Rethinking the Corporation (and Race) in America: Can Law (and Professionalization) Fix 'Minor' Problems of Externalization, Internalization, and Governance?

Abstract

This Article focuses on what is right about the modern publicly held corporation and attempts to decouple these attributes from the debate about what needs to be fixed. It attempts to show that much of this "blame game" is ill-founded and misdirected. It instead argues for a more austere restructuring that would actually transcend the corporation per se and focuses on the apparent locus of the difficulties: The management of the large, publicly held business enterprise.

The essence of the modern corporation consists of two important elements: (1) limited liability; and (2) the ability to lock in capital regardless of the desires of individual owners or creditors.

This Article seeks to highlight these central points, in the specific context of race in America. Part I will seek to show what is right and wrong with the modern corporation. Part II will demonstrate, in general, how the law should respond to this realization of the fundamental strengths and the more "minor" weaknesses of the modern corporation. Part III will apply these lessons to the problems of race in America in 2005. The Article concludes that law plays an important role in the dementia of corporate wrongdoing but that the legal foundation of the corporation itself is not to blame. Instead, the blame lies largely in the legal infrastructure (or lack thereof) surrounding the corporation. In particular, corporate governance law in the US devolved to a CEO primacy model. The real question that recent corporate misconduct raises is whether it is now past time to insist upon professional management of publicly held companies. This Article suggests a road map for racial reformers thinking about the central role that the corporation has played in our economy.

Keywords: corporations, race, corporate structure, corporate reform

JEL Classification: l00, M14