My immediate reaction to Amy Chua's fascinating and brave book and the media storm that followed it was surprise. My surprised reaction was not to Chua's story but to the distinction between Western parenting and Chinese parenting on which it was based and that was particularly highlighted by the media.  Strict ambitious Chinese parenting described by Chua was consistently compared to permissive Western parenting. Having spent a lot of time in the last two years thinking and writing about the transformation of American parenting norms - I believe the differences are not as stark.

Chua describes Chinese parenting as extremely intense, demanding children to excel at all costs and investing family resources (time, money  and energy) to ensure these goals are met. In our article titled Over-Parenting, Zvi Triger and I describe the ways in which parenting in the United States has changed over the last two decades and has become what we call "intensive parenting." Intensive Parenting is prevalent in middle and upper-middle class families. Intensive parenting is first of all cultivating. Parents spend time and resources identifying their children's strengths and scheduling their days to cultivate these strengths. Children's lives are chock-full with activities designed to make sure they develop to their full potential. Intensive parenting is also informed - parents spend significant amounts of time making sure that they are abreast of all the information necessary to excel at child-rearing. This may mean reading volumes of child development literature or spending hours researching the best after-school French class. Finally, intensive parents consistently monitor their children to assure these goals are met, whether through constant cell phone communication or regular involvement in schools. So really Western intensive parenting and Chinese  parenting share a lot in common. Both have high expectations and ambitions for children and parents alike. 

Since both parenting styles have high expectations from parents, they both exert an enormous toll on parents. Chua in her book describes in many words the cost of her parenting style to her relationship with her youngest daughter - the daughter who resisted. But neither Chua nor Western intensive parents discuss the toll of these parenting styles on themselves. Both Western intensive parenting and Chinese parenting are extremely intense for parents. They require a massive investment of time. whether it is to accompany your child to piano lessons and oversee hours of practice as Chua describes or whether it is to take children from one after-school activity to another and continually negotiate that each institution caters to your child's need as many Western intensive parents do.  These parenting style have costs for adult careers, time spent with spouses and just general adult free time. Unlike our parents, parents today have far less free time that is real adult-time -- not catered to children activities. Yet, this is a topic rarely discussed by Chua or by Western parents.

Having said all of that, I should acknowledge that there are obviously differences between the two parenting styles. These differences become stark particularly when things go wrong. When things go wrong and the child fails, the Chinese parent, according to Chua, blames the child and demands more work to achieve the goal. The Western intensive parent instead blames the institution or the teacher, arguing that the child would have excelled, absent a problem with the institutional arrangement.

Finally, I have to say that I am very glad that Chua wrote her book. Glad not just because it was an honest book and a fascinating read. I am glad because I believe it underscores the message of our Over-Parenting article. In the article we show that the law in many ways is already endorsing Western intensive parenting norms and we caution against further incorporation of intensive parenting norms into the law. We argue that Western intensive parenting is class and culture dependent and not shared by all cultures and classes. In the article we highlight other cultures' parenting practices, which endorse less parental involvement and more free play. Chua's parenting style is a different variation, endorsing intense involvement but using methods that are foreign to Western intensive parenting. The storm that followed the publication of Chua's book showed how strongly people feel about their parenting styles and the danger of enforcing one parenting style through legal standards on all.

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If there is one thing that can distract me from a crushing load of commitments, it is superheroes.  One of my favorite colleagues, sent me a link to a post on "Superhero Organizations and Business Entities".  The post deals with the question of "what kind of business entity would be best for superhero organizations like the Avengers or the Justice League."

When I get a free moment, I'll add my own nuanced analysis to this under-theorized field to examine the embedded tensions.  For now, several big ticket items are missing from this opening volley of a post.  The big issues with superhero organizations do not concern limited liability (which may be surprising given the tendency of superteams to regularly level Metropolis, Gotham, or NY).  Instead, my empirical data suggest that the most common issues are control ("Will Captain America remain team leader?"), the admission of new members ("Should the Avengers roster be capped at seven?"), and the expulsion of members ("Green Arrow is a loose cannon!"). 

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Peter Kraus, who managed to become the best paid investment banker in America last year, while failing his way to AllianceBernstein, is the subject of the latest "I hate bankers" profile in the New York Post, though the lesson might be more that those with law degrees should make like Lloyd Blankfein and trade them in for finance jobs whenever possible.  Kraus spends his money on Park Avenue apartments, awesome clothes and watches, and modern art.  It is a fun read.  But his handlers were bonkers to permit it while Andrew Cuomo is investigating the guy.

Like Gordon, I think Law and Society has good options for the business oriented scholar - and one of the best panels I attended during the conference was an explicitly pre-tenure panel.  If you want to know where scholarship is headed, you can do a lot worse than to hear the research agendas of those soon to be on the job market.  It's something that AALS and ALSB do not provide - though, to their credit, I think you can find it at CELS, ALEA, and CLEA.  It's part of the mix of a good conference.

