There's a Forest in Those Trees: Teaching About the Role of Corporations in Society

Abstract:     
This paper was prepared for the University of Georgia School of Law Conference on Teaching Corporate Law, October 16, 1999. The paper argues that the basic corporate law course should focus much more on the questions surrounding the role of the corporation in society. In the typical corporate law course, little attention is given to the broad question of the position of the corporation within society at large or the narrower question of the relationship between the corporation and workers. The lack of consideration of these issues is odd indeed, since corporate law (like all law) is understandable only within a social and political context, and because, by any account, workers provide an essential input to a corporation's productive activities and have much to do with the success or failure of the enterprise.

This paper explains why it is essential to focus our students' attention on these issues. Without such coverage, I argue, our courses will fail to address some of the most pressing political and economic matters of our day: the growing rift between the rich an poor, the stagnation of wages, the decrease in living standards for much of the population, and the fact that corporations (and corporate law) must share some of the blame. I suggest that the basic course should encourage our students to ask whether society as a whole would be better off if the law of the corporation or, more fundamentally, the nature of the corporation itself, were significantly if not radically changed.

The paper also offers a concrete suggestion, namely a case corporate law professors can add to the basic course that can facilitate the discussions of these issues. This case is Local 1330 vs. US Steel, the Youngstown Steel plant closing case. The case offers an interesting and provocative way to discuss first principles of corporate law, that is, the questions of who owns the corporation and for what purposes the corporation exists.

JEL Classifications: K20, K22

Working Paper Series