the 20th century, the railroads and industrial companies wielded great power. By the 1960s and 1970s, there was great fear of the “military industrial complex”. In the 2000s, society faced the dilemma of a financial services sector that was “too big to fail”. Today, it is large tech companies that are playing an outsized role in everyday life and the intrusion is expanding at lighting speed. In fact, there is far more information on the average American imbedded in one private server farm today than any government has ever known about its citizenry in history.

In some ways, this was inevitable. Corporations have enjoyed many courtesies as a result of America’s legal system over the past century. Their influence has risen steadily since Santa Clara County v Southern Pacific Railroad Supreme Court decision in 1886 through the Citizens United v Federal Election Commission case in 2010. Computing power, smart phones, human nature and the internet did the rest. As a result, we have seen the weight of civic responsibility fall on corporate shoulders as personal information is gathered, synthesized, sold and stolen. Given limited liability laws, where does the protection of life, liberty and property fall in this technological world? Who is responsible? It is almost an existential crisis.

It is not always easy for the enlightened CEO to rise to the occasion. For one thing, Wall Street’s view of the future is roughly 90 days. What is legal and profitable over 3 months is very different than what is right and wrong over the long term. Nevertheless, bad or short-sighted behavior (even if profitable) may not end well for shareholders. 

For example, the broadband spectrum is a public asset owned by American tax payers. A reasonable tradeoff for being able to build massive commercial ventures on its back is not to create trap doors that weaken democratic institutions like a free press and a well-informed electorate. Or, embrace a mindset where the personal habits, interests and thoughts of individual Americans can be mined and exploited with abandon – in most cases with only tacit permission granted and few safeguards.

With politics having devolved into a tribal fracas, enlightened corporate leadership is not optional. Elected officials have only slightly longer attention spans than Wall Street and there motivations are much more political. America needs long-term planning and corporate leadership on a host of social, environmental and national security issues. Case in point: Russia has exploited technology platforms with cyber-attacks specifically designed to weaken American democracy and limit America’s influence in global politics and capital markets. It is highly unlikely the American government can protect democratic institutions against these attacks without the cooperation and leadership of large tech companies. 

We have only to look to the global financial crisis a decade ago to read the epitaphs of companies that failed to operate within the spirit of the social contract. A decade later, the country is still unpacking the mess. And although many would argue the regulatory efforts to align the financial services sector with the interests of society and government are at best a work in progress, there is no question that many profitable but questionable activities have been curtailed. The tech industry faces this same possibility, probably sooner rather than later in Europe where regulators are likely to be more aggressive. Why? In America, the tech sector provides hundreds of thousands of new jobs each year, a profitable sense of purpose for higher education, and as an industry is culturally powerful in major economic regions. In Europe, they have data breaches, cyber-attacks and the same risks without those positive associations.  

Some tech companies are getting out in front of the issue. In light of nation-state sponsored cyber-attacks, Microsoft Corporation president Brad Smith has even called for a “Digital Geneva Convention” to protect society. Microsoft now offers a free service to think-tanks and candidates at both the state and federal level to protect them against the types of targeted cyber-attacks that sought to disrupt the 2016 elections. These efforts are consistent with the Cybersecurity Tech Accord that Microsoft signed along with Facebook, Linkedin, SAP and other tech companies in April of 2018. The accord is a “public commitment among from 40 tech companies to protect and empower civilians online and to improve the security, stability and resilience of cyberspace.”

This makes perfect sense. A public/private partnership fighting to protect American democratic institutions is manifest to the mutual benefit implied in a social contract between citizens, the government and large corporations. It stands to reason that the large tech companies that lean into their responsibilities and get this right, will likely do right by shareholders in the end as well

There is also a movement at the state level that may make it much easier to see the evolution of the social contract between corporations and society happen. Thirty-four states have now embraced an alternative corporate charter called a “Benefit Corporation” that can help align the mutual self-interests of society and corporations. The model has been signed into law in 34 states by both Republican and Democratic governors. The Benefit Corporation charter makes it easier for companies to slot profits alongside the concerns and interests of communities, customers, suppliers and the environment – not high above them. Simply put, it provides legal protection for having a social conscience. Maximizing profits doesn’t have to be the sole mandate. Patagonia and Kickstarter are two successful companies operating under a Benefit Corporation charter. The concept is also supported by a cross section of business leaders and thinkers including Noble Laureate Economist Robert Shiller, and Larry Fink, the CEO of the world’s largest asset manager Blackrock.

Kings and queens no longer rule the world. Communism is no longer seen as a great threat to capitalism. Slavery (although still existent) is not state-sponsored. In large part, the success of the capitalist democratic system over its predecessors is because Age of Enlightenment concepts like the social contract took hold. The social contract served as guiderails to help curb the exploitation and injustice prevalent in human systems. The implicit sacrifice of some individual rights for the mutual self-interest of society, helped create the most lasting form of government on the planet today. Like all great ideas, the social contract needs to evolve to encompass the modern landscape. If ever there was a time to ensure that Big Tech embodies the basic tenets of the social contract, it is now. The system may have morphed over time, but the idea of enlightened self-interest is still the best way to preserve life, liberty and the pursuit of personal privacy – if not happiness.

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