The Modern Corporation and American Political Thought: Law, Power, and Ideology [Paperback]

Scott R. Bowman (Author)

Book Description

Publication Date: April 9, 2009 | ISBN-10: 0271014733 | ISBN-13: 978-0271014739

Despite all that has been written about business and its role in American life, contemporary theories about the modern corporation as a social and political institution have failed to explain adequately the pervasiveness and complexity of corporate power in the twentieth century. Through an analysis of history, law, ideology, and economics that spans two centuries, Scott R. Bowman attempts to offer a complete interpretation of the way corporate power has achieved its dominant position in American society today.In The Modern Corporation and American Political Thought, Bowman demonstrates how judge-made and statutory laws have structured and regulated the growth of corporate power while preserving corporate autonomy. The argument unfolds within a historical framework that reconstructs the evolution of the corporation with reference to its two dimensions of power: internal (within the enterprise) and external (in society at large). Bowman examines and revises Marxist, pluralist, and managerial theories to develop his own political theory about class conflict and corporate power and offers fresh interpretations of the political thought of Herbert Croly, Walter Weyl, Thorstein Veblen, Peter F. Drucker, Adolph A. Berle, and John Kenneth Galbraith. Ultimately, this book sets forth the first political theory that adequately accounts for the power of the modern corporation in all its dimensions.

Editorial Reviews

Review

This is a valuable contribution to the understanding of the history of the corporation in the United States, and to the legal, political, and social questions bound up with that history. Bowman's presentation of theoretical issues is lucid, and his own ideas are serious and important. Presenting a lucid grasp of the past, this book raises crucial questions about the present. --Paul Mattick, Jr., International Journal of Political Economy --This text refers to the Hardcover edition.

About the Author

Scott R. Bowman is a lecturer in public law and political theory in the Department of Political Science, University of California, Los Angeles. --This text refers to the Hardcover edition.

Product Details

• Paperback: 448 pages
• Publisher: Penn State University Press (April 9, 2009)
• Language: English
• ISBN-10: 0271014733
• ISBN-13: 978-0271014739
• Product Dimensions: 9 x 6.1 x 1.1 inches
• Shipping Weight: 1.6 pounds (View shipping rates and policies)
• Average Customer Review: 4.0 out of 5 stars  See all reviews (1 customer review)
• Amazon Best Sellers Rank: #1,271,583 in Books (See Top 100 in Books)

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8 of 9 people found the following review helpful:

4.0 out of 5 stars An ambitious work explaining corporate power., December 10, 1996

By A Customer

This review is from: The Modern Corporation and American Political Thought: Law, Power, and Ideology (Paperback)

This is an ambitious work which investigates how ideas which justify particular
interests are adopted into law and influence intellectual presumptions. Bowman wants
to know how we got to the point where "increasingly, transnational corporate power,
not state power, constitutes the formative agent of change in world development."

He begins by reviewing how the republican tradition, which emphasized the
responsibilities of citizen and statesman in maintaining social balance, was
gradually replaced by the rise of classic liberalism, which affirmed the rights of
the individual and justified the rise of capitalism by conceiving of economics as a
matter of contracts between individuals. Economic activity came to represent the
realm of freedom and the pursuit of self-interest. The coercive powers of the state
were limited to preserving the realm of freedom and social efficiency. The
ideological precept of corporate autonomy grew out of legal doctrines which reified
the corporation as a citizen, thus, serving both to legitimize and to disguise
corporate power as an inviolable part of the natural order. Corporate liberalism rose
as an alternative to laissez-faire liberalism and statist socialism.

Jurists moved from thinking of the corporation as an artificial construct of the
sovereign to a regulated citizen. The rights of due process aided corporate power by
providing constitutional rights that could be invoked against state attempts to
regulate. With the rights of legal persons, came an expectation of corporate social
responsibility, consistent with the ideological concept of citizenship. The western
frontier and the "invisible hand" gave way to faith in technological advance and a
pragmatic role for government support and regulation.

