What is a Corporation? Liberal, Confucian, and Socialist Theories of Enterprise Organization (and State, Family, and Personhood)

What is a corporation? An easy, but not very informative, answer is that it is a person — a legal person, that is. More substantive answers suggest that it is a moral person, a person/thing, a production team, a nexus of private agreements, a city, a semi-sovereign, a (secular) God, or a penguin (kind of). Surprisingly, despite the economic, political, and social importance of the corporate form, we do not have a generally accepted legal theory of what a corporation is, apart from the law’s questionable assertion that it is a “person.” Insofar as legal scholars theorize corporation law, they draw predominantly on economic theories of “the firm.” In this essay, I place the idea, and law, of the corporation in a comparative context in order to suggest, following the English legal historian Frederic Maitland, that corporation law is a “theme from the borderland where ethical speculation marches with jurisprudence.” I do so not to question the utility of economic theories of the corporation as such but to suggest that by thinking in terms of broader concepts — such as organization of economic enterprise more generally — and by considering those concepts in the context of the larger political economy in which economic enterprise is necessarily embedded, we will be able to see better the utility and limits of any particular theory. I outline theories of enterprise organization in three ideal-typical worlds that I call liberal, Confucian, and socialist. My template for liberalism in this sense is the United States while the main source of my idealized notions of Confucian and socialist polities are late imperial China and the People’s Republic of China before the inception of economic reforms in 1978, respectively. Exemplifying distinctive political and moral economies, they help us see more clearly some of the assumptions we make about (U.S.) corporation law. Each of them has distinctive conceptual difficulties in justifying the organization of economic enterprise in the form of corporate entities. None of the theories is self- evidently superior to the others. Collectively, they offer a range of different possibilities with distinctive social, political, and moral visions. Rather, what a comparative analysis of different theories of enterprise organization can do is to bring to focus the cultural specificity of each. What economists ordinarily call “the theory” of the firm is in fact best thought as a liberal theory of the firm, which assumes in turn a particular division of labor among the institutions of the market, the state, and the family. Stated in the parlance of economics, not only institutions of the material kind but even our theories about them can become path-dependent, losing sight of the historical contingency of the phenomena they seek to analyze. In Part II, I briefly sketch the broad ideological contours of liberalism, Confucianism, and Chinese state socialism. Part III examines the theoretical status and place of economic enterprise in each. Part IV analyzes some of the ways in which all three theories of enterprise organization resort to distinctive ideological fictions to maintain their internal coherence: fabrications of corporate personhood, invented kinship, and aspirational unity in a socialist ideal of “the people,” respectively. Part V considers the practical implications of the preceding analysis in the context of the reform of Chinese state-owned enterprises. Part VI concludes.