The Form of the Firm : A Normative Political Theory of the Corporation

Contemporary discussions of the corporation tend to fall into one of two camps. The side that dominates much of public discourse is those who conceive of the corporation as purely economic. According to this view, corporations are “nexuses of contracts” that have no greater duties than to maximize profits for their shareholders and that should be given legal and political deference to do so. On the other side are those who conceive of the corporation in almost entirely political terms. In this view, corporations are created by government and exercise powers and privileges that are conceded to it by the state; governments have a responsibility to organize and constrain corporations such that they act for the benefit of society as a whole. This book offers a third way that sees the corporation as being both economic __and__ political. It begins historically, by exploring and explaining the development and strength of the economic theory of the corporation. Despite their strength, such approaches miss the mark: while corporations exist largely to increase economic efficiency, they achieve this in ways that distinguish them from standard economic processes in markets. Corporations are not natural outgrowths of the free market, but institutions that use “norm-governed productivity”—social power, norms, and state-sanctioned authority—to effect economic cooperation that markets cannot. Corporations serve economic ends, but with political and social means. These facts suggest a radical rethinking of how corporations should be legally ordered, who should control them, and what sorts of obligations corporate managers have. Présentation de l'éditeur : "Contemporary discussions of the corporation tend to divide into one of two camps: On one side are scholars who treat the firm as a purely economic and contractual entity, while another set of scholars look at corporations in purely political terms. Therefore, the corporation is not merely an economic endeavor; it is a political institution and must therefore serve social ends and not merely profit. In The Form of the Firm, Abraham Singer contends that both of these approaches overstate their cases dramatically, resulting in two wrongheaded, influential accounts of the corporation. He offers a third way that sees the corporation as being both economic and political. First, it is true that corporations exist primarily to increase economic efficiency. However, they do this in ways that distinguish them from the markets in which they operate. Corporations are not natural outgrowths of the free market, but institutions that we have developed to correct market inefficiencies through mechanisms normally associated with politics. Corporations use social power, norms, and state-sanctioned authority to establish economic cooperation in ways that markets cannot. But, Singer argues that they also have an obligation to uphold the norms of liberal democracy that enable their existence and smooth-running in the first place. A profound rethinking of what a corporation actually is and how power within it ought to be structured and exercised, The Form of the Firm will reshape our understanding of corporate governance, corporate law, and business ethics." What are we to make of the power that corporations wield over people in modern society? Is such power legitimate? Many think so. To many businessmen and economists, as well as the general public, firms are purely private and economic entities, justified in using all legal means to maximize profit. In The Form of the Firm , Abraham Singer contends that such a view rests on a theoretical foundation that, while quite subtle, is deeply flawed. Contrary to the conventional wisdom, corporations are not natural outgrowths of the free market. Instead, Singer invites us to see corporations as political institutions that correct market inefficiencies through mechanisms normally associated with government -hierarchy, power, and state-sanctioned authority. Corporations exist primarily to increase economic efficiency, but they do this in ways that distinguish them from the markets in which they operate. Corporations serve economic ends, but through political means. Because of this, Singer argues that they also must be structured and obliged to uphold the social and political values that enable their existence and smooth-running in the first place: individual autonomy, moral and social equality, and democratic norms and institutions. A profound and timely rethinking of what a corporation actually is and how power within it ought to be structured and exercised, The Form of the Firm will reshape our understanding of political theory, corporate governance, corporate law, and business ethics. "What are we to make of the power that corporations wield over people? Is such power legitimate? Many think so. To many businessmen and economists, as well as the general public, firms are purely private and economic entities, justified in using all legal means to maximize profit. In The Form of the Firm, Abraham A. Singer contends that such a view rests on a theoretical foundation that, while quite subtle, is deeply flawed. Contrary to the conventional wisdom, corporations are not natural outgrowths of the free market. Instead, Singer invites us to see corporations as political institutions that correct market inefficiencies through mechanisms normally associated with government - hierarchy, power, and state-sanctioned authority. Corporations exist primarily to increase economic efficiency, but they do this in ways that distinguish them from the markets in which they operate. Corporations serve economic ends, but through political means. Because of this, Singer argues that they also must be structured and obliged to uphold the social and political values that enable their existence and smooth-running in the first place: individual autonomy, moral and social equality, and democratic norms and institutions. A profound and timely rethinking of what a corporation actually is and how power within it ought to be structured and exercised, The Form of the Firm will reshape our understanding of political theory, corporate governance, corporate law, and business ethics" -- Book jacket Cover The Form of the Firm Copyright Dedication Contents Acknowledgments Introduction 1. A Framework for a Political Theory of the Corporation Part I The Economic Theory of Corporate Efficiency and Justice 2. The Classical Theories of the Corporation 3. Ronald Coase and the Difference between Markets and Firms 4. The Managerial Challenge to Liberalism 5. The Chicago School’s Theory of the Corporation 6. From Market to Firm to Market Again: A Recap Part II A Normative Account of Corporate Efficiency 7. The Concept of Norm-​Governed Productivity 8. Corporate Justice within Efficiency Horizons Part III Toward a More Just Corporate Regime: Law, Governance, and Ethics 9. Toward a Relational Corporate Law 10. The Architecture of Corporate Governance and Workplace Democracy 11. Business Ethics and Efficiency: The Market Failures Approach 12. Business Ethics and Equality: The Concept of “Justice Failure” Conclusion Works Cited Index