In recent years, the publicly held corporation has assumed a central position in both the economic and political spheres of American life. Economically, the public corporation has long acted as the key institution within American capitalism. Politically, the public corporation now can use its economic might to sway electoral outcomes as never before. Indeed, individuals who control public firms wield more economic power and political power today than ever before. These truths profoundly shape American society. The power, control, and role of the public corporation under law and regulation, therefore, hold more importance than ever before.
Even though corporate law and regulation define all aspects of this central economic and political institution within the American system, the development of corporate law is impeded by a deficient pedagogy—and thus, to a certain degree, scholarship—that scarcely mentions the power and influence corporations hold. Critical voices, in particular, are excluded from virtually all corporate law textbooks. Many corporate law texts taught in law school classrooms treat the social role of the public corporation as a black box of corporate law pedagogy and, by extension, mainstream legal scholarship. Indeed, a relentless stream of legal scholarship challenging the law and regulation of the public firm from the perspective of its broader social and economic implications receives little to no mention in the key textbooks adopted and taught from in law schools today. This Article challenges the dominant corporate law master narrative perpetuated in all of the major business law textbooks. This master narrative prevents law students and legal scholars from fully understanding and analyzing the changing nature and evolution of law and power in the United States.
In challenging the status quo narrative, law students and scholars today must consider the fact that at the apex of the modern public firm stands the Chief Executive Officer (“CEO”). CEOs act as the new potentates in American society and manage their firms as “personal fiefdoms.” The pay of CEOs and senior executives at the largest firms proves their power, as they now command enormous salaries beyond most athletes or movie stars and far beyond any ordinary citizen or employee. Never before has the American economy produced so much for the benefit of so few—most of whom are corporate or financial elites. Recently, data on current inequality affirms that wealth gaps have again reached the historically high levels last seen in the chaotic days just prior to the financial collapse of 2008.
Even when chief executives who constitute this new economic royalty fail badly in their supposed primary task of shareholder wealth maximization, as they did during the financial market crisis of 2008, they are still richly paid through stock options or golden parachutes. These arrangements exist with the consent of their handpicked confederates on the Board of Directors who too often serve as nominal supervisors. Yet, issues of CEO power, CEO compensation, golden parachutes, and the crony capitalism that gives rise to board members with close affinity to the CEO, ostensibly supervising the CEO, get little discussion in the most widely used corporations textbooks today. The manifest costs of CEO primacy in the public firm are not mentioned at all. Today’s law students will become tomorrow’s business leaders, advisors, and policymakers, but their legal education regarding corporations suffers from crucial blind spots. This black hole of knowledge will lead to an intolerable ignorance on the part of those who propose to lead on global economic issues in the future.