Is the purpose of a business just to turn a profit? David Silver’s new book says its more complicated than that

It’s a long-held belief that the primary purpose of a business is to maximize profits. But what would happen if corporations took a more “persons-based” approach — that is, if they broadened their focus beyond just shareholders to include customers, employees and the rest of society? In his new book, Corporations and Persons: A Theory of the Firm in Democratic Society, UBC Sauder Associate Professor and Chair in Business and Professional Ethics Dr. David Silver tackles that very question. He also explores how democratic societies choose to govern those firms — and how those companies, in turn, affect democratic institutions and values. In this Q&A, Dr. Silver discusses the inspiration behind the book, and what’s getting in the way of meaningful change.

What inspired this research?

It began when the Enron scandal of the early 2000s was still in the air. It was one of those moments where it really felt like we couldn't trust the system anymore. It was palpable. My father had been trained as an accountant in the 1950s by people who lived through the Great Depression. He and his partner were saying, “What happened to our profession?” I was already a professor of philosophy at the time, and I wanted to help figure out what went wrong and how to make it right. 
 

Not long after, the global financial crisis hit.

Yes, it started with Lehman Brothers; then institution after institution began imploding, and I could feel the collapse of political and economic confidence. That's when I started thinking, “How can we reimagine capitalism in a way that appreciates its power, its strength and its ability to uplift lives while recognizing its very real flaws?” Writing the book was my process of answering these questions.
 

What impact did that financial crisis have?

I argue that it contributed to this authoritarian moment. People began to think, “These governments say they’re for us and they have our backs, but time after time, they don’t. So we'll look for someone, either on the political right or political left, who does.” In a sense the book is a warning that things have gotten worse. The problem isn’t capitalism itself: it's something that happened to it.  So that was the impetus for the book. There's a real danger if we don't reimagine the place of business within our democratic system. 
 

You talk about how we need to reimagine the firm. What do you mean by that? 

The 2003 documentary The Corporation was based on a book by UBC law professor Joel Bakan, and his thesis was if the corporation were a person, it would be a psychopath. I think that way of seeing things is very disempowering for the people who work for corporations. “I work for a psychopath? What am I supposed to do? Starve?” It’s also disempowering for us as citizens, because we live in a society that allows these corporations to exist.

In response, I say that, “If a corporation were a person, it would be a person.” We human beings all have our own interests and values, and sometimes you find people who will bring those together; other times people are just self-interested. It's the same thing with corporations: they get to choose whether they act well or not. It can be hard for them to make ethical decisions, but they always have the choice.
 

How do we get there?

The first step is simply awareness: if you go around life thinking, “I'm in a capitalist system. I have to make money, and I can't worry about things like how workers are treated, or how animals are treated, because I have no power,” then you're going to act in ways that make that disempowerment a reality. So, the first step is the awareness that you have power, like Dorothy in The Wizard of Oz. It's not as simple as just clicking your heels, but the first step is understanding you do have power.  And even more importantly, you realize when you work with other people that there’s great empowerment together. Once you adopt that framework, you start getting attuned to what we should do, what we can do, and how we get there.
 

What are some practical measures that companies can put in place to achieve this?

Instead of focusing so much on the competition — the idea that if I don't do it, somebody else will — look for positive examples. Whether it comes to sustainability or inclusion in race, gender and Indigeneity, look to see who's actually making real efforts that either don’t cost much or that are actually benefiting them financially. If you start looking, you will find them — and once you find them, then you don't have to make a tragic choice. They're doing it. How? And how can I do it too?

You have to look for examples that are like you — so Ben and Jerry's and Patagonia aren’t necessarily good examples for a lot of businesses. But there are good examples in every sector. Consider when the government says “We don't want large companies focusing on diversity anymore”? Costco responds that “We're going to keep doing it.” Then other firms can say, “Well, if Costco can do it, it's not impossible.”
 

You say we need to rethink the fundamental purpose of the firm. What do you mean by that?

It is a moral obligation for companies to make profits for their shareholders, but how do they make them in a way that is going to respect our role in the environment and our obligations to all sorts of vulnerable people in society? In short, our obligation is to make money and do all these things. As human beings, we want to do things for other people and for ourselves. The same holds for corporations. They can create things for other people and serve their shareholders at the same time.
 

What role does democracy play?

It’s a widely held view that the fundamental purpose of the corporation is to make as much money as possible. Who said that? And more importantly, who has the right to say that? One answer is, it doesn't matter who has the right; that’s just the way it is — but that is a disempowering way for us as citizens to think about the world. So ultimately the question is, “Who gets to decide how we organize and interact with each other in society?” That’s something that we in a democracy should decide together.
 

The book clarifies the role corporations play in helping society figure out major social problems from climate change to pandemics, and governing new technologies such as AI and genetic engineering. Why should corporations engage in this way? 

In many ways I’m walking the middle path. On one path you have people who look at all the problems in society and blame them on big business. On another path, you focus exclusively on all the good that has been created, including lifting billions of people out of extreme poverty. A morally mature view is going to hold these thoughts at the same time and say, “There's good and there's bad in business. Let's get better.” 

Once you get into that middle space you recognize that business activity is a really important part of people's lives and a necessary part of society. And if we're going to have conversations about how to address major social problems, then business needs to be part of the conversation. That's the middle path.  
 

What shifts need to happen for us to get there?

I talk about a kind of social therapy. Recall the recent execution of a healthcare executive — and how the killer has become a bit of a folk hero. That’s a sign of social dysfunction. So part of what I do in the book is a diagnosis: how did the relationship get to the point where, on one hand, you have people saying all the problems in society are due to big business or capitalism, and on the other hand, you have people within the business world saying we are under siege, so screw democracy. It's like a dysfunctional relationship between two conjoined twins: you can either sit there attacking each other, or you can reconcile. 
 

How do you get to reconciliation?

Part of it is to grow up and say, “There are a lot of problems in the world, but they’re not all the fault of big business.” When you buy an iPhone, you bought it. We’re all part of this. That doesn't mean that we can’t make it better. It means we make it better without demonizing — and without picking out one guy and shooting him — and fix the system. The business community also has to get into a place where they can hear and receive criticism without turning on everybody else.
 

How optimistic are you that substantial change can happen?

I'm not optimistic or pessimistic. That's not my job. I like to describe myself as hopeful; that's my contribution as an ethicist and philosopher, to imagine the way the world could be — and once you see that, then we can all work together, at least those of us are so inclined, to make it a reality. You can take minor risks, or major risks. But that’s what hope is for me: it’s not that it will turn out this way or that way; it’s that you can see how it should be and you have the courage to take a step in that direction. I’m hopeful that way. It’s worth taking that step. 

Corporations and Persons: A Theory of the Firm in Democratic Society is available now through Oxford University Press, and will be available in Fall 2025 through Amazon and other retailers.