Accounting for Incorporation: Part 1

Robert Hockett —

Last month Senator Elizabeth Warren proposed an innovative – or better yet, restorative – new piece of legislation to the US Senate. Something like the Senator’s Accountable Capitalism Act, which would, among other things, hold corporations accountable to other stakeholders besides shareholders, is long overdue. It is in consequence much more than welcome. This owes less to the bill’s likely passage, however – it will probably die in committee this time around – than to the occasion its proposal affords us to recollect (a) what incorporation legally is and (b) what incorporation actually is for.

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We seem as a society and as a legal culture to have forgotten how the corporation as a ‘publicly’ privileged mode of ‘private ordering’ came into being. Hence we have come likewise to overlook how the irreducible public/private hybridity of this now-ubiquitous institutional form gives the lie to familiar liberal and neoliberal clichés concerning a supposed fundamental divide cleaving both life in communion with others, and that life’s legal emanations, into radically distinct public and private ‘spheres.’

Senator Warren’s proposal accordingly provides not only lawyers, but also the broader public a rare opportunity to recall the true nature and purpose of incorporation – and, with those, the institutional continuum along which our contiguous public and private modes of life and collective agency are arrayed. In so doing, it also affords us an opportunity to restore to America’s productive life a critical institutional element that lay at the core of its economic ‘growth miracles’ and ‘social contracts’ alike during its most prosperous past eras.

I’d like in two posts, then, first to recall in detail what needs restoring and why, then to sketch how to restore it. In the present post I’ll stick to that what and why. In the follow-on post I’ll turn to the how – I’ll elaborate, in short, how Senator Warren’s proposal can be viewed as a sequence of first steps toward the requisite restoration.

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The Allocation of Economic Coordination Rights

Sanjukta Paul —

The concept of economic competition is central to policymaking deliberation in this country. Yet even as our understanding of that concept evolves to take better account of corporate power, our thinking about competition retains a fundamental blind spot. Simply, the boundaries of the business firm insulate many instances of economic coordination that would be deemed anti-competitive if they were to take place between firms or individual persons. The regulatory discrepancies that flow from this fact tend to entrench existing distributions of advantage, power, and opportunity rather than to balance it.

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Economic life necessarily involves competition and coordination; it always has, although our policy choices about how to allocate coordination rights change. Presently, both antitrust law and our dominant frame for economic policy more generally tend to favor top-down, hierarchical forms of coordination

grounded in ownership rights, while viewing more democratic, horizontal forms of coordination with skepticism. This deep-seated preference, which itself precedes the contemporary concern with promoting competition, can be traced in part to antitrust’s (and the law’s) original preference for protecting property rights over workers’ freedom of association and contract – even as the pre-New Deal courts invoked the freedom of contract in other areas of economic and labor policy.

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Sachs & Block on Labor Day

We’re back from our hiatus, and first up, this cross-post from On Labor, about a new blueprint for labor law. Shouldn’t every day be Labor Day?

 

This Labor Day, A Clean Slate for Reform

Benjamin Sachs & Sharon Block —

As divided as we have become as a country, we arrive at this Labor Day with a shared national understanding: both economic and political power are wildly out of balance, with dire consequences for the vast majority of Americans who find themselves on the losing end of this imbalance. Wherever we live, and however we vote, Americans know that both wealth and political influence are now radically concentrated in the hands of a tiny few.

What does economic inequality look like in 2018 America? Here’s an illustration: The average Amazon worker makes about $29,000 per year, while Jeff Bezos, the Amazon CEO, has a net worth of $150 billion. This means it would take an Amazon worker 5 million years, working full time, to earn what Bezos now possesses.

With respect to political inequality, the data is just as stark. Political scientists have shown that the preferences of the vast majority of Americans simply no longer have any impact on what happens in Washington. In fact, when the rich disagree wth the poor and middle class, the path our government takes has nothing to do with what anyone but the rich want.

Why is it important to consider this crisis of inequality on the day we set aside to honor labor?  Because the evisceration of the labor movement is in large measure what got us here, and resuscitating the collective power of workers is what will get us out of this mess.  The more we learn about inequality – both economic and political – the clearer it becomes that the strength of the labor movement is intimately connected with the equality of our nation. Sustain a strong labor movement and you can count on a more equal society. Kill labor and you kill equality.

