Stone Where the Law Ends


1. The Corporation as Actor

  1. Corporation as "legal fiction"
    • Acts only through its agents (review idea of "principals" and "agents")
  2. Jury as example
    • Jury "action" may not be what any members wanted
    • Organizational constraints
    • Limited range/vocabulary of action options
    • Formal requirement on process
    • Time constraints
    • Formal information constraints
    • Fixed characteristics of decision makers, setting, etc.
    • Formalized role structure (not everybody can do everything)
    • Decision framework is prespecified
    • Qualifications for participation
    • Members and others have sense of jury’s social role
    • Informal constraints of group behavior
  3. Time out: Institution vs. Organization
    • So, how to analyze?
      • Look at the actors
      • Look at the institution
      • Some sort of mixed analysis
      • Depends on what you are trying to do
    • To change performance of institution look at institutional variables
    • Moving back to corporations
      • Everything we saw in the jury but to much greater degree
        • "Size"
        • Complexity
        • Extent
        • Power
        • Inertia
        • Positions, not people
    • Summary
      • "…There is no reason to suppose that the motives of a corporation, the way it will respond and adapt to external threats, the way it will scan its environment for information, the way it will calculate and weigh its pleasures against its pains – in sum, its decisions and the way it arrives at them – will coincide with those of any one person within it, not even necessarily those of the president." (7)
      • "…the problems of controlling [business corporations are] distinct from that of controlling human beings in ordinary situations.

2. "Corporate" and Individual Responsibility in Early Law

  1. Point here is that Enlightenment brought move away from corporate notions of responsibility and liability and in the mean time this other kind of collective thing grew up, but our notions of law, right and wrong, and social control stayed on the individual model.
  2. Jeremy Bentham (b. Feb. 15, 1748, London—d. June 6, 1832, London), English philosopher, economist, and theoretical jurist, the earliest and chief expounder of Utilitarianism.
"Medieval" "Enlightenment"
1000 — 1400 1400 — 1800
Tribes and Families Persons
Custom Theory
Cruelty Rationality
Theology Science
Common Sense Utilitarian Efficiency
Strict Liability "the average reasonable man"

Compare Durkheim on

Retributive Justice Restitutive Justice
Mechanical Solidarity Organic Solidarity
Group Identity Individual Identity

3. Corporations and the Law: The First Skirmishes

  1. The Earliest Corporations
    1. Churches, universities, towns, guilds
    2. Regulating corporations wasn't a big issue — main role was to hold land — didn't do much acting
    3. Church lands as legal conundrum
    4. Somebody has to own it. What kinds of things can they do with it? What happens when the person dies or is replaced?
  2. Guilds — property was a charter
    1. Tendency was to ignore corporate wrongs in favor of individual actors
  3. Regulated Companies: Budding Capitalism and Incipient Managerialism
  4. The Bubble Act Period
  5. The Industrial Revolution — The Die Is Cast


5. What Do We Want the Law to Accomplish?

6. Measures Aimed at the Organization Itself

  1. A. The Basic Strategy: Does the Pocketbook Control?
  2. B. The Place of the Law on the Corporation’s Horizon
  3. C. The Lack of Congruence Between Individual and Corporate Calculations
  4. D. A Bigger Stick?

7. Measures Aimed at "Key" Individuals


8. What Exactly Are the "Antis" Against?

9. Why Shouldn’t Corporations Be Socially Responsible?

  1. A. The Promissory Argument
  2. B. The Agency Argument
  3. C. The role Argument
  4. D. The "Polestar" Argument

10. Why the Market Can’t Do It

11. Why the Law Can’t Do It

  1. A. The Time-lag Problem
  2. B. Limitations Connected with the Marketing of Law
  3. C. Limitations Connected with Implementing the Law

12. What "Corporate Responsibility" Might Really Mean


13. Structural Variables: The Room at the Top

  1. A. Roles and Role Definitions
  2. B. The Board of Directors
  3. C. The Prospects for Change

14. Reforming the Boar

  1. A. Class A Behavior
  2. B. Class B Behavior
  3. C. Getting at Class A Problems
  4. D. General Public Dictatorships
  5. The Union Pacific Experience
  6. E. Selection and Placement of General Public Directors
  7. F. Function of the General Public Directors
  8. G. Special Powers of the General Public Directors

15. Special Public Dictatorships

  1. A. The Demonstrated Delinquency Situation
  2. B. The Generic Industry Problem
  3. C. Appointment of Special Public Directors
  4. D. Functions of the Special Public Directors
  5. E. Powers of the Special Public Directors

16. Managing with Management

  1. A. Requirements for Holding Office
  2. B. Review of Entire Management Systems

17. Mending the Information Net

  1. A. Dealing with the Corporations Information Net
  2. B. Public-Private Interfaces

18. Redesigning the Decision Process

  1. A. The Level at Which Decisions Must Be Made
  2. B. Those Who Must Be Assimilated Into the Decision Process
  3. C. Mandated Findings

19. The Culture of the Corporation

  1. A. Why Aren’t Corporations More Moral?
  2. B. What Can Be Done?
  3. C. Rewards For Excellence
  4. D. The Social Audit
  5. E. Interchanges
  1. Background on Organizations
  2. Evolution of Society
    1. Durkheim
      1. Mechanical Solidarity
      2. Organic Solidarity
      3. "Discovery" of the individual
      4. Rights and Responsibilities, Liberty, Freedom
        1. stone-wtle-01.gif
      5. Problems for law
        1. stone-wtle-02.gif
  3. Two Strands
    1. Legal &Corporation as Fictional Person Model of Church or City
    2. Organizational Entity as Unitary Collective Actor -; Model of Army
  4. Organizational Problems
    1. Collective action
    2. Principal Agent
    3. Flexibility, nimbleness
    4. Size
  5. Organizational Features
    1. Goals
    2. Bounded Rationality
    3. Loose Coupling
    4. Principal / Agent Problems