February 26, 2017
Christopher Bruner on the puzzle of progressive corporate law
Posted by Matt Bodie

Christopher Bruner has a terrific new draft article out on SSRN entitled: "Center-Left Politics and Corporate Governance: What Is the 'Progressive' Agenda?"  It is a really insightful exploration into the contradictory stances that liberal and left-leaning actors have taken within the larger corporate law sphere.  Bruner points out that in the state law arena, progressives have focused on stakeholder rights and powers and have deemphasized shareholder primacy.  However, in the federal context, Democrats and the center-left (particularly labor unions) have pushed the SEC to provide more rights to shareholders.  Given these paradoxical positions, what does "progressive" corporate law even mean?  

Bruner's paper provides a terrific discussion of the underlying political economy of progressive corporate law, which includes the Delaware chancery, the SEC, union leaders, the Democratic party, and ERISA.  He brings together so many disparate but related people, institutions, and issues that the paper is almost mind-blowing in the best sense.  Not to spoil it, but here's a bit from the conclusion:

[T]he re-orientation of labor unions away from traditional organizing activities and toward pension management; the intense (and ironic) focus of applicable labor regulation on generating returns for pensioners, including fiduciary obligations interpreted to require pensions to engage in activism aimed at forcing corporate managers to focus intently on maximizing returns to shareholders; and the increasingly centrist Democratic Party’s efforts to capitalize on these proshareholder trends by assembling an anti-manager “middle class” coalition of workers and financial institutions, have together prompted a center-left politics of corporate governance at the federal level bearing no relation whatever to the progressive agenda for corporate law at the state level.

I don't want to speak for Christopher here, but I get the sense that much of the recent fight over the DNC chair revolved around these very issues.  There is a suspicion amongst Bernie supporters that much of the party's leadership is too close to Wall Street.  Bruner's paper documents this concern in a particular way and demonstrates concrete policy ramifications from this (Bill) Clintonian shift towards a more financially friendly Democratic party.

Bruner focuses on the progressive side of the equation, but there's a similar rift in the more traditional corporate law ecosystem between the shareholder-oriented and the managerially-oriented.  Oddly enough, both sides insist on an adherence to shareholder primacy.  There is surely a paper or three to be written about this political economy as well.  In the meantime, Bruner's paper is a valuable addition to the corporate law literature and will surely help us understand and grapple with these issues.

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