07 January 2020

A Real Corporations Scholar Looks at Corporations

I've taken a couple of stabs at articulating the nature of corporate personhood and corporate purpose. What's a Corporation Good For, A Real Aristotelian Looks at Corporations, and most recently, The Modern Business Corporation: A Source of Structural Injustice? All good enough in their own ways but I strongly urge my readers to go here to download Christianity and Corporate Purpose by Stephen Bainbridge.

Christianity and Corporate Purpose is a chapter in the soon-to-be published book "Christianity and Private Law." You can read about my contribution here.

Bainbridge begins where I left off here. In other words,
It is consistent with the Christian world view to insist that a realistic social order must be designed around principles that fall short of Christian ideals. In particular, the rules must not be defined in ways that effectively require every citizen to be a practicing Christian. Christian visions of Justice therefore cannot determine the rules of economic order. Instead, legal rules and predictions about human behavior must assume the fallen state of Man 
Why not aim a bit higher when it comes to corporate social purpose? 
The law declines to assume that directors and managers are angels. The law thus recognizes the legal regime “must be based on a certain realism about human beings and, therefore, on a theory of sin and a praxis for dealing with it.” Here, the sin in question is that of self-interest. While corporate social responsibility empowers honest directors to act in the best interests of all the corporation’s constituents, it also empowers dishonest directors to pursue their own self-interest. There is a very real risk that directors and managers given discretion to consider interests other than shareholder wealth maximization will use stakeholder interests as a cloak for actions taken to advance their own selfish interests. 
Even so, is there no moral content in the corporate form? Are corporation only tools and are shareholders the only ones who possess moral agency? Bainbridge seems to say yes yet this raises the question of whether, if at all, corporations can be the subject of criminal prosecution. .

I would also like to have seen Bainbridge address the more fundamental Catholic critique of modern commercial life articulated by trad cath writer Brian McCall in "To Build the City of God: Living as Catholics in a Secular Age". While McCall does not address the corporate form as such, he stands against the separation of ownership and control and the decoupling of moral analysis from the economic framework in which wealth is created. The modern business corporation could not function without such a separation. All sorts of arguments are made in favor of this separation--it promotes specialization, increases risk-taking, and enhances the universe of private goods. But none of these satisfy McCall because the fundamental moral unity of human action (no corporations-as-tools for him) and the primacy of the common good trump utilitarian calculations. In short, Bainbridge (and me, for that matter) are basically (classical) liberals. And liberalism at its best, from McCall's perspective, is an illegitimate stepchild of Christendom.

Nothing in the criticisms above suggests I have anything better to offer. In other words, Bainbridge's argument is careful, winsome, and compelling. His is the best I've seen.

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