The Failure of Corporate Law: Fundamental flaws and progressive possibilities

Kent Greenfield sets out his objective clearly in the introduction to THE FAILURE OF CORPORATE LAW. He observes that Easterbrook and Fischel’s THE ECONOMIC STRUCTURE OF CORPORATE LAW (1991) is likely the most important book on corporate law since Berle and Means’ 1932 work, THE MODERN CORPORATION AND PRIVATE PROPERTY. Easterbrook and Fischel’s work is informed by their neo-classical economics approach in support of a contractarian/nexus of contracts view of the corporation. This approach is premised on a normative ordering in which liberty is the ultimate value, economic growth the sole objective of corporate law, and assumes externalities, distribution of harms and benefits, and all other such matters will be dealt with most fairly by the market. They believe corporate law is simply a matter of people freely choosing to contract as they see fit and that those choices and goods are exclusively private matters, and of course, are best left to an unfettered market. The corporation is seen as the premier institution of the free market and free contract.