Law, the American Corporation, and Society
Stewart, Fenner Leland
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This book explores how American legal scholarship treats the corporation by providing a history of American corporate legal theory, a history of corporate (social) responsibility from the perspective of the Berle–Dodd debate, an analysis of how legal scholars understand corporate lawmaking in America, and an initial inquiry into how the prevailing opinions about the corporation are realized in the context of a critical assessment of whether or not this resulting corporate governance holds the potential to compliment the efforts of new governance regulators. This book consists of four essays about American corporate governance. Three essays trace how three particular presumptions about the corporation came to become part of the dominant narrative about the corporation within the American academic context. The first presumption is that the American contractarian theory of the corporation most accurately frames an understanding of the corporation. This presumption underpins much of Delaware’s corporate law. Second is the notion that shareholder value maximization provides the necessary precondition for effective corporate governance. The modern incarnation of this presumption was inadvertently inspired by the early 20th Century work of Adolf A. Berle. Third is the idea that there is market competition for incorporations between states, and this competition creates a “race to the top.” Such presumptions help shape the dominant narrative about the American corporation. In the final chapter, the elements of these presumptions, and the narratives they weave, are reconsidered within the context of new governance, which encourages private actors, like corporations, to play larger roles within the administrative functions of governments. It is explained how new governance thought presumes that corporations are becoming more imbued with a sense of public spiritedness. This presumption is closely examined and then ultimately rejected as dangerously optimistic considering the narratives that dominate corporate legal thinking—at least in the American context. Each of the four chapters has been published in U.S. law reviews, creating a portfolio of essays regarding the American corporation and its place in society.