The Past Speaks

In the Black Lives Summer of 2020, a variety of venerable organizations in the UK and the US faced calls that they apologize/pay reparations for their historical involvement in African chattel slavery. Firm such Barclays Bank, Lloyds of London, and Bank of America faced accusations that their current wealth was based, in part, on profits they accumulated during the period in which African chattel slavery was widely used in the countries around the Atlantic. The accusations against these companies were usually backed up by the citation of historical documents that provide pretty clear evidence that the firm or its predecessors either owned slaves or somehow took decisions that contributing to the maintenance of the system of African chattel slavery, such as insuring the vessels that engaged in the dangerous business of the trans-Atlantic slave trade.

Since 2020, a variety of companies have either apologised for their historical role in slavery or have apologized and promised to undertake some sort of remedial action in the present.  The media, especially conservative media, brand such remedial action “reparations”, which connects this issue to the wider campaign for governmental reparations payments to the descendants of enslaved Africans, a cause that has been championed by politicians in the Caribbean and by activists in the United States. The idea of corporate reparations for slavery is actually about 20 years old—it emerged around the year 2000 in New York and was, according to a research project I’m involved in, inspired by the 1999 out of course settlement by which German companies agreed to pay reparations to the surviving Nazi era slave labourers. During the Second World War, more than 3,100 German firms, some of which are still global household names exploited Jewish and non-Jewish slave labour. In 1999, they agreed to pay $2.4 billion in compensation to the now elderly slave labourers. This precedent inspired African Americans whose ancestors has been enslaved to try to get compensation out of some companies with historical ties to antebellum slavery. Although the litigation against British and American firms by the African-American activists in the early 2000s failed in the courts due to a combination of questions about standing and statutes of limitations, the underlying idea of corporate reparations for slavery persisted, resurfacing during the BLM summer of 2020

In the summer of 2020, critics began to charge that the Guardian, a left-wing London paper that began life as the Manchester Guardian in 1821, is also guilty of historical financial ties to slavery. The accusation was that because the newspaper was founded in a city that famously specialised in the processing of imported cotton and because most of Britain’s pre-American Civil War cotton imports were produced by enslaved people in the American South, the business that owns the Guardian, the Guardian Media Group, is guilty of historical involvement in slavery and should pay reparations as well. This accusation, which may have originated with activists on the left of the political spectrum, was gleefully repeated by conservative talk-radio hosts, as the Guardian, an expensive, upmarket, very left-wing paper, exemplifies much of what they dislike.

In response to these accusations, the paper’s owners commissioned some historians to do some research on the paper’s historical ties to slavery. The Guardian Media Group is owned by a non-profit entity called the Scott Trust, which was established in 1936 by John Russell Scott, the paper’s owner, who was worried about death duties/inheritance tax.  This week, the Scott Trust published the results of the historians’ research. The paper and the Trust have issued an apology for their historical role in slavery and have promised to make investments in remedial action. The historical researchers found that a number of the entrepreneurs who initially bankrolled the Guardian newspaper in 1821 had made their fortune in cotton manufacturing. These entrepreneurs, who mainly owned factories in Manchester, were in the business of processing fibres that had been harvested on plantations in the New World One of the early investors in the Guardian also appears to have owned a slave plantation overseas. The historical researchers noted that while the Guardian generally supported the cause of the abolition of slavery, during the American Civil War it expressed hostility towards the North and some sympathy for the slaveholding southern Confederacy. While Manchester was a note centre of pro-Northern sentiment in Britain during the American Civil War, the Manchester Guardian was hostile to the North and condemned those who held pro-Northern meetings.

