Corporations without labor: the politics of progressive corporate law.

"We, the rank and file, got burned.... I thought that people had to treat us honestly and deal fairly with us. In my neck of the woods, what happened is not right." (1)

American corporate law ignores workers. They don't figure into the structure of the corporation or its legal duties. But there is no one group of people more identified with a corporation and more responsible for its day-to-day conduct than corporate workers. (2)

"People can complain about the corporate culture at Enron, but that doesn't represent the employee culture, the thousands of wonderful people who worked there." (3)

INTRODUCTION

One of the most enduring characteristics of modern American corporate law is its shareholder-centered vision of managerial duties, pointedly expressed by Milton Friedman, according to which corporate managers are agents of shareholders and must manage the corporation in ways that maximize the profits of their principals. (4) Ardent supporters of this vision argue that corporate law requires managers to exercise their power to maximize shareholder value, not the interests of other corporate constituencies, specifically workers. (5) Last year, the collapse of Enron and the losses suffered by its rank-and-file workers brought aspects of this shareholder-centered vision of corporate law (particularly the short-term shareholder-wealth-maximization norm) to the front pages of newspapers around the country. (6)

Many contemporary progressive corporate law scholars (7) like to fault Milton Friedman and his students for the exclusion of workers' interests from corporate law and shareholder centrism more broadly. (8) But the responsibility lies elsewhere. As this Article demonstrates, a shareholder-centered vision of corporate law (on its different aspects) reflects the cumulative effect of a broader phenomenon--namely, the reluctance of American legal scholars (progressives, moderates, and conservatives) to accept the existence of a permanent, working, wage-labor class, and hence their failure to direct law's attention to it and to class analysis more generally. (9)

Focusing on major issues in corporate law--the nature of corporate entities and corporate power--this Article explores how, in the course of the twentieth century, legal scholars and political theorists helped remove the interests of workers (as differentiated from shareholders, officers, and directors) from the core concerns of corporate law and theory. It demonstrates how scholars' conversations about corporate entities and corporate power were influenced by a shared cultural and intellectual objection to Marxist class analysis with its focus on the proletariat. It further explicates how the purging of the working class from scholarly imagination paved a way, first, for the rise of the new classes of managers and owners and the shareholder-centered vision of corporate law and, then, for the emergence of a narrow, shareholder-wealth-maximization norm, which is being questioned today. (10)