Corporations, Networks, Technology, and Access

Paper Session

Friday, Jan. 6, 2017 8:00 AM – 10:00 AM

Swissotel Chicago, St Gallen 2
Hosted By: Association for Evolutionary Economics
  • Chair: Ann E. Davis, Marist College

Evolution of the Corporation in the United States: Stabilization Policies and Vested Interests

Glen W. Atkinson
,
University of Nevada-Reno
Stephen P. Paschall
,
Lovett Bookman Harmon Marks LLP

Abstract

The development of transportation and communication infrastructures, improvements in productive technology and the significant increase in the granting of corporate charters in the nineteenth century involved changes in the financial and legal institutions supporting production for large-scale markets. The evolution of the corporation under the circumstances of the widening of markets reflects the role of the legal system in disputes between public and private interests. <br /><br />
<br /><br />
From the earliest characterization of the corporation as an entity created by a contract between the State and its incorporators and bound by its charter to the adoption of general incorporation statutes, the tension between public power and private power persisted. When the doctrine of ultra vires frustrated financial demands for mergers to stabilize prices, the formation of monopolies under general incorporation statutes was confronted by federal antitrust law and state regulation of business. Stabilization in a period of industrial abundance meant antitrust law would be restrained and state regulation would be limited.<br /><br />
<br /><br />
This paper will examine the court decisions deeming the corporation to be a person with regulation of it limited by the due process requirements of the Fourteenth Amendment and creating the Rule of Reason in antitrust law. Such examination involves John R. Commons' stages of capitalism, particularly the age of abundance and the search for stability related to Banker Capitalism. The benefit of public stabilization policies for the vested financial and business interests will be explained.

Reproducing the Firm: Networks and Routines

Wilfred Dolfsma
,
Loughborough University-London
Amber Geurts
,
University of Groningen

Abstract

Firms exist because jointly people can produce goods that they cannot produce individually, or they can produce them much more efficiently. People collaborating in firms can do so because of the social fabric that they create and maintain, somehow. The social fabric consists of the relations between individuals, in terms of a multitude of possibly overlaying social networks (Aalbers & Dolfsma 2015), as well as because of routines that grow from these social relations. The social relations can, but need not be informal. Routines, a concept similar to the concept of institutions, but best restricted in use, perhaps, to a more specific practice, must be supported by social relations, but can develop to become independent of them.
Routines set expectations with all individuals involved in a practice about what is appropriate behaviour to show in circumstances triggering an if→then sequence of behaviours. Organizational routines create a status quo expectation among participants in a firm, or practice generally. Organizational routines thus (help) reproduce the firm. As Kenneth Boulding has taught, however, each practice (or system) faces an external environment that affects it (Dolfsma & Kesting 2013), “irritates” the if→then routines that make the system work as Niklas Luhmann would put it. What is needed, then, is a conceptualization of what might stabilize the systemic nature of a practice again, after it is irritated.
In addition to supporting the development of routines, social network relations help determine when routines can be departed from without upsetting the status quo. Social network relations between individuals in a firm (organization, practice) offer the means by which novel kinds of routines are sought as information spreads across individuals in an organization through the contacts maintained.

Technology, Gender, and Entrepreneurship: Bridging the Resource Gap

Tonia Warnecke
,
Rollins College

Abstract

Some of the most important resources for entrepreneurs and small businesses are intangible—knowledge and access to networks. In the developing world, technology can facilitate these resources and address basic human needs in a variety of ways, from provision of farmer training and cloud-controlled clean water systems to health information and mobile money services. Some of these services expand access to resources in ways that particularly benefit women. Where male-female interactions or decent work opportunities for women are limited, information and communications technologies can enable women to avoid some forms of gender bias, improving the ability to shift to the formal sector, access wider markets through e-commerce, partake in distance learning programs, and share experiences with and gain mentorship from other women. However, there are large gender gaps in access to technology, particularly in rural areas. Worldwide, women are 14% less likely than men to have access to a mobile phone, and 23% less likely to have access to the internet, though in some regions the gender gaps are much larger (Mitchell 2015). With particular focus on female entrepreneurship, this paper will discuss how technology is utilized to create social impact, reduce gender inequalities and increase female empowerment in the developing world context. Challenges hindering the impact of technology in these areas will also be discussed.

The Corporation, Credit, and the Public Interest

Eric R. Hake
,
Catawba College

Abstract

Despite Veblen’s analysis of the rise of a credit economy a century ago, public policy has not yet addressed the profound role of the corporation in reorganizing industrial capacity or altering rights to work and income. Policy discussions are, unfortunately, still framed with reference to the benefits of competition, or a merger’s potential impact on market share and pricing control. While the nascent applications of equity finance and merger practice were laid out in rough form for Veblen to evaluate, recent decades have extended and multiplied the methods and practices of the modern credit economy with dizzying speed and complexity. Like that earlier time, this modern period has remade the substance of old taxonomies, blurring the lines between stocks and bonds, equity and liability, manufacturing and finance, capital and credit, investment and speculation. This paper will analyze the modern methods of corporate financial practice, in the hopes that a better understanding of its purpose and form will allow more effective framing of the initiatives necessary to promote the public interest.

Collectives and Commitments: The Co-Emergence of Corporations and Capital Markets

Ann E. Davis
,
Marist College

Abstract

As recognized by J.R. Commons, the corporate command of labor in the market is a form of “public” power, although the business corporation is considered “private.” It is important to trace this apparent anomaly from the long term emergence of the private, for-profit business corporation from its roots in the early modern medieval Europe. The earliest forms of the corporation were the church, the commune, and the guild (Berman; Wickham; Barkan; Najemy), with eventual extension to the chartered monopoly corporation by the crown in the Dutch East India Company and the English East India Company (Dari-Matiacci, Gelderblom, Jonker and Perotti 2013). The issue of “shares” of the corporation and the emergence of capital markets for the trading of public and private debt has been dubbed the “financial revolution,” which then facilitated the emergence of the fiscal military state (Schumpeter; Brewer). The presence of public decision-making processes by parliaments, with public deliberation and “representation,” had an impact on the cost of credit (Stasavage; Pezzolo), and the race for empire via war and global exploration. This relative “rise of the West” has been interpreted as the superiority of “property rights” (Acemoglu and Robinson; Pomeranz), while the role of collective commitment and legal reinforcement has been recognized by economic sociologists, economic historians, and institutionalists (Carruthers; Greif; Trivellato; Stasavage; Hodgson; Pistor). This paper will explore the historical emergence of the private business corporation, in terms of the co-emergence of the financial circuit and enforceable credit commitments by collective entities, illustrating the methodology of “historical institutionalism” (Davis 2015).
Discussant(s)
Ellen Mutari
,
Stockton University
JEL Classifications
  • B5 - Current Heterodox Approaches
  • L2 - Firm Objectives, Organization, and Behavior