January 20, 2007
Millon on the Single Constituency Argument in Economic Analysis of Business Law
David Millon's important article, The Single Constituency Argument in the Economic Analysis of Business Law, has just been posted on ssrn. It is forthcoming in Research in Law and Economics. Here is his abstract:
The essay points out an interesting parallel in law-and-economics business law scholarship. Working largely independently of each other, economically oriented scholars working in different areas have argued that the law should focus on the interests of a single constituency - shareholders in corporate law, creditors in banckrupcy law, and consumers in antitrust law. Economic analysts thus have rejected arguments advanced by progressive scholars working in each of these areas that the law should instead concern itself with the full range of constituencies affected by business activity. The law-and-economics single constituency claim rests in part on skepticism about judicial competence but the underlying objection is to the use of law for redistributive purposes. The primary value is efficiency, defined in terms of market-generated outcomes. In this essay, I question this political commitment, suggesting that it implies a strong tendency toward maintenance of the existing distribution of wealth. Even more importantly, the single constituency claim may actually have redistributive implications. In each of these areas of business law, however, it is a regressive program that favors owners of capital against those who are generally less well of, such as workers and small business owners.
The conflict that Millon identifies over this meta-issue between law and economics and more traditional analysis in antitrust, corporate law, and bankruptcy, has implications for property scholarship as well. Do we focus exclusively on the interests of the person with record title to the property or to others as well?
I'll be posting in the next week or two on the Hershey Trust case, which affirmed a preliminary injunction against sale of the Hershey Trust's controlling interest in Hershey Chocolate (hence the illustration). The injunction was granted in part it seems because of the community's interest in the company. Not quite sure of the legal basis for this; the community (which was, after all named Hershey) seemed to be an implied beneficiary of Milton Hershey's trust. Perhaps the makings of talk of Quaker jurisprudence, which may be related to aloha jurisprudence....
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