The Failure of Corporate Law
Fundamental Flaws and Progressive Possibilities
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About the author
Kent Greenfield is professor of law at Boston College Law School and served as a law clerk under Supreme Court Justice David H. Souter.
When used in conjunction with corporations, the term “public” is misleading. Anyone can purchase shares of stock, but public corporations themselves are uninhibited by a sense of societal obligation or strict public oversight. In fact, managers of most large firms are prohibited by law from taking into account the interests of the public in decision making, if doing so hurts shareholders. But this has not always been the case, as until the beginning of the twentieth century, public corporations were deemed to have important civic responsibilities.
With The Failure of Corporate Law, Kent Greenfield hopes to return corporate law to a system in which the public has a greater say in how firms are governed. Greenfield maintains that the laws controlling firms should be much more protective of the public interest and of the corporation’s various stakeholders, such as employees. Only when the law of corporations is evaluated as a branch of public law—as with constitutional law or environmental law—will it be clear what types of changes can be made in corporate governance to improve the common good. Greenfield proposes changes in corporate governance that would enable corporations to meet the progressive goal of creating wealth for society as a whole rather than merely for shareholders and executives.
University of Chicago Press
; September 2008
301 pages; ISBN 9780226306988Read online
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Title: The Failure of Corporate Law
Author: Kent Greenfield
In the press
“Kent Greenfield takes us into fertile and promising territory that has been generally neglected by both politics and social reform—the corporation as a potential engine of progress. His critique is grounded in the extraordinary fallacies and failures of corporate law, and he demonstrates with remarkable clarity how a series of essential changes in the premises and obligations of the corporation can turn the nature of the beast in very positive directions.”
— William Greider, author of The Soul of Capitalism: Opening Paths to a Moral Economy
“With relentless logic and impeccable evidence, Kent Greenfield presents a stunning critique of the shareholder supremacy theory of corporate law, complete with practical and progressive law reform proposals designed to get so-called public corporations back into the business of promoting the public interest. He challenges conventional wisdom to show how corporations can be managed to promote the interests of all stakeholders, including shareholders, workers, creditors, and the communities in which corporations operate, while promoting both profits and social welfare. Arguing for a broad definition of costs and benefits, this book persuasively lays out new principles for corporate law designed to serve the interests of society as a whole, while promoting both efficiency and justice.”--Joseph William Singer, Bussey Professor of Law, Harvard Law School
— Joseph William Singer
“Kent Greenfield has emerged as the most creative thinker in the contrarian school of progressive corporate law. At the heart of this progressive vision is the notion that corporate law matters. His version of the progressive argument that corporate law is shareholder-centric and needs to expand its borders to include employees and other nonshareholder constituencies is creative and should provoke lively debate between traditional and progressive corporate law scholars for years to come.”--Gordon Smith, University of Wisconsin Law School
— Gordon Smith
“Kent Greenfield makes a compelling case for progressive corporate law reform in The Failure of Corporate Law. Through careful deconstruction of a traditional and yet fundamentally failed body of law, Greenfield offers an impressive reconstruction that hinges on a simple but truly profound claim—corporate law is vitally important. With so many fundamental questions about the role of corporations left largely unattended, at a time of dramatic socioeconomic change that crosses all borders, Greenfield offers a rich and thoughtful prescription for some of the most important and powerful institutions of our time. The Failure of Corporate Law is an exacting and challenging contribution to the study of corporate law and corporate governance.”--William S. Laufer, author of Corporate Bodies, Guilty Minds
— William S. Laufer
"A stunning critique of the shareholder supremacy theory of corporate law, complete with practical and progressive law reform proposals designed to get so-called 'public' corporations back into the business of promoting the public interest. . . . Arguing for a broad definition of costs and benefits, Greenfield persuasively lays out new principles for corporate law designed to serve the interests of society as a whole, while promoting both efficiency and justice. . . . Simply the best and most well-reasoned progressive critique of corporate law yet written."
— Joseph Singer, Ethical Corporation
“Greenfield commences with a reconsideration of the basic and generally accepted purposes and norms of law. The result is as startling as it is enlightening. . . . A seminal piece of writing that evidences dominance of a vast range of ideas, research, and critical thinking, and puts it into a coherent, well argued, accessible whole in a mere 243 pages. It merits a place alongside Berle and Means, Easterbrook and Fischel, and indeed, one can but hope that it becomes the touchstone for further corporate law reform globally.”
— Benedict Sheehy, Law & Politics Book Review
"For the sympathetic reader, Professor Greenfield's book is heartening. For the unsympathetic reader, it offers a worthy target."
— Harvard Law Review