January 23, 2010
Taking Concession Theory Seriously
Prof. Bainbridge takes issue with Justice Stevens's position, in his dissent in Citizens United, that corporations have been "effectively delegated responsibility for ensuring society's economic welfare." Bainbridge proclaims that:
It has been over half-a-century since corporate legal theory, of any political or economic stripe, took the concession theory seriously. In particular, concession theory is plainly inconsistent with the contractarian model of the firm, which treats corporate law as nothing more than a set of standard form contract terms provided by the state to facilitate private ordering.
I remember a very powerful lesson I learned in private practice about being willing to ask "why" when everyone else is saying "it's obvious". And at the risk of sounding like the first-year grad student Clark in "Good Will Hunting", I have to say that I remain puzzled as to how the state can be deemed merely to be facilitating private ordering through the corporate form when, as far as I can tell, the private citizens could not in any meaningful way privately order themselves to mimic the corporate form. As far as I can tell, the state is doing something more than just facilitating private ordering. And for that "something more" to be legitimate, there arguably must be some public good served. Given that the most obvious public good served by the corporation is economic development via the leveraging of its utility as an incredibly efficient capital accumulation device, it is not clear to me why the state cannot require as one of the terms of doing business in the corporate form that corporate funds be directed solely at profit maximization and not electioneering without violating the Constitution--especially since all the actual citizens whose ordering is being more-than-facilitated retain all their personal First Amendment rights.
I will be chewing on all this for some time. And I reserve the right to change my mind. But for now I just can't help but continue to wonder why exactly we're not supposed to take the concession theory seriously.