The question on this Labor Day therefore must be how, in 2018, can we create a new labor movement, one that can unite the interests of a sufficient number of lower and middle income Americans so that they have the power to restore balance to our economy and politics.

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Summer Break

Dear Readers —

 We are taking a few weeks off to accommodate the end of summer holidays and the scramble toward the new semester.  We’ll be back online in mid-September.  Thanks, as ever, for reading.

Best,

The LPE Team.

Bias and Exclusion in Human Rights History

Sam Moyn  –

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I am so grateful to the blog, and the respondents who wrote in to it, for the attention Not Enough has gotten here. In my brief rejoinder, I will focus on the criticisms for the sake of ongoing discussion — most of which reveal the biases and exclusions in the book’s coverage, when it comes to the past or the present. And I want to cop to those, clearly, totally, and upfront.

Okay — actually, there are some provisos.

Bias and Exclusion in General

Julieta Lemaitre frames the case for bias and exclusion most generally but, in my opinion, least responsibly. Of course, everyone has a view from somewhere — including Lemaitre herself, who has spent as much time in and around American law schools as I have. But the important question is how inevitably local perspective affects coverage and ideology.

Unfortunately, Lemaitre’s response to this important question describes the book so misleadingly as to leave it unrecognizable. At the very least, therefore, her remarks provide an occasion to make some basic points about the book that seem like a non-negotiable basis for proceeding if the goal of future scholarship is to interrogate bias and exclusion in human rights history more usefully.

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When Splitters become Lumpers: Pitfalls of a Long History of Human Rights

Peter Rosenblum –

In the preface to Not Enough, Sam Moyn obliquely acknowledges the dramatic contrast between the new book and his breakthrough work on the history of human rights, the Last Utopia: “What makes the study of history exciting is that its infinity of sources and our change in perspective can allow two books on the same topic by the same person to bear almost no resemblance to each other….”

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For a close reader of Moyn’s work on human rights the differences between his two works are head-spinning.  Where Last Utopia attacked the very idea of historic continuity in explaining the human rights movement that emerged in the 1970s, Not Enough builds an entire narrative on continuities. The result is an aspirational history for a reformed human rights movement, a history of roads not taken – with respect to equality, in particular, which Moyn elevates to the ‘original’ position – that can still be reclaimed.  Not Enough lacks the skepticism that Moyn employed so effectively in The Last Utopia to explain how disconnected contemporary human rights was from its claimed antecedents and undermines arguments in both books. In addition, by not heeding his own lessons from Last Utopia, Moyn understates the emergent human rights movement’s inability to contest what became neoliberalism. As someone who confronted those issues at the time, it is harder to dismiss the claims of complicity.

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The New Class-Blindness

Cary Franklin —

Legal advocates have scored some major class-related victories in 2018. In January, an appellate court held that the administration of California’s money bail system violated the Fourteenth Amendment rights of indigent defendants. In February, the Fifth Circuit held Harris County’s money bail procedures unconstitutional on the ground that they keep the “poor arrestee” behind bars “simply because he has less money than his wealthy counterpart.” But holdings that explicitly vindicate the constitutional rights of people without financial resources remain rare, and that rarity bolsters the widespread perception that Fourteenth Amendment law offers virtually no protection against class-based discrimination.

It is true that class-based discrimination does not trigger heightened scrutiny under equal protection in the way that race-based and sex-based discrimination do. Fifty years ago—in the era of Gideon v. Wainwright and Harper v. Virginia Board of Elections—it looked to many as if the Court was poised to recognize the poor as a protected class (or perhaps, as Frank Michelman famously argued, to recognize a constitutional right to some form of minimum welfare). But in San Antonio v. Rodriguez and the abortion funding decisions, the Burger Court both declined to recognize the poor as a protected class and rejected the idea that the Constitution guarantees minimum welfare.

