Corporations are legal fictions, and recent ones at that. Growing out of royal and governmental “charters” in the eighteenth and nineteenth centuries, governments gave to individuals the right to create a legal body – a legal “person” – distinct from themselves but yet which they own and control. Over the past two centuries corporations have become so ubiquitous that we hardly pause to consider how truly weird and brilliant they are as well as the trade-offs that are inherent to them. A recent New York Times article revealed that BlackRock, a giant investment firm, is considering telling corporations that they need to demonstrate more social responsibility in order to receive their support. Although unlikely to cause massive changes in corporate behavior, the move does have the potential to open up a wider conversation about the very nature of corporations and to what extent a nineteenth century legal fiction is suited for the twenty-first century. Corporations are really one of the truly great human innovations. Legally separating the “company” from its owners – and thus, most importantly, limiting the legal risk of its owners – sparked a wave of business activity. Individuals who otherwise might have hesitated to form their own […]
↧