January 16, 2010
Connecting the Dots; Back to Square One
1. It was not too long ago that arguing that corporations effectively ran the government was quite fashionable.
2. In light of the recent financial crisis and the emergence of USA, Inc., that is not so much the case anymore.
3. However, Peter Fox-Penner, in a post over at The Baseline Scenario, notes that "the measures taken to prop up the U.S. financial system have made the largest banks even larger, while small banks are failing at record levels." He then goes on to ask: "[C]an a firm be too big to regulate?" (HT: Kristina Melomed.)
4. Between TARP-exit and industry consolidation, I expect concerns about who is really in charge will re-emerge sooner rather than later.
5. At the very least this will hopefully mean that my soon-to-be-published article--"Finding State Action When Corporations Govern"--will avoid being named the worst-timed article ever.
PS--For further evidence that New Governance remains a timely topic, check out Pies, Beckmann & Hielscher, "Competitive Markets, Corporate Firms, and New Governance - an Ordonomic Conceptualization". Here's the abstract:
The purpose of this article is to develop an ordonomic conceptualization of corporate citizenship and new governance that (a) provides a framework for positively explaining the political participation of companies in new governance processes and (b) does not weaken but instead strengthens the functional role of corporations as economic actors in the market system of value creation. To this end, we develop our ordonomic approach in a critical discussion of Milton Friedman’s stance on the social responsibility of business in three steps. (1) The ordonomic perspective on the economics ethics of competitive markets argues that the social responsibility of business does not lie in maximizing profits but in addressing societal needs through the mutually advantageous creation of value. (2) The ordonomic approach to the business ethics of corporate actors claims that corporate firms can use moral commitments as a factor of production. (3) The ordonomic perspective on the process ethics of new governance holds that companies can act not only as economic actors but also participate as political and moral actors by taking ordo-responsibility in processes of new governance. This role of corporate citizens in the new governance does not weaken but, instead, strengthens the role of business firms as economic agents for value creation.