Employee Primacy, or Economics Meets Civic Republicanism at Work

Abstract

This paper argues for employee in corporate governance. primacy has two elements: ultimate employee control over the corporation, and an objective function of maximizing employee welfare. In methodology, the argument draws upon both economics, but understood more broadly than in most corporate law scholarship, and upon civic republican ideas. The paper presents four different arguments favoring employee primacy. (1) Employee is likely to create the most surplus within the corporation due to incentive effects and the wealth of information that employees possess. (2) Corporations characterized by employee are more likely to be socially responsible, and hence generate fewer negative externalities, than corporations characterized by shareholder primacy. (3) Employee will lead to a more egalitarian distribution of wealth and political power. (4) Employee will produce citizens better fit to participate within a political democracy.