The Importance of Corporate Models: Economic and Jurisprudential Values and the Future of Corporate Law

Abstract

This article argues that the debate concerning the nature of the corporation is not finished and nor a mere intellectual exercise for interested legal academics. The current model of the corporation as an economic entity - the firm - has a number of imbedded value assumptions. Given the common territory between corporate law and economics, some scholars have come to identify the two as equal partners striving for the same ends. This is a serious error which has had and continues to have significant negative consequences for both the economic situation of the majority and justice in society. These value assumptions are being seriously brought into question in light of developing economic experience and analysis. In light of experience, the values are far from being universally accepted. Furthermore, they do not promote a just society. Models of the corporation are fundamental to the debate because models are both descriptive and prescriptive. For society to develop on just lines, the debate of the fundamental values needs to be brought into the open and brought under closer scrutiny.

Keywords: Corporations, corporate law, law and economics, values, future of corporate law

JEL Classification: G32, G34, G38, M14