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Many (most? all?) academic disciplines other than law have an annual conference, which is devoted to networking, workshops, paper sessions, lectures, etc. While the conferences, such as the Academy of Management Annual Meeting, have many dimensions, the academic content is the driving force behind the conference.

The Association of American Law Schools holds an annual meeting each January, and despite recent advances -- for example, many sections now base their programs on a call for papers -- the academic content of AALS remains rather sparse. Those interested in business associations, for example, can expect one paper session and a panel from the Section on Business Associations. Other sections may have programs of interest, but in a good year, I find three or four academic programs that attract my attention.

The conception of the Law & Society Annual Meeting as the default academic conference for law professors was suggested to me this week by a friend, and I think he may be right. The range of topics represented at this year's meeting is impressive, including a large number of sessions on business law. Unlike the American Law & Economics Association Annual Meeting -- which is a great conference, and I don't intend this comparison as a slight -- LSA is largely unbounded by methodological constraints. "Society" used to imply (to my mind, at least) an empirical orientation using sociological methods, which are anyway quite diverse. But LSA has embraced the "big tent" view of law and society, and it shows in the sessions. Many groups, including our small band of law and entrepreneurship scholars, use LSA as a platform for organizing a "conference within a conference," and this has resulted in a much richer conference than in years past. I hope that LSA continues to allow or even encourage this development because law professors benefit from having a discipline-wide academic conference, and AALS does not seem well positioned to providing it.

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    Much of the outcry about Citizens United has focused on its anticipated impact on elections, see here and  here, as well it might since the decision was, after all, one about the proper interpretation of the Bipartisan Campaign Reform Act, aka McCain-Feingold. However, for my money (no pun intended), its most pernicious impact is likely to be not on elections (there was already a lot of corporate money in elections), but rather its influence on the future interpretation of the commercial speech doctrine. The commercial speech doctrine permits the regulation of commercial speech for its truth.

    What has this got to do with political speech you might say? Nothing, unless one considers why for-profit corporations get into campaign finance or lobbying in the first place. They do so for the same reasons they engage in commercial speech; to further the economic interests of the corporation (and/or the shareholders if you prefer). Even though the Supreme Court did not hold in Citizens United that a corporation enjoys the same First Amendment rights as a human being, the rhetoric in the opinion, what I call the "anti-discrimination rhetoric," is likely to be used as if the Court had said just that and in support of an argument that the Court should not "discriminate" against commercial speech and relegate it to the category of an intermediate scrutiny test but rather should apply to it a strict scrutiny test, a New York Times v. Sullivan test. Suffice it to say that this permits regulation in theory, but little in practice.

    There is evidence that Citizens United will be used this way if you look at how at how Bellotti was used. Bellotti was another corporate election law case. It was decided in 1978, only two years after  Virginia Pharmacy, the case in which the commercial speech doctrine was first announced. It has been repeatedly used to argue for expanded protection for commercial speech. Most recently in the Supreme court in 2003 in the  Nike v. Kaksy case. See here, here and here. 

    Theoretically Bellotti was a case that had nothing to do with commercial speech. Nevertheless, it has regularly showed up, as it did in Nike, in arguments in favor of more protection for commercial speech, supposedly for the proposition that speech is not less valuable because a corporation utters it. May be. But consider this, if we (or the Court) gets this argument tangled up with some notion that First Amendment protection is offered on the basis of some anti-discrimination principle we may be in very deep waters indeed, because for a business corporation its political expression is surely tangential to its main organizing purpose. It's core expressive activity is commercial speech. If we are protecting the speaker then it would seem that its core expressive activity ought to be protected. However, going that way would seemingly wreak havoc on any sort of regulation of commerce. How can you regulate commerce if you can't regulate commercial speech? If the Court goes the way of offering strict scrutiny protection to a lot of commercial speech it may make debate about reform of the financial sector moot. Not to mention the idea that corporations need protection against discrimination is a fairly difficult one to swallow. (It makes for some good editorial cartoons though! This month's Vanity Fair has a great one which you can only see if you buy the magazine; but you can find in the table of contents here under the Vanities section. A similar cartoon showed up earlier in the Boston Phoenix and that one you can view here .)

    This is not just a theoretical proposition. There is a case now pending before the Supreme Court which (arguably) involves commercial speech and at least one amicus brief suggests that this is the case in which the Court can resolve the status of commercial speech (in favor of more protection, natch) and answer the question raised but not answered in Nike v. Kasky. Guess which case is included in its list of authorities? Yep. Citizens United. I will save for another post which case this is and where else Citizens United is popping up. But this is one of those First Amendment cases that could have very widespread impacts on all sorts of regulation of business. That may be a happy thing if you think less is more in the regulatory arena for business. May be not so happy if you think the government should have more of a hand in the regulation of the safety of food, drugs or... financial services.

