Neoliberalism in Context by Unknown
Author:Unknown
Language: eng
Format: epub
ISBN: 9783030260170
Publisher: Springer International Publishing
Corporate Form and Governance in Earlier Eras
I start this outline of the evolution of corporate form and governance by noting that global capitalism has been dominated by one hegemonic power or another for centuries, with the UK dominant in the nineteenth century and the United States in the twentieth century (Arrighi 1994/2010).
According to Karl Polanyi, nineteenth century British dominance was underpinned by laissez-faire notions of a ‘self-regulating market’—perhaps, more of a fiction than reality though. As a social order, laissez-faire reflects a particular understanding of markets and new forms of economic organization, especially owner-managed firms (Polanyi 1944/2001). Going back to Adam Smith, this social order was centred on epistemic claims about individual self-interested action as the fount of social benefits resulting from market exchange—the famous ‘invisible hand’ (Barkan 2013). These new ideas provided a new critique of large-scale political-economic organizations as disruptors of ‘moral’ markets through collusion and monopoly, whether they were state or quasi-state entities, like joint-stock companies (Arrighi 1994/2010). The reason for this was that market competition and market prices were naturalized as objective forces outside human control; in turn, large-scale organizations were presented as disrupting this natural order (Bratton 1989).
The dominant form and governance taken by business enterprises in Britain at this time reflected these epistemic claims, primarily entailing small- and medium-sized, owner-managed firms and partnerships, or unincorporated joint-stock trusts that acted like partnerships (Gillman and Eade 1995). Governance-wise, such business enterprises did not separate ownership from control, and were often part of a highly competitive, mainly familial business tradition that stretched across the world in many cases. For example, they formed what Arrighi and Silver (1999) call ‘an ensemble of highly specialized medium-sized firms held together by a complex web of commercial transactions’. Their success and failure rested on price competition with success and failure framed as an effect of market decisions.
As British global hegemony waned at the end of the nineteenth century, a new corporate form and governance model arose, leading to the so-called corporate revolution in the United States (Chandler 1977; Fligstein 1990; Roy 1997). Characterized by the rise and expansion of large and publicly traded business enterprises, this managerial era was entrenched after World War II by the rapprochement between organized labour and business leaders that led to the ‘golden age of capitalism’.
Again, this era entailed specific understandings of markets and a form of corporate governance that helped to shape the emergence of these new corporate enterprises. The key idea was a notion of managerialism that promoted responsible corporate management and the concomitant goal of societal benefits by reconciling the concentration of corporate power with the demands of liberal democracy (Bowman 1996). In particular, this meant emphasizing and promoting the positive role of large corporations in the wider US economy, including the goal of raising living standards through mass production and consumption, as opposed to promoting competition through (laissez-faire) markets (Locke and Spender 2011). As a result, greater emphasis was placed on cost-based planning and production according to Bratton, in contrast to the
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