Abstract

There can be a tendency to think that corporations having responsibilities to the greater good is “new.” The theory goes that companies are about maximizing shareholder value, but recently, companies (and others) have chosen (or have been forced) to think more broadly, so that a stakeholder model has changed historical corporate purposes. From the perspective of legal history, this argument has things backwards. This chapter will sketch a legal history that shows that, historically, companies were formed for a public purpose. This was the case in Roman antiquity; it was even true in 18th and early nineteenth century America, where one could only obtain incorporation status if one could demonstrate a public benefit. Over the years, that view did become more complex with increasing emphasis on private gain, as long as one complied with certain legal requirements. But the tension between public and private responsibilities of companies never went away, even in the twentieth century. Indeed, the tension continues today, as demonstrated by two famous law cases, the one-hundred years old Dodge v Ford case, which did hold that managers primarily have economic duties to shareholders and the other being the 50-year old Shelensky v Wrigley (a.k.a., The Chicago Cubs) case, which held that executives can prioritize non-economic, public goods, as long as there is some rational tie to shareholder benefit. Both cases remain good law. Shareholder value primacy did not come down the mountain with Moses nor did Darwin discover it as a feature of natural law on the Galapagos Islands. Instead, in tracing this legal history, the chapter argues that efforts to broaden corporate responsibilities beyond shareholder profitability are not particularly radical, but instead part of a centuries-old tug-of-war as to exactly the balance between the two. Thus, contributions to this book are a timely extension of reclaiming what’s old as something that can become new again.