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Tackling Corporate Power: New Approaches to Governing Firms and Governing Markets

Paper Session

Friday, Jan. 6, 2023 8:00 AM - 10:00 AM (CST)

J.W. Marriott New Orleans, Orleans
Hosted By: Union for Radical Political Economics
  • Chair: Brian Callaci, Open Markets Institutes

New Frameworks to Define the Political Economy of Corporations

Lenore Palladino
University of Massachusetts Amherst


It is critical to distinguish what a corporation is—an economic institution that has special attributes granted by the state that distinguish it from other businesses—from what a firm does: produce goods and services for consumption, some in a more innovative manner than others. The theory of the corporation as an innovative enterprise—engaged in productive innovation by producing higher-quality goods and services for lower unit costs—explains what makes corporations successful producers. Theories of the business corporation as a ‘real entity’ or ‘enterprise entity’ describe its attributes with reference to other types of structures. Shareholder primacy competes with the theory of the enterprise entity and stakeholder theory for a vision of what a corporation is and whose interests it should service but does not describe well what a corporation does — for that we need a theory of innovation. This article explores economic theories of production, innovation, and growth that are based on the elements of what has enabled corporations to succeed or fail, and the social conditions that have enabled those dynamics to play out inside the walls of the business. I contrast theories of innovation with several strands of theories describing what the corporation is, and therefore who should have power within it: shareholder primacy, rooted in the neoliberal theory of the markets, and stakeholder theory, as developed in progressive law and in business & management scholarship. While we focus on the theory of the innovative enterprise as the best framework for what a firm does, the theories of innovation as they were developed in the twentieth century did not carefully consider the question of negative externalities—the pollution and resource extraction created by what the corporation does— from the periphery to the center.

Political Exchange: A Condition for Wage Restraint

Andrew Elrod
United Teachers Los Angeles


Over the course of the twentieth century, those nations who most seriously considered and practiced a national policy of full employment realized that wages were an important cornerstone of ordered markets. Stable growth policy thus brought governments to coordinate the institutions of wage determination—workers, employers, labor law, and the government budget and credit policies. In both US shipbuilding and building construction industries during WWII, "stabilization agreements" fixed wage rates, overtime rates, provided union security, and expanded public authority into prices and investments during periods of unprecedentedly rapid growth. After WWII, economists across the North Atlantic reconceived of labor's stabilizing role in national growth programs in terms of national "wages policies" or "incomes policies." This paper considers two periods of experimentation with such "wages policies" in the US, World War II and the Vietnam War, and compares the reasons for success or failure in stabilizing markets during periods of accelerating inflation.

Grassroots Democracy? Democratic Governance in Public Power Institutions in the United States

Sandeep Vaheesan
Open Markets Institutes


How democratic and publicly accountable have cooperative and public power institutions in the United States been? Have they been models of “grassroots democracy,” in the words of former Tennessee Valley Authority Chairman David Lilienthal? The history of electric cooperatives, municipal utilities, and federal power projects reflects an inconsistent democratic record. Some cooperatives and municipal utilities have fulfilled the vision of economic democracy, in large measure, and been responsive to, and effectively governed by, their communities. Others have been quite different and plagued by a democratic deficit and featured insulated, self-perpetuating, and even outright corrupt boards and managers. In general, federal power projects such as the TVA have been technocratic and unaccountable to the localities, states, and regions they serve and, at most, engaged in co-optation and accommodation of powerful interests, as opposed to fostering genuine community participation. This mixed democratic performance of cooperative and public power can be traced, in part, to legal and policy choices made at the federal, state, and local levels. Certain decisions encouraged and codified democratic control, while others produced institutions that did not seem all that different from investor-owned utilities.

Globalizing Regulation: A New Progressive Agenda for Trade and Investment

Maha Rafi Atal
Glasgow University


The past two decades have witnessed growing concern about the challenges governments face in regulating multinational corporations. Trade and investment agreements play a crucial role in setting the regulatory regime that governs these transnational activities. The multilateral trade and investment regime has been experiencing a period of crisis, with the collapse of proceedings at the World Trade Organization’s appellate body and the failure of the Doha Development Round. During this period, states have turned to unilateral, bilateral and regional channels in lieu of multilateral progress. Bilateral and regional agreements contain a much higher degree of regulatory coordination among members, including a growing number of binding standards on labor, the environment and human rights which apply to multinational corporations operating across the trading blocs. This paper reviews three cases of states, or groups of states, endeavoring to impose binding regulation on multinational corporations through the trade and investment regime. This paper argues, that these efforts, while partial, form the basis for a new multilateral trade and investment regime that holds corporations accountable. It shows that during the multilateral system’s period of crisis, as states in both the Global North and Global South have pursued their own strategies and shown a shared commitment to increasing their regulatory capacity, the policy consensus among practitioners at the multilateral level has shifted towards increasingly accommodating these efforts. Together, this paper argues, these developments lay the groundwork for a new multilateral model of trade and corporate accountability.
JEL Classifications
  • J5 - Labor-Management Relations, Trade Unions, and Collective Bargaining
  • L2 - Firm Objectives, Organization, and Behavior