The Economizing Corporation, the Free Market, and the Place of New Governance
Fenner L. Stewart Jr.
Capital University Law School
September 20, 2012
Osgoode CLPE Research Paper No. 31/2012
This article explores the prevailing American characterization of the corporation as an economizing device, the loyalty this imposes upon corporate managers, and the potential subsequent ramifications for new governance. It first offers an understanding of new governance by discussing the nature of regulated spaces and how these regulated spaces operate within new governance. Three regulated spaces of new governance are identified: the free market, the sphere of new commerce, and the place of new governance. It provides a rough outline of each, and then suggests some minimum standards that regulators ought to satisfy to protect the fledgling legal architecture within the place of new governance. It then explores the types of normative pressures that corporate law institutes within the workplace environment. It questions if the normativity, which corporate law encourages, generates the sort of environment that private regulators ought to face.
This article suggests that a legal analysis cannot answer this question alone, but to the extent that it can contribute, the answer appears to be no. The corporation, as presently understood as an economizing device, can only serve one master, the shareholder. Conversely, new governance demands that its regulators serve the public interest. A dilemma arises: Which is to be compromised? The answer may be neither, and thus it is concluded that the corporation may not provide the appropriate normative context from which key new governance regulators ought to be situated.
Keywords: New Governance, Corporate Governance, Regulatory Theory, Agency, Free Market, Privatization
JEL Classification: G38, H10, H11, H30, L33working papers series
Date posted: September 21, 2012 ; Last revised: October 15, 2012
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