SOCIETÀ ITALIANA DI DIRITTO ED ECONOMIA
Lorenzo Sacconi (University of Milan)
This paper makes four statements on the relation between justice and corporate governance
1) The first statement is empirical: It seems to exist a relevant relation between the growth of unacceptable inequalities and corporate governance models. Hence if you want to reduce unjust inequalities you have to reform CG.
2) The second is explanatory. The emergence of institutional forms is not driven by unique economic necessity. It is an equilibrium selection process emerging from a multiplicity of possible equilibria, framed by beliefs systems, social norms and shared mental models. But the most powerful normative shared mental model that allow us to think the origin of institutions is the “social contract model”. It may shape the equilibrium selection process, assigning the initial conditions of the equilibrium selection process, so that the selection of CG institutions may be affected by contractarian conceptions of social justice, or different views of the social contract.
3) The third is normative. Given the role of views of the social contracts in the selection of the CG institutional forms, there is room for relevance of a genuine normative theory of CG. The socially responsible corporation (or sustainable corporation) is grounded on the idea of the social contract of the firm (micro) . From this micro level the justification goes back to higher levels –reaching the constitutional contract on CG principles. until corporate governance takes a place in the very general idea of contractarian social justice. Therefore socially responsible CG can be justified according to the Rawlsian principles of justice, and this requires much less inequalities than what currently occurs.
4) The fourth statement is still normative. We can go a step forward in the search for a normative grounding of CG in the idea of social justice according to the capability approach (Sen). If we make this step, we discover that the essential legal counterparty of the capability concept is that entitlement, which means an Hohfeldian liberty and not so much a claim right or a property right. Hence CG must be developed to protect the stakeholders multiple liberties and permissions to access the firm assets, by means of a combination of permissions, rights and responsibilities. and not so much the protection of the property rights of a single class of shareholder (residual claimant or residual control right holders) . Even if this is only the first step in a normative argument on CG grounded on the CA, we have to recognize that a world rich of capabilities would be one in which many good are not privately owned, or a world in which everything were privately owned would be very poor in terms of capabilities (and hence wellbeing) . Admittedly this is a significant change of perspective in law and economics.