Corporations and society

Abstract

This extended Review Article assesses the changing role of the corporation in history, using the 2018 book by Oxford scholar Colin Mayer entitled ‘Prosperity’ as a basis for the analysis. This is a traditional review article centred around the Mayer book, but as we end we take our argument, albeit tentatively, to other related issues, beyond the Mayer argument. The corporation may be viewed in a positive sense as a creator of wealth and ‘prosperity’ for society in general, or as in a negative sense as generating ‘prosperity’ only for the few, shareholders and executives at the expense of the many, including workers, customers and future generations. Colin Mayer’s book visits both sides of this ‘prosperity’ equation and the title of the book derives from this recognition. Our argument is that even within the limits of contemporary neo-liberal global capitalism, corporations could be a force for more sustainable and balanced economic growth, as well as for social and environmental good. This requires a clarification of its ‘purpose’ as well as changes in the composition of its decision-making structures and revised mandates of its boards and sub-committees such as its remuneration committees that often have been given the power alone to determine executive pay. But we argue (albeit only suggestively) in the final section that the nature and variety of capitalism itself may have to be addressed alongside firm level changes for the long-term good and sustainability of a more equal society. Mayer shows that since its birth in Roman times, as an agency for promoting public works and the public good, the corporation has taken on many different roles, with varying purpose. Only in the last 50 years has the Milton Friedman doctrine, that companies should have only one role, of maximizing shareholder wealth, become the dominant explanation for the purpose of the corporation. We are not confident that corporations will voluntarily move in these progressive directions, especially given the continuing stranglehold of neo-liberal globalization. A push for broader social and economic change from below through struggle may be essential. JEL Codes: B1, N1, M14