Personally, I don’t think that either the Scott Trust or the Guardian Media Group should apologize for the predecessor firm’s highly indirect ties to slavery. I say this as someone who is a strong believer in the norm that corporations should be held to account for what they did in previous centuries and the firms such as Lloyds insurance should indeed and pay reparations for their role in supporting African chattel slavery.  The involvement of Lloyds in the trans-Atlantic slave trade was substantial and direct enough to warrant an apology and payment of compensation in some form. The decisions taken by members of the Society of Lloyds caused real harm and we want to discourage analogous decisions from being taken in the present. That’s why Lloyds needs to apologise and pay a noticeably painful amount of compensation now. Incentives matter. I certainly think that the Church of England, which invested in a slave trade corporation, should also apologise and pay compensation, as it is now doing. (My thinking about how that compensation should be structured, which is informed by the Effective Altruism movement, is a subject I’ll leave for another blog post).  I just think that the Scott Trust’s ties to slavery are so indirect that it shouldn’t apologise here. In fact, I suspect that it would be positively harmful for the Guardian to apologise for its alleged role in slavery because doing so would reduce the pressure on the other corporations whose antebellum managers took decisions that are actually morally blameworthy. If everyone is a little bit guilty of everything, then nobody is really guilty of anything. The Guardian just isn’t Lloyds.

Systems of guilt, innocence, punishment, and compensation are the most effective at incentivizing good behaviour when they target decision-makers and force them and their firms to internalize costs. If a reckless motorist kills someone, we blame that individual and focus punishment on them. This approach incentivizes good behaviour. If our response to a death caused by a reckless motorist is to blame all of the drivers who were on the road that day or all drivers in general or “car culture” or the fact we have built our cities so that taking public transport is frequently not a viable option, them that lets the reckless driver off the hook. Moreover, we don’t blame the factory workers who produced the car that was driven by the reckless driver. Indeed, one can one imagine an individual who has just killed someone through his reckless driving wanting to change the subject of the conversation from their own choices to broader, societal level issues.  “I didn’t kill that child, car culture did. I blame it!”

Now in the 19^to  century, virtually everyone in Britain aside from a very small group of religious zealots who refused to consume sugar (the anti-saccharites) and cotton was somehow indirectly connected to slavery. Cotton garments were popular because they were comfortable and rapidly displaced wool undergarments.  Virtually everyone, even passionate abolitionists wore cotton, even though they knew that much of the cotton currently being imported into Liverpool was produced by slave labour rather than yeoman farmers in the upland regions of the American South.  There was a brief effort in the 1830s to create a market in cotton that was certified as being the product of slave labour but it soon collapsed. (I briefly mention this episode in my Journal of Business Ethics paper on free-grown sugar in nineteenth-century Britian). Abolitionists argued that the abolition of slavery in America would increase the world’s supply of cotton, doing so on the ground that this system of labour was economically inefficient and harmful to all concerned, including the millowners of Manchester. Richard Cobden (1804-1865), a leading cotton entrepreneur, was one of a prominent British supporter of the Northern cause in the American Civil War.  Anyway, lots of people had slight connections to slavery and the profits generated from it. Money that had passed through the hands of slaveowners circulated in the economy. For instance, if a slaveowner went into a pub and purchased a pint of beer, the pub owner can be said to have benefitted from slavery. Should that pub’s owner now apologise for its historical connection to slavery? Most people would have had some degree of connection to individuals who benefited from slavery through the seven degrees of separation principle. In the same way, lots people today are indirectly connected to the human rights abuses that take place in some countries overseas—every time I put petrol in the car, I am creating demand for oil from some regimes we don’t much like. Only a small number of individuals and firms in 19^th century Britain, however, took decisions that bolstered slavery, such as investing in overseas plantations or  issuing insurance policies to ships involved in the slave trade. We need to focus on their decisions and that means criticising the successor companies of those firms, and no other firms. Nobody has pointed to any business decisions taken by the employees of the 19^th century Manchester Guardian that helped to perpetuate slavery. The founders of the paper took money from some individuals, a few of whom had taken morally blameworthy decisions such as investing in plantations. At most, they can be accused of not doing the due diligence in screening their investors that we might want in the present day.

