By: John F. Coverdale
Many observers have noted that American corporate law lacks a
sound foundation. The participants in a symposium on the most
recent attempt to systematize American corporate law, the American
Law Institute’s ambitious Principles of Corporate
Governance, criticized the Institute’s efforts from many
different perspectives, but agreed that “[t]he Principles lack a
clear and coherent theory of the corporation.” Delaware corporate
law has been faulted for being “incoherent, [and] lacking an
animating principle.” Professor Mitchell has described the
question of “the nature and purpose of the corporation” as “the
great unanswered question in corporate law.”
This article proposes that useful principles for answering that
question can be found in the writings of John Paul II. He
offers a thick vision of economic activity and business grounded on
a philosophical and theological anthropology which avoids the
pitfalls of both individualism and collectivism. That vision
of economic activity and business