Bowman's historical journey leads through exponents of the Progressive Movement such
as Herbert Croly, Walter Weyl, and Thorstan Veblin who argued that corporate hegemony
constituted the central problem of modern society. In place of the automatic balance
of the marketplace, a conscious social balance would have to be imposed. The rights
of property would be reduced but freedom would be retained through the separation of
political and economic realms. Our concept of democracy shifted from the belief that
sovereignty resides in the people to a more instrumental approach, dependent on rule
by experts and faith in technology.

At the beginning of the Progressive Movement most large corporations were controlled
by the majority stockholder. With the publication of Berle and Means' The Modern
Corporation and Private Property in 1932 that assumption changed and the
economic/political dichotomy fell. Peter F. Drucker, Adolph A. Berle and John Kenneth
Galbraith "viewed the corporation as an autonomous or self-sufficient entity capable
of generating its own capital and therefore no longer dependent on the capital
markets." The objective of managerial theory shifted from preserving democratic
institutions by regulating enterprise, to limiting the regulatory powers of
government in deference to the value of corporate autonomy.

Each wave of populism was marked by pushing regulation of corporations to a more
abstract level. Bowman speculates on the future of the adoption of an international
companies act or a supranational corporate charter. Behind the political decisions of
corporations, Bowman sees the work of a dominant class. His is not the simple class
warfare of Marx; the owners of the means of production pitted against the masses.
Instead, for Bowman, control lies with the corporate executives and board members of
the top 200 industrial and 50 financial corporations. Power based on relationships of
control over the corporate bureaucracy superseded power based on property ownership,
as the corporation developed into a political institution.

So where does Bowman look for salvation from a world dominated by a few hundred
corporate executives? Clearly, he believes that large corporations must be held
accountable for policies that affect society and that increasingly, corporate
accountability will be defined in global terms. He rejects any movement to destroy
the corporate form or rewrite their charters after the fashion of the 19th century.
Instead, he seems to turn to public interest groups organized around environmental,
health and consumer issues. According to Bowman, America's tradition of civic
activism has "found its most potent voice when it has arrayed itself against
corporate power or class privilege." Yet, even here Bowman appears pessimistic since
he believes corporate social responsibility is unlikely to become a salient political
issue except in cases of gross negligence or blatant disregard for the public
welfare. In addition, through the media and political influence, corporations have
taken the lead in redefining the parameters of corporate social responsibility.

However, the reforms public interest groups seek are dependent on government
regulation. If, as Bowman argues, corporations are so dominant they control
government, it seems that little would change. Perhaps Bowman is too quick to dismiss
those who seek to reform the corporations themselves. He sees the dominant struggles
for control in merger battles not in a resurgence of stockholder democracy. "Tender
offers, an essential strategy of the merger movement, have supplanted proxy fights as
the favored means of seizing control of large corporations."

While tender offers and diversified mergers have played a significant role in
increasing asset concentration, there has also been a significant resurgence of
shareholder democracy. As more money moves to the indexes and to institutional
investors with large holdings, shareholder democracy becomes increasingly important;
shareholders who cannot sell must become active in corporate governance if they wish
to increase the value of their holdings. In 1992 the Securities and Exchange
Commission changed the rules regarding shareholder communication. After this limited
deregulation, the United Shareholders Association estimated the cost of a target
mailing to a corporation's 1,000 largest shareholders was reduced from $1M to between
$5,000 and $10,000.

Bowman does an excellent job of drawing from concepts in law, political thought and
the social sciences in making a case for a revised form of class analysis to explain
the character and evolution of corporate power. He is clearly right that civic
activism reaches its peak when it focuses on "corporate power or class privilege."
Each wave of reform in the past has been immediately preceded by public outrage.
Upton Sinclair's portrait of the meatpacking industry, Ida Tarbell's condemnation of
Standard Oil, Rachel Carson's cry for the environment and Ralph Nader's research into
unsafe cars each stirred the middle class to action. Each crisis is answered with a
new set of regulations for business.

Perhaps if shareholder democracy can take root, corporations will build democratic
mechanisms into their own structures. Power would then shift from the dominant class
of Bowman's concern to a more broadly based group of shareholders and employees.
Arguably, such a shift would be consistent with both republican and liberal
democratic traditions. Social balance would be restored, while preserving the realm
of freedom and social efficiency, by relying less on the coercive powers of the
state.

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