The Relevance of Corporate Theory to Corporate and Economic Development: Comment on the Transplantation of the Legal Discourse on Corporate Personality Theories

The question posed by this conference is, what can history teach us about corporate law? The development of corporate law in the United States has been intensely practical, with courts and legislatures bowing to the changing needs of business in their regulation of corporate organization, management, and finance. As Professor Harris and others show us, positive and normative theories have appeared from time to time, typically, or so it would appear, in response to these changes.1 This reactive nature of corporate law and theory departs from the tighter, traditional, continental interrelationships of theory and practice and undoubtedly reflects historical, social, environmental and psychological differences as much as anything else.The differences are critically important to understanding the historical role of theory in corporate law and its impact on the present. I frankly admit that I find it difficult to approach Professor Harris's paper on its own terms for two different reasons. First, I approach the issue as a corporate scholar, not an intellectual historian, so I suppose my comments reflect the very pragmatic American approach to corporate law and theory in which I was raised and now work. Second, whatever troubles I might ordinarily encounter in evaluating theories about corporate law, Professor Harris's paper is not really about theory at all, nor, as he tells us, about corporate law, but instead it operates at an even higher level of abstraction as a theory about theory. The role of corporate theory in his paper is to serve as a case study for a broader story of the ways in which talk about corporate theories was conducted among Germans, Britons, and Americans over time and with effects across time. Professor Harris's central point appears to be that discourses, as well as theories, are historically constrained, and thus their doctrinal uses are also historically constrained.2 The tale of the real entity theory and its ultimate grounding in American corporate law demonstrate that our understanding of the corporation is contextual.It didn't take much to persuade me that our understanding of the corporation is contextual. My question about the paper is, what does the nature of discourse about corporate theory add to what seems to me to be a self-evident proposition? In keeping with the spirit of Professor Harris's thesis, I will develop this comment with keen sensitivity to context and will show and agree that context matters by telling a parallel story of the development of the American corporation. My comment places less emphasis on theory and more on the law, and it gives attention to economic developments as well.3 What I am left with in the end is a nagging question as to why theory matters, let alone theorizing about theory, at least outside of the sacred precincts of academia. And I am left with this question precisely because I believe that theory played very little role in the truly important developments of American corporate law. Theory might have legitimated what had already happened, but that is not Harris's point. And so I begin my tale with, perhaps, an intellectual "barbaric yawp."4Harris notes that the real personality theory was developed by Otto von Gierke more than three decades before it found its way into the American context.5 Gierke didn't care about the relationship between stockholders and creditors, nor did he care about managers or markets.6 He didn't care about solving practical business problems at all; rather he was "interested in the effects fellowships had on the ideas of the individual and on the spirit of the nation."7 Thus, Harris asks, why was the theory so popular as applied to business corporations in the United States where "legal personality discourse entered the context of business organization more than any other American context?"8 His answer appears to be that the theory permitted the corporation to enjoy a combination of constitutional rights and entity characteristics that would otherwise have been incompatible. …