Labor Law, Ownership and the Firm

27 Pages Posted: 10 Jul 2024

See all articles by Sanjukta Paul

Sanjukta Paul

University of Michigan Law School

Date Written: May 28, 2024


Labor law has its own working theory of the business firm, not derivable from another area of law. This "theory of the firm," which the affirmative provisions of labor law are taken to both modify and preserve, is more overtly hierarchical than in other areas. This is true across the main functional domains of labor law: union formation; expressive and associational rights; and the scope of collective bargaining. A rich vein of existing scholarship deals with both hierarchy and deference to property within labor law. The arguments of this essay emerge from considering these aspects of labor law in conjunction with broader ideas about the firm. The essay shows that labor law's theory of the firm does not follow straightforwardly from generally accepted ideas about corporate property and is in fact in tension with them. It also sets out how the "coordination rights" granted to workers by labor law are systematically inferior in quality to the analogous rights granted by incorporation, as well as being derivative of firm-based economic coordination more generally. Finally, the essay briefly revisits the ur-text of modern corporate governance, authored by New Deal liberals Adolf Berle and Gardiner Means, and surfaces the implicit premises about labor relations contained therein. Specifically, Berle and Means read a similarly hierachical picture of the work relationship (an unrealistic one) into the historical snapshot of the firm and of property relations that effectively serves as the normative benchmark for their affirmative view. This ultimately functioned to narrow questions of enterprise governance to largely exclude workers, setting the stage for later developments that would do so even more explicitly, while questions of workers' role in the enterprise were now cordoned-off within labor law.

Keywords: labor law, theory of the firm, corporate governance, economic coordination

Suggested Citation

Paul, Sanjukta, Labor Law, Ownership and the Firm (May 28, 2024). Chicago-Kent Law Review, 2024, U of Michigan Law & Econ Research Paper Forthcoming, U of Michigan Public Law Research Paper Forthcoming, Available at SSRN:

Sanjukta Paul (Contact Author)

University of Michigan Law School ( email )

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Ann Arbor, MI 48109
United States

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