Agent Correction: Chastisement, Wellness, and Personal Ethics

Abstract

Mitigating the “agency problem” has been a core concern of agency theory in general and corporate theory in particular. Modern thinking emphasizes two basic solutions: law and economics. Law attempts to deter misconduct by imposing liability if an agent is careless or disloyal, and economics prescribes strategies to align the interests of agent and principal, for example, by giving the agent a financial stake in the principal’s enterprise. Here I examine a distinct, third approach to solving the agency problem that was salient in the past but is obscure today: agent “correction.”

The early common law regarded an agent’s slacking or insubordination as an expression of a dispositional flaw that could be corrected. The common law recognized a principal’s prerogative to “correct” the agent through chastisement: physical hitting. The prohibition of this dehumanizing practice is one of the signature achievements of modernity. But the evil of corporal discipline has perhaps led us to conflate the galling means of chastisement with the provocative idea of correction. Re-examining the idea of agent correction at a level of abstraction allows us to recover from that idea insights about the nature of the agency relationship, its promises and threats, that are lost to the contemporary idiom. Informed by these insights, I identify the re-emergence of the idea of agent correction in the form of contemporary “wellness” campaigns in corporate and other organizational operations. Attention to the idea of agent “correction” as a distinct approach to solving the agency problem can help us understand, advance, and properly modulate the use of “wellness” in corporate contexts today.

While this inquiry makes a novel contribution to the study of the agency problem in organizational affairs, its motivating purpose and deeper work is more personal. This Article is part of a broader project aimed at excavating from corporate law ideas about how to live a good life, and how to make meaning in our lives. We must find some other resource to draw on if we are to thrive amid the collapse of other, once trusted, now suspect, sources of meaning, and hold off the threats of nihilism, malaise, and madness that otherwise rush into the resulting existential vacuum. Fiduciary scriptures, I submit, can help. Resuscitating and modernizing the idea of “agent correction” showcases the workability of the project and adds a crucial component to it.

Keywords: corporate law, corporate theory, agency, agency problem, agent correction, legal philosophy, ethics, corporate governance, chastisement, corporal punishment, wellness