Democracy Versus Economics in Corporate Governance: Book Review of The Companies We Keep by A.C. Hutchinson

Abstract

This is a review of Professor Allan C. Hutchinson's The Companies We Keep: Corporate Governance for a Democratic Society. Hutchinson's overall thesis is that large corporations are at present undemocratic, and that for the good of society their governance should be overhauled so as to bring it into line with democratic requirements. The review focuses on three issues at the heart of Hutchinson's project: the alleged lack of justification for shareholder primacy, the shortcomings of economic analysis in the evaluation of corporate governance policy and the requirements of democracy. The author suggests that The Companies We Keep does not succeed in its attack on shareholder primacy or the conventional economic understanding of the corporation, and in particular it does not succeed in demonstrating that corporations as conventionally understood are undemocratic.