Hurly-Berle – Corporate Governance, Commercial Profits, and Democratic Deficits

Abstract

The financial crisis over the last couple of years has exacted a heavy toll. Large corporations have gone to the wall, banks have needed to be bailed out, and whole national economies have collapsed. Amidst this mayhem, schemes of corporate governance have come under close scrutiny. Punishing inquiries have been made about their role and performance in contributing to or failing to avert the crisis. As allegations of greed, incompetence and irresponsibility by corporate bigwigs have abounded, many have asked whether the structures and process of corporate governance have been equal to their supposed task of shaping and controlling corporate activities. Indeed, the debate about the validity of the whole approach to corporate governance has become an organizational bell-weather in efforts to diagnose and remedy the ills of the financial crisis. In this essay, I want to make a distinctive contribution to that debate. On the basis that no crisis should be wasted, I propose that substantial and substantive changes are required in prevailing ways of thinking about and implementing corporate governance. Contrary to the views of many commentators, I maintain that it is the whole nature of what counts as ‘good corporate governance’ that must be re-thought and re-constructed from the conceptual ground up. In order to inform and accomplish this goal, I will move beyond the traditional evaluative focus of economic success and instead look to a more inclusive and democratic standard of social well-being. Drawing upon an expansive understanding of the role of corporations in modern society and its recent crises, it will suggest ways in which the performance of corporations can be appreciated and assessed in terms of both economic and social improvement. The essay is based upon and devoted to offering a re-visioning of Berle and Means’ The Modern Corporation and Private Property.