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Kim Krawiec (Duke) has a new paper on SSRN, “A Woman’s Worth”, in which she disputes some of the traditional arguments for legal regulation of prostitution, oocyte donation, and surrogate pregnancy. Here is the abstract:

This Article examines three traditionally “taboo trades”: (1) the sale of sex, (2) compensated egg donation, and (3) commercial surrogacy. The article purposely invokes examples in which the compensated provision of goods or services (primarily or exclusively by women) is legal, but in which commodification is only partially achieved or is constrained in some way. I argue that incomplete commodification disadvantages female providers in these instances, by constraining their agency, earning power, and status. Moreover, anticommodification and coercion rhetoric is sometimes invoked in these settings by interest groups who, at best, have little interest in female empowerment and, at worst, have economic or political interests at odds with it.

Krawiec’s focus is on whether regulation of these markets reflect an inherent bias against women. For example, she questions why regulations of egg donation are so stringent (and appear to push women to “donate” for altruistic motives) while men face little comparable restrictions in sperm donation. This contributes to the shocking statistic cited by Krawiec that egg and sperm donors receive roughly the same hourly compensation for their services.

I see these regulations less as a means to regulate women differently and more as a way to protect the marriage contract as a social institution or tool of social control. There are some interesting connections between Krawiec’s work on these “taboo trades” and her research on financial derivatives. Whereas financial derivatives are often used as ways to unbundle the various economic rights associated with financial assets such as debt and equity, these taboo trades – prostitution, egg donation, and surrogacy – represent the unbundling (or decoupling) of the marriage contract. Religious and legal strictures traditionally bound sex, conception, and childbearing all within the confines of the marriage contract. As with derivatives, new technology and markets combined to allow these services to be unbundled. Regulation of trades of these unbundled services may be aimed at protecting the marriage contract (or at least minimizing its damage) and not just at regulating women per se.

In fact, these regulations also serve to control men – albeit indirectly. Regulating the availability of prostitution pushes men to seek sex in a relationship (like marriage). Raising the cost of surrogacy impacts men – including gay men -- who want fatherhood outside of heterosexual marriage. What explains then why women are the dominant targets of these regulations and not men? Perhaps it is gender bias. But law & economics may offer an alternative explanation. Women may be the cheapest cost avoiders. For example, it may be far cheaper to regulate the relatively fewer number of prostitutes compared to the larger number of johns. It may be easier to regulate egg donation and surrogacy – which often require more invasive technology than sperm donation.

Krawiec’s article opens up a number of interesting questions for future research – particularly how the unbundling of the marriage contract have different effects across class lines. This has long been an interesting area of inquiry in economics – see for example George Akerlof and Janet Yellen’s work on “reproductive technology shocks.” One hypothesis would be that both the markets and the restrictions Krawiec describes have widely differing impacts along two axis -- higher income and lower income women on the one hand and women seeking to be part of a long-term opposite sex relationship or not on the other. Disaggregating the analysis based on class might yield some very provocative conclusions. Might higher-income women favor price controls (including indirect price controls that operate through moral suasion) on surrogacy and oocyte donation because it keeps the cost of having a baby artificially low?

Happy Commercialized Romance Day!

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Global Corporate Citizenship  ("GCC") emerged in management and business scholarship in the 1990s.  GCC posits that corporations have rights and obligations in society similar to citizens.  It addresses the ethical responsibilities of companies operating in a global market and the values that should guide corporations' engagement with society.   In effect, GCC requires that corporations engage with both financial and societal stakeholders as well as acting as stakeholders themselves. 

GCC is closely related to corporate citizenship (without the “global”).  Corporate citizenship is a business strategy, a voluntary model for business practice that is believed to incorporate core values while simultaneously supporting the pursuit of financial goals.  According to the Boston College Center for Corporate Citizenship, there are four key principles of corporate citizenship: (1) minimize harm, (2) maximize benefit, (3) accountability and responsiveness to key stakeholders, and (4) support strong financial results. 

Theories of GCC infuse the discussion of the role of corporations in society with questions of ethics, morality, and societal values, which are substantially lacking in the scholarly lineage that followed Berle’s line of argument.  (See my earlier Conglomerate post on Corporate Purpose.)  It is inherently interdisciplinary and draws from several fields such as management studies, political philosophy, international relations, sociology, and legal studies.  GCC already plays an important role in the actual business practices of transnational corporations ("TNCs"), goals and agendas of international institutions, and theoretical advancements in academic fields such as management, business, and economics.  

The underlying values of GCC are recognized by an increasing number of corporations and business leaders and many TNCs have incorporated GCC into their business goals and policies.  For example, in 2003 CEOs of numerous TNCs published a joint statement with the World Economic Forum ("WEF").  This statement set out a framework for the implementation of GCC principles in the business context.  Since that time, the integration of GCC into the policies of TNCs has moved beyond the group of companies and CEOs associated with the joint statement.  For example, TNCs have begun including GCC in the portfolios of their in-house counsel and corporations are becoming increasingly engaged in promoting GCC.  

