Corporations, Corporate Law, Catholicism: Replies to Steve Bainbridge

I have been meaning to reply to Steve Bainbridge's several interesting posts about the relationship of Catholic Social Thought (CST) to the way we understand corporations and corporate law, but my menial decanal duties kept getting in the way. I also have been revising my paper on the topic, which is forthcoming in the Villanova Journal of Catholic Social Thought. (It is now posted under my name in the sidebar.) The article is an attempt to describe what I call "Competing Visions of the Corporation in Catholic Social Thought," and to reach some preliminary conclusions about the two competing visions.

The first vision is what I call the "communitarian" vision, traditionally associated with CST, that characterizes the corporation as a community, and which emphasizes the corporation's social responsibilities within the community. This vision bears certain affinities to so-called "progressive" versions of secular corporate law theory, although obviously the starting points are very different. The other vision is associated with Michael Novak and other Catholic neoconservatives who emphasize the importance of economic liberty (in the classical liberal sense) to CST, and come up with very different prescriptions about the proper relationship of the corporation to state and the law. Steve associates himself with Novak frequently, but I argue that his critique of the communitarian version of CST does not depend on Novak's (good thing!), and is actually much more serious. Steve articulates his views in the three articles listed in the sidebar, as well as in his fascinating Apologia for Law & Economics in the Yale anthology on Christian legal thought. My article should be seen as being in part a reply to Steve's pioneering articles (three of which were published in Villanova journals, I am proud to say!)

Because my article is posted, I will refer you to it rather than rehash my whole argument, and will confine myself to a few observations. To begin: what are Steve and I arguing about?

(1) On one level, it is an intramural squabble among Catholics about which point of view is more authentically "Catholic." Starting that kind of argument is always asking for trouble, but it is a way of getting at a better understanding of what the CST understanding of economic life and the relation of the state to economic life really is. Novak certainly believes that his concept of the centrality of economic liberty tp Catholic tradition is surely the correct one, and that those who disagree are inflicting secular "statist" or "socialist" biases on Catholicism. I think he has it exactly backwards.

(2) On another level, we are engaged in an inquiry (not really an argument) about how one moves from the very general principles and norms of CST to concrete positions on corporate law theory and corporate law itself. One of Steve's great contributions is to show how exquisitely difficult it is to make that move.

(3) We are also engaged in a discussion and, to some extent, a disagreement over what CST teaches, or means, for specific substantive matters such stakeholder v. shareholder theory, the status of the shareholder wealth maximization norm, the relative importance of participatory corporate governance, and the basic notion of the corporation as a community.

My conclusion is that Novak's critique of the communitarian tradition in CST thinking about corporations and economic life on general is based on dubious theology; an overemphasis on the centrality of economic liberty to CST; a failure to appreciate the highly conditional understanding of liberty and rights within CST; a categorical antipathy to the state that is not justified by his distorted interpretation of subsidiarity; a failure to appreciate the nuanced and equivocal understanding of the meaning of wealth in CST; and, in particular, a misreading of Centesimus annus that makes it a much more enthusiastic celebration of capitalism than it really is. He has attempted to graft classical liberalism onto CST in a way that is not congruent with CST itself.

Steve frequently invokes Novak, and reapplies his arguments. To the extent he does so, I feel he shares Novak's problems. He actually does not need Novak, however. He makes sophisticated prudential arguments (usually employing the analytical tools of Law & Economics) that raise serious questions about some communitarian shibboleths in corporate law. That is entirely appropriate, and does not need Novak's questionable abstractions. In short, Steve poses a serious challenge to attempts to translate broad SEC norms (community, pursuit of the common good, the priority of the subjective/spiritual experience of work) into concrete positions. This challenge needs to be answered if a CST theory of corporate law can be created.

As they say, read the article!

- Mark