Scholars have often viewed those decisions as excising all class-related concerns from Fourteenth Amendment law. But that view has obscured an important and ongoing form of class-related constitutional protection: one that resides not in equal protection but in fundamental rights doctrine. My new article (The New Class-Blindness, forthcoming in the Yale Law Journal) examines the long-standing and often overlooked forms of class-related constitutional protection the Court has developed in the fundamental rights context. These protections have played an important role in some areas of Fourteenth Amendment law for over half a century. But they are now under attack by conservative judges, who have begun to argue, for the first time, that it is impermissible for courts to consider class at all when adjudicating Fourteenth Amendment claims.

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Uniting the Working Class Across Racial Lines

Uniting the Working Class Across Racial Lines

Daria Roithmayr – 

The Democratic Party is once again dividing into a left versus center configuration, just in time for the November Election. The catalyst for this renewed debate appears to be Alexandria Ocasio-Cortez’s massive primary upset in New York’s fourteenth district. Ocasio is a democratic-socialist who has focused on her district’s predominantly Latino and black working class, campaigning on a platform of Medicare for all, a federal job guarantee, and the dismantling of ICE. More than almost any other candidate this season, she has developed an affirmative vision of economic, social and racial dignity for all working-class Americans.

The daughter of Puerto Rican parents, she has argued that the interests of people of color should be represented in the district. Remarkably, some of her strongest support came from predominantly-white Astoria. To those who accused her of playing identity politics, she responded:

“I can’t name a single issue with roots in race that doesn’t have economic implications, and I cannot think of a single economic issue that doesn’t have racial implications. The idea that we have to separate them out and choose one is a con.”

This post serves as a follow-up to an earlier post in which I issued a call to unify the old and new working classes. In this post, I want to accomplish two things. First, I want to further uncover the relationship between race and class. In particular, I want to explore the argument that race segments the working class into less-free workers of color and more-free white labor. Second, I want to strengthen the call to unite the old and new working classes across the race-class divide.

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Khan on Ohio v. American Express

Lina Khan 

I recently published two pieces assessing Ohio v. American Express, the Court’s most significant antitrust opinion in a decade. At Vox, I explained how the Court’s 5-4 decision ratified a new and troubling approach to antitrust. In short, the Court created a special rule for what it describes as “two-sided transaction platforms”—a term that encompasses, for example, Amazon and Uber. Antitrust plaintiffs seeking to hold these firms accountable for wielding their power in anticompetitive ways will have to meet a much higher burden, at the earliest stage of litigation. At Take Care, I identify two areas where the Court’s majority showed remarkable disregard for traditional antitrust principles. Specifically, the Court’s reasoning assumed conduct not at issue in this case—which means it introduced a special rule that is untethered from the practices that could justify the exception in the first place. Moreover, its special rule turns on a concept that is far too malleable to sustain a critical legal distinction, undermining administrability and predictability.

In short, the Court’s decision is likely to suppress legitimate antitrust suits. It comes amid growing recognition that antitrust has failed to keep markets competitive, and that dominant companies have concentrated power across our political economy, enabling firms to depress wages, hike prices, block the rise of new businesses, stifle innovation, and exert undue political power. American Express freshly illustrates the role that the judiciary has played in defanging antitrust over decades, marshaling select economic theories and methodologies to craft jurisprudence deeply at odds with the values that animated antitrust laws. This case is a good reminder that revitalizing antitrust will require Congress and the antitrust agencies to reassert their authority over shaping the substantive content of antitrust policy.

 

Lina Khan is currently a legal fellow at the Federal Trade Commission. All views expressed in this piece are her own.

The Role of Technology in Political Economy: Part 3

Yochai Benkler 

In the prior two posts in this set I described how the leading mainstream economic explanation of rising inequality and its primary critique treat technology.  The former takes technology as central, but offers too deterministic or naturalistic a conception of both technology and markets such that it functions, in effect, to legitimize the present pattern of rising inequality and to limit the institutional imagination of how to deal with it.  The latter focuses so exclusively on the institutional determinants of bargaining 46038488 - law concept: circuit board with  scales icon, 3d renderpower, that it largely ignores technology as a distraction.  Here, what I’ll try to do is synthesize out of the work of many of us in the field an understanding of a political economy of technology that gives technology a meaningful role in the dynamic, but integrates it with institutions and ideology such that it becomes an appropriate site of struggle over the pattern of social relations, rather than either a distraction or a source of legitimation.

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