Let’s go back to first principles to see why this formerly abolitionist newspaper should not apologize/pay reparations. The ultimate test of whether a norm or rule should exist is whether widespread adherence to that norm will make the world a better place by promoting the greatest happiness of the greatest number of people. That’s true whether the norm in question is a formal norm (say a tort law that is backed up by the state and its court system) or an informal norm (such as the sub-legal rule that says if you knock a man’s pint glass over in the pub, you are obliged to buy him a replacement).  Let’s call that way of judging whether norms should exist rule utilitarianism, which is indeed what many philosophers call it. John Stuart Mill, who has a hardcore abolitionist back in the day, was an advocate or rule utilitarianism

 In our society, there is a long-standing rule that says that if a driver injures another person with their car, they must apologise and pay reparations. I think that we would all agree that drivers are safer and life expectancy is longer thanks to the existence of this rule, which gives all of us a stronger incentive to drive carefully.  Life expectancy goes up, making insurance actuaries happy. Moreover, we have less vigilante justice. Similarly, corporations have long been held liable both in the formal legal system and in the wider court of public opinion (informal norms) if they commit harms against individuals. For instance, if the manager of a firm decides to cheap out on essential maintenance and a customer is injured on a poorly maintained staircase, the customer can sue. That arrangement incentivizes good behaviour on the part of firms. Yes, I’m aware of the argument that the balance in favour of injured customers has gone too far in this direction in many common-law jurisdictions, creating inefficient outcomes, but I think we can all agree that some sort of liability for property owner who don’t keep their assets in safe condition is a good thing to have.

The formal and informal norms that incentive drivers to be careful and property owners to ensure their staircases aren’t slippery are old ones. What is new is the informal norm that the corporations should be held responsible for human rights abuses they committed a long time ago, before any of the current managers or shareholders were even alive, let alone in decision-making positions within the company. For decades now, a variety of formal and informal norms have held companies responsible when they or their subsidiaries commit human rights abuses overseas. The foreign torts law introduced in the US during the Carter Administration forces companies to pay attention to whether they are involved in human rights abuses overseas. More importantly, there are informal norms that companies need to follow—many Western firms pulled out of Russia after the invasion of Ukraine not because of sanctions but because to continue doing business there would violate a set of informal norms about not doing business with terrible regimes that emerged in the 1980s during the anti-apartheid movement.

 The new informal norm that is emerging, thanks in part to the precedent set in 1999 by the German firms, extends this responsibility to responsibility to corporate involvement in human rights abuses long ago, rather than just yesterday or last year. In other words, the new norm gets rid of the living memory statute of limations equivalent here. The BLM campaign for corporate reparations for slavery is just one example of this new norm.

Personally, I think that the advent of this new norm, perpetual corporate historical responsibility, is a positive development that will incentivise the right types of behaviour. I think that this norm will incentivise good behaviour because I reject the theory that decision-makers in firms only care about their immediate self-interest and have very short time horizons. The available evidence (see the research on socioemotional wealth maximisation) strongly suggests that this model of managerial behaviour is just inaccurate and that many actual managers care about their legacies and what posterity will think of them after they are dead. For every Gordon Gekko there are numerous family firm managers who want to be respected by their great-grandchildren. If all managers were Gordon Gekko, the new norm wouldn’t have any impact on corporate decision-making and thus would be pointless.  At least enough managers care about what posterity will think about them for us to conclude that the advent of a norm that holds firms responsible for human rights abuses regardless of when they were committed will be effective at discouraging corporate involvement in human rights abuses in the future.

For that reason, I think that public opinion should only require firms to apologise and pay reparations for historical human rights abuses when there is evidence that decision-makers in the firm made decisions that contributed to human rights abuses, such as deciding to rent Jewish slave labourers from the SS or insuring ships that were clearly involved in the slave trade.  When firms that were essentially uninvolved in the human rights abuses start apologising, that takes the pressure off the truly guilty parties, which will be observed by today’s businesspeople and which may affect their calculus about whether or not to engage in immoral behaviour that involves human rights abuses.