July 26, 2006
A Debate on Corporate Law
Posted by Gordon Smith

Remember that "Call for Debate" issued by the Yale Law Journal? Well, the deadline is next Tuesday, which means that I know what I will be doing for the next week.

When I first started writing as an academic, I drafted an article entitled "God, Mammon, and Corporate Law." Though that article never made it to press -- instead, it morphed into my most-cited article, The Shareholder Primacy Norm --  I blogged about the central idea almost three years ago: "attempts to promote corporate social responsibility through corporate law are misguided."

As our faithful readers know, I remain interested in the ideological divide between "progressive" corporate law scholars and the rest of us. Last year I was asked to review a book manuscript by my friend, Kent Greenfield, who has written insightfully about his views on corporate law for many years. Those writings form the basis for The Failure of Corporate Law: Fundamental Flaws and Progressive Possibilities, which is forthcoming from the University of Chicago Press. While writing the review, I thought that Kent and I should have a debate about the premise of the book: that corporate law can change the world. YLJ's call for debate crystalized my resolve, and Kent agreed.

Of course, we both recognize that corporate law matters, but we disagree sharply in our estimation of the scope of corporate law's influence. Perhaps I will say more about the substance of our disagreement in a later post, but for now I will limit my comments to a simple observation about the state of play. Both Kent and I are conscious of the need to say something fresh, and over the past few days, I have been reviewing the classic debate between Adolf Berle and Merrick Dodd, which was launched by Berle's famous article, Corporate Powers As Powers in Trust, 44 Harv. L. Rev. 1049 (1931). I have been struck by the fact that both authors place such faith in the ability of the shareholder primacy norm to influence corporate decision making. Too bad they didn't have Brayden's recent  post on that subject.

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