In addition to its integration into business policy and practice, GCC is also becoming institutionalized at the international level and an increasing number of non-governmental organizations are supporting GCC.  For example, GCC is being promoted by international institutions such as the United Nations Global Compact ("Global Compact") and the WEF.   The Global Compact is a public-private initiative that seeks to promote ten principals that focus on human rights, labor standards, the environment, and anti-corruption.  The WEF is a Swiss non-profit foundation that focuses on the equality of values and rules in shaping corporate governance and ensuring that economic progress and social development go hand-in-hand.  Both organizations support the creation of a framework that incorporates values and morals into corporate governance and operations while taking the interests of both financial and societal stakeholders simultaneously into consideration – key elements of GCC.

A body of scholarship on GCC has developed in some academic fields, for example, management and business theory.   In 1997, good GCC was defined as "meeting, within reason, the expectations of all its societal stakeholders to maximize the company's positive impact and minimize the negative impact on its social and physical environment, while providing a competitive return to its financial stakeholders" in a publication funded by the Hitachi Foundation.  Over the past decade GCC has continued to be discussed in the management and business literature.  In the management literature, GCC is used at times as an umbrella to include a range of corporate social responsibility and corporate social accountability initiatives.  The stakeholder model rather than a shareholder model for corporate responsibility has played and continues to play an important role in the management literature.  Recent articles argue that corporations are citizen-stakeholders in the global society and, therefore, they should play a more direct role in the advancement of society.

However, although the question of shareholder versus stakeholder models continues to be debated by legal scholars, GCC theory has received only minimal resonance in the U.S. legal discourse.  GCC has been mentioned briefly in several international law articles in connection with descriptions or discussions of the Global Compact and the Millennium Development Goals.  While some legal articles mention GCC in discussions of Corporate Social Responsibility and human rights, others go further and contemplate the definition a good global corporate citizen or propose regulating accountability for GCC.  A few legal articles briefly mention GCC in discussing how NGOs can strengthen their international roles and the role of NGOs in building global democracy.   Still others briefly mention the role that policymakers have in promoting GCC and how the tax advice of law firms and accounting firms may undermine GCC.  Despite brief acknowledgement of GCC in a handful of legal articles since 2000, there has not yet been an attempt to develop a theoretical framework for GCC in the legal context.

I believe that GCC offers a useful theoretical framework with which to integrate and analyze the interests of both financial and societal stakeholders in this age of globalization and my current scholarship focuses on exploring ways that GCC can inform legal theory and corporate, international, and human rights law.   Voluntary measures are an important way to create and realize behavior that is influenced by societal morals and values.  However, reliance on voluntary initiatives is insufficient to assure the protection of key human rights and societal values.  Although the body of scholarship that has developed in the business and management fields is a promising starting point, I believe that developing a legal theory of GCC offers another perspective from which to approach and, hopefully, make a useful contribution to discussions about how to regulate and govern corporations.   

*The main body of this post is excerpted from my article entitled Toward Global Corporate Citizenship: Reframing Foreign Direct Investment Law, 18 Mich. St. J. Int'l L. 1 (2009), which is available on SSRN here.

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I couldn’t agree with Rachel more. The discussion on the role of corporations in society is not over, in fact two seemingly separate stories from last week – the standoff between Google and China and the landmark Supreme Court decision in Citizens United –together signal that we are a watershed moment in this question. I don’t claim to have done the type of deep thinking that Rachel or Gordon or Lisa or other corporate scholars who have written on corporate social responsibility have. But at the risk of interloping into territory others know and think about far deeper and better than I, consider a few quick thoughts on how contrasting Google/China with Citizens United suggests we are returning to some very old questions about the twin risks of not having corporations separated from government power and not having governments separated enough from corporate power.

I would argue that Google’s threat to leave China because of government intrusion into its operations can be seen as a victory for those who advocate for corporate social responsibility. And the Citizens United decision obviously represents a victory for those who want to see corporations as not being creatures of the state, but rather as persons that can check government action. But these two victories pose thorny intellectual problems for the victors. These problems, in turn, reveal something about the horrible tangle we find ourselves in after the financial crisis as we cut our way between the risks of government being captured by corporate interests and corporations becoming the playthings of the state. Bear with me, because I think these two stories also have something to tell us about New Governance and the need for even greater cross pollination between public and private law in scholarship and the classroom.

Google v China: Do we know corporate social responsibility when we see it?

Many (I won’t even attempt to embed links) have applauded Google’s threat to pull out of China on account of state censorship and cyberattacks on Google’s servers as a victory for corporate social responsibility. Some scholars, like Ribstein, complicate this interpretation, in part, because Google’s actions may stem more from pure economic self interest. Given Google’s business model -- particularly their need to reassure users of the sanctity of personal information -- it may be impossible to disentangle definitively whether this resistance to China is an example of self-interest or social responsibility.

Let me ask a more basic question. How do we define what corporate social responsibility is? And who gets to define it? When we discuss corporate social responsibility at the end of my Business Associations class, there inevitably seems to be widespread consensus in the classroom about what responsible behavior means. Everyone seems to agree that dumping mercury in the Rio Grande or employing child laborers is irresponsible. But then I ask students what if social activists were pushing a corporation either to include abortion coverage in their health plans or to exclude same sex partners from employee health benefits. Consensus evaporates.

Do we define corporate social responsibility through the public law process? There are real dangers with treating corporate social responsibility as a matter of positive law and state determination. Consider that Google may not be a good corporate citizen if you look through the lens of the Chinese government. They are violating Chinese law. That of course is an extreme, rhetorical example. But there is a deep concern though that by implicating public law or government intervention – however light and well-intentioned -- in the core purposes of corporations we are slouching towards treating corporations as a plaything of the state rather than as a potential check on government power. Which is the role many lauded Google for playing.

So the Google victory poses several questions for advocates of corporate social responsibility, including how do we know what is corporate social responsibility, who decides, and are we comfortable that we can draw principled distinctions that will ensure the public does not subsume the private? Are corporate social responsibility advocates putting great faith in the political process to check abuses?

Citizens United: spheres unseparated

Meanwhile, Google and all other corporations received a huge boost to their political power and their ability to check and shape government regulation by virtue of the Supreme Court’s landmark decision in Citizens United. I won’t pretend to be a public law scholar, but the sweeping aside of restrictions on corporate political speech clearly represents the culmination of a centuries long evolution of case law -- running from Dartmouth College to Bellotti – that has given corporations more and more of the constitutional rights of natural persons. If last week’s Supreme Court decision means anything, it is a clear refutation of the ancient idea that corporations are creatures of the state.

But in this victory too lies a deep intellectual challenge for the victors. In the precursor of the current debate on social responsibility, Berle espoused a view of corporations and government as existing in “separate spheres” a view that echoed 19th century political thought and was in turned echoed later by Milton Friedman and others who later argued against corporate social responsibility. To render a fine idea into a quick sausage: governments should set the rules of the game for corporations then stay out, and corporations play by the rules.

From a pure descriptive standpoint, after the Citizens United decision, it seems impossible to argue that these spheres can be neatly separated. Corporations are not just playing by the rules, they have the right to participate in setting them. Moreover, they may be the 800 lb gorilla in the room. One interesting morsel in reading through the dissent was to see Justice Stevens grappling, even briefly, with corporate law scholarship questioning whether shareholders have the realistic ability to control corporate speech through corporate governance.

More deeply, do we now need to worry more that corporate law rules are not merely the product of competition and economic efficiency but set through management’s use of the political process. (For an interesting comparative study of the intersection of politics and corporate governance, see Peter A. Gourevitch & James Shinn, Political Power & Corporate Control (Princeton 2005). There seems to be a danger of management using the political process to hardwire not only management entrenchment but the political preferences of those in control of corporations. Aren't those who laud Citizens United placing great faith in the capacity of markets and the competition for corporate control to prevent agglomerations of political power? If the Google/China standoff lays bare for the need for the separation of corporations from state control, Citizens United raises the question of how we ensure that governments can retain sufficient independence from corporate control.

Strange constellations: the alignment of corporate law scholars after the financial crisis

I don’t think these concerns about corporations capturing the government or the government overreaching into the private sector are just dystopian constructs. The bailouts during the financial crisis reveal that these concerns are festering. There is plenty in the bailout for people across the political spectrum to lament. Progressives lament that bailing out AIG and other firms represents government capture and the socialization of loss and the privatization of profit. Conservatives lament the government interference in the discipline of the marketplace and now government using its leverage from the bailouts to justify interventions such as in executive compensation.

In the wake of the financial crisis, is government becoming the plaything of corporations? Are corporations becoming the playthings of government? Or is the reality some complex and perverted mix of both? Forgive the metaphor, but we seem to be stuck in bad remake of some scene from Eyes Wide Shut. It’s not clear from the tangle and the masks who is in control, but it’s clear it is not G-rated.

Problems of power and the dangers of a lack of clarity between public and private power point to a reason to ask tough questions of New Governance – which I admit to being only at the beginning of understanding. Cindy Williams politely told me that there are different versions of New Governance. At its core, New Governance seems to look to public/private partnership in regulation. But blurring the lines between public and private, even in experiments, has dangers. Progressives should fear regulatory capture. Libertarians should fear government co-opting the private sector.

Further afield, experimentation to insulate government decision-making from the political process has again become a constitutional issue as revealed by the Supreme Court taking up the challenge to the Public Company Accounting Oversight Board. This case – about an obscure and odd agency duckling created in the wake of the Enron scandal to insulate the regulation of the accounting profession from the political influence of the accounting profession – brought together strange constellations of law professors to support and oppose the constitutionality of the agency. If you look at the professors who filed briefs as amici, you might seem some striking lineups. I don’t presume to place scholars in political pigeonholes, but their previous scholarship suggests we have seen truly strange alliances of professors with very different political beliefs. And within the various alliances, the professors likely have very different opinions on the relative risks of state versus corporate power. I am sorry I missed the AALS Hot Topic Panel on the case, because I hear it cast a sharp spotlight on the strangeness of these political constellations.

Is this a one-off phenomenon, or are we seeing an ideological realignments in the legal academy? If you are outside the academy, you might ask: who care what we eggheads think on this technical topic? It sounds trite, but ideas matter and will spill over into the political arena -- perhaps after years of gestation. Perhaps the gestation period will be much shorter; the political arena seems ripe for a tectonic shift. We already see stark examples of strange political bedfellows – the Kuciniches of the left and the Pauls of the right -- in Congressional opposition to bailouts and to the political independence of the Federal Reserve itself.

Unchecked Power – Public and Private

So in debating the risks of concentrated corporate power versus concentrated government power, we are likely revisiting the same debates we had at the turn of the last century. History didn’t end. Nor does it repeat. It rhymes and samples. Indeed, to sample from my favorite poem, “All the new thinking is about concentrated power. In this it resembles all the old thinking…”

We are also likely to hear some familiar motifs in the political noise – such as calls to break apart corporate conglomerates to reduce perceived threats to democratic values. Is this perhaps an unspoken aim of the Volcker plan to limit the size of financial institutions. Will we return to trust busting?

If we are concerned about democratic values, we need to pay attention to agglomerations of control in the media. Without a critical and independent media, we will have no way of gauging how corporate and state powers are intersecting. But we may come to find a genie let out of the bottle during the Clinton presidency when few were watching closely. If few really understood what the repeal of Glass Steagall would mean for the consolidation of power in the financial sector, are we considering enough what the Telecommunications Act of 1996 means for the consolidation of power in the media industry? Do we understand how competition and consolidation among broadcast, cable, phone, internet, newspaper, radio corporations will play out in terms of concentrations of political power? I certainly don’t because communications law and the economics of those industries lie far outside my understanding.

When historians look back to the Clinton era, they will likely see the most radical shifting in economic and political control since FDR – all the more radical because its magnitude was obscured by its technicality and by the fact that the President who squired it cast himself as part of some “Third Wave” in politics. Beware those selling easy ways to transcend and triangulate across political divides. Here is a third example of a statute passed during the Clinton years that will have far reaching consequences for concentrations of political power: cyberlaw scholars have been trying to get us for years to pay attention to what the Digital Millenium Copyright Act of 1996 means for who holds the power over the intellectual commons.

Looking for checks

Cyberlaw scholars first made their mark by alerting us to the subtle and far-reaching consequences of seemingly technical questions on how both the state and corporations could use the internet as a means of social control. So we are now full circle to the conflict between Google and China. One of those scholars, Larry Lessig advocated making the “code” of the internet “open” to allow civil society to check these subtle forms of control. This last fall, Lessig notably balked at a broadbrush application of these same open source ideas to making politics more transparent.

Indeed, citizens would have trouble making sense of raw government transparency – in terms of the volume of information and the complexity of issues. This is not because people are stupid, but no individually has time to master complex issue and process reems of raw data. We need to rely on experts to edit and filter information for us. The forms of political, economic, and technological control are subtler and potential threats to democratic value harder to grasp.

But how do we trust those experts? Trust throughout society has long been thought to have been declining for decades, and perhaps accelerating in an age of political polarization. Moreover, we also decry how the digital age has left us with shorter attention spans. We also live famously  in an age of irony. It is often remarked now that some of our most intelligent commentators on public affairs are fake newscasters. This irony may lead to a particularly unfunny kind of political paralysis (“Ha ha – that’s really funny what Colbert said about our country going to hell. LOL ;-).”)

It’s not easy to make sense of the new dangers of concentrations of political power. Bolshevism and trusts were simple compared to understanding interconnections between complex corporate ownership structures, telecommunications regulations, and how the technology of the internet functions.

Understanding this landscape requires the involvement of scholars who are independent of corporate and government power. Which is why sources of university financing during an age of budget cuts looms as so large an issue.

All the New Thinking: cross pollination in legal scholarship and public law in the business law curriculum

If legal scholars must play a valuable role in sorting through the risks of concentrating political power, it suggests that faculties need to foster greater dialogue among private and public law scholars. Understanding new constellations of power might require minds in corporate law, constitutional law, cyberlaw, communications law …

Integrating scholarship in corporate law with public law is not a new idea. In fact, this essay has clearly trampled all over ground covered by many scholars who’ve looked at the intersection of public law and corporate law -- Kent Greenfield, Larry Mitchell, Lyman Johnson, Lynn Stout, Cindy Williams, Margaret Blair, Lynn Dallas. Not to mention our own Lisa and Gordon and our guest Rachel. I’m likely making enemies galore by the dozens of scholars I am leaving out including scholars -- like Bainbridge -- critical of corporate social responsibility.

There is also a question of whether we corporate law scholars need to build a bigger public law component into basic business law courses. This is also not a novel idea. I admit being resistant to doing this; law students need to learn the nuts and bolts in order to get a job and have the intellectual tools to practice as effective lawyers. But I am reconsidering, because law students also need a set of intellectual tools to exercise their duties as citizens.

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In an effort to stop the economic freefall of the most severe financial disaster since the stock market crash of 1929 Great Depression, the United States and governments around the world took action.  Government intervention ran the gamut from conservatorships, partial nationalization, rescue plans, guarantees, and aid requests to the International Monetary Fund.  While these measures may have prevented a total collapse of the global economy, they do not suggest a model for the future.  Two of the many questions one could ask in this situation are:  What can we do differently and who should be doing what?

As corporate law scholars and economists know, the role and responsibilities of public corporations has been the subject of debate since the birth of large public corporations in the late nineteenth century. Corporate responsibility can be categorized as: economic, legal, ethical, and discretionary.  In the United States corporations generally are considered to have a primarily economic function with corresponding economic goals and responsibilities that are then tempered by legal and ethical restraints while still allowing corporations to take on discretionary responsibilities such as philanthropy. However, both practitioners and theorists have questioned the primacy of the economic function.

Generally, when U.S. legal scholars question the primarily economic role of corporations in society, they do so either in the context of Corporate Social Responsibility ("CSR") or Corporate Social Accountability ("CSA") or both.  These theoretical frameworks can be traced back to arguments advanced by E. Merrick Dodd in a debate between Adolph Berle and E. Merrick Dodd in the 1930s.  Berle essentially argued for the primacy of obligations to financial stakeholders. Dodd essentially argued that corporations have responsibilities to both financial and societal stakeholders.  The modern legal discourse on CSR has its roots in Dodd’s position.  In more recent decades the CSA movement has expanded the discourse.

The exact scope and contours of CSR are disputed within the U.S. legal discourse and also varies from country to country.  However, it is fair to say that CSR relates to the scope of ethical obligations that corporations have to stockholders, stakeholders, and society more generally.  In corporate legal theory, CSR generally focuses on economic and governance issues.  The underlying question revolves around the purpose of the corporation.  In the U.S. corporate law context, the rules governing CSR tend to be found in state and federal statutes and these "hard laws" are generally enforceable in a court of law.  In international legal theory, CSR generally focuses on human rights.  The underlying question revolves around what is acceptable conduct from a moral and societal standpoint.  In the international and transnational business arena, the rules governing CSR tend to be found in codes of conduct or documents produced by international organizations.  These types of "soft law" tend to be non-binding and unenforceable in a court of law.  In the U.S. legal discourse, domestic corporate governance and international human rights occasionally have uncomfortable meetings.  However they not yet been integrated into one overarching theoretical framework.

The CSA movement attempts to implement the principles of CSR as legally enforceable "hard law."  Among other things, CSA is an attempt to link human rights, the environment, and other societal issues to the economic and corporate governance concerns of corporations.  This can take the form of disclosure rules, national and international standards, and legal liability for the social and environmental effects of corporate actions.  CSA is a shift from CSR because it moves from a discussion of moral and ethical obligations and responsibilities to a discussion of socially and legally enforceable obligations and responsibilities.  However, CSA is more instrumental than theoretical.  It allows us to link domestic corporate governance with international human rights in an instrumental manner.  However, it does not offer a theoretical framework for bridging the gaps between the interests of financial and societal stakeholders.

From where I sit, the recent financial crises suggest both a need and an opportunity to bring the corporate purpose and corporate social responsibility and accountability discussions to the forefront of legal scholarship.  I plan to continue this discussion in an upcoming post.  

*The main body of this post is excerpted from my article entitled Toward Global Corporate Citizenship: Reframing Foreign Direct Investment Law, 18 Mich. St. J. Int'l L. 1 (2009) (citations omitted), which is available on SSRN here.

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I've had almost enough of end-of-the-year and end-of-the-decade lists.  (Is this a peculiarly American phenomenon?  An attempt to produce some amount of cultural cohesion in a nation of 300 million?)

But not enough to refrain from speculating on what will be the major stories in business law and the legal academy in the next decade.  In my guest posts a while ago, I wrote about how the economic pressures on law firms and legal education will intensify.  Here are two other trends to watch:

1.  Graying boomers continue to rock the boat:  The leading edge of the baby boom will turn 64 this year (and back of the envelope calculations suggest these boomers will be 74 in ten more years).  Like in every previous decade, the boomers will continue to be heard.  Some pundits suggested that the retirement of boomers will create massive demand for new workers (including lawyers and professors) to fill the gap.  Not so fast.  Demand for many services may also shift.  And don't expect boomer to retire on cue.  Anticipate tension in all sorts of places of work as generations grapple with the issue of when the torch will be passed.

In terms of law practice, it would not be at all surprising if employment discrimination, trusts and estates, and elder law see growth spurts.

In terms of social issues, thanks in part to immigration and to Americans having more kids, the U.S. won't deal with the same degree of economic and social challenges that Japan and Europe face.  But there will still be huge issues.

For example, expect the costs and ethics of elder care to become a national issue that dwarfs the current health care debate.  Financial markets may gyrate as boomers reallocate or cash out of investments.  Expect consumer finance to focus on new financial products aimed at the elderly, of which reverse mortgages are just the harbinger.  (In short, my colleague Nathalie Martin will have a full plate this decade.)

2.  We will all be comparativists soon:  Law professors have been stressing the need to incorporate international and transnational issues in the law school curriculum, including in business law, for quite a while.  But I doubt public international law will be as important as giving students some comparative law skills to enable them to work with clients and lawyers across jurisdictions.  Over my time in practice, I think I looked at a treaty only once, but spent quite a bit of time working with lawyers in other jurisdictions.  It was one of the more difficult and fascinating aspects of practice.

Overarching treaties will be less important in corporate and financial law scholarship too compared to the type of bilateral and multilateral cooperation among national regulators that scholars like Chris Brummer and our own Professor Zaring have written about.  To understand whether this cooperation works, we need to know quite a bit about foreign legal systems.

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I posted this in October, but I am moving it up as a reminder ...

Darian Ibrahim, Brian Broughman, and I are organizing a "conference within a conference" for the next Law & Society Association Annual Meeting in Chicago, Illinois on May 27-30, 2010. The LSA's call for papers is here. Our goal is to assemble several paper panels of scholars who are doing work relating to law and entrepreneurship (broadly defined). We welcome not only legal scholars, but also scholars in other disciplines.

While much of the work at LSA is empirical -- and we encourage the submission of such proposals -- we also encourage other proposals.

This year the LSA is soliciting proposals for projects in the early stage of development that could be presented at work-in-progress sessions. We would be interested in developing a proposal for such a session focused on law and entrepreneurship, so please feel free to submit such projects to us.

You may submit a proposal to any of us via email, but as a default matter, please send your proposal to Gordon Smith by November 30, 2009.

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There's a blog-related happy hour at Marlowe's tonight at 9:00 in Denver, Concurring Opinions and Prawfsblawg being the organizers, details here, and do drop by, we'd love to see you.

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A couple of us will be in Denver for the Law and Society meeting, and we'll be attending the law blog happy hour coordinated by Dan Markel.  If you're a reader of the Glom, or the other usual suspects, do join us.  Here's the announcement on Prawfs:

For those of you planning on attending the LSA meeting in Denver at the end of the month, please mark your calendars for Saturday May 30th at 9pm. The festivities will begin shortly after the end of the LSA reception at the University of Denver, and they will continue into the night.  Marlowe's is about a a block away from the Hyatt hotel, and the owner of the bar is offering us his Happy Hour Drinks Specials Marlowes is located in downtown Denver at the 16th Street Mall and Glenarm Place. Please see the map. Feel free to call them at 303.595.3700. Please spread the word: all are invited. 

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A few years ago, while I was still at the University of Wisconsin, I started investigating the business of cheesemaking. Wisconsin has long been the leading producer of cheese in the United States, but as California has increased production, Wisconsin cheesemakers have turned increasingly to the production of specialty cheeses. I noticed that some of these specialty cheesemakers were organized as corporations or limited liability companies, while others were organized as cooperatives.

At roughly the same time that I was looking into cheesemaking, I had a couple of students who were interested in the law governing cooperatives. I did a bit of reading and started asking around in the local legal community. We never discuss cooperatives in Business Organizations, and very few legal scholars write about cooperatives (Henry Hansmann being the notable exception). I became fascinated by this lost corner of our law, which obviously still has some traction in the U.S.

So last year I recruited Brayden King and Marc Schneiberg, two organizational sociologists, as co-authors. We applied for and received a grant from the University of Wisconsin Center for Cooperatives. And I took the occasion of the Wisconsin Contracts Conference to visit some cheesemakers in southwest Wisconsin. This is my first time using interviews as a research methodology, and it's a lot more fun than sitting in my office hatching theories of fiduciary duty. Not that there's anything wrong with that.

The only problem is the weather. A storm on Sunday -- rain followed by snow -- left the roads icy, and most of these cheesemakers reside in very small towns ... or in no town at all. They are accessible only by country roads, which are beautiful in the summer, but treacherous this week. Yesterday, I ended up in a snowbank on an unmarked curve. Fortunately, a cheesemaker named Ole (I am not making this up) had a truck and a chain and was able to pull me out.

My discussions with the cheesemakers are fascinating. I am constantly reminded of Stewart Macaulay's famous study of non-contractual relations because the smaller cheesemakers simply can't be bothered with formal contracts. If they come crosswise with a farmer who supplies them with milk or a distributor who sells their cheese, they just stop dealing with them. Simple.

UPDATE: If you want to get a feel for some disturbing local culture, this is one of the towns I visited yesterday.

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Bob Gordon of Yale is speaking at the Wisconsin Contracts Conference about "Teaching with Stories." In surveying the reasons for using stories, Bob mentions "gap studies" -- works that strive to reveal the gaps between "law on the books" and "law in action." Finding gaps is an old game, of course, though it still makes for good reading, when done well. Continuing yesterday's theme of exploring the connection between law and facts, he quotes Llewellyn: "Law means so pitifully little to life. Life is so terrifyingly dependent on the law." Karl N. Llewellyn, What Price Contract? -- An Essay in Perspective, 40 Yale L.J. 704, 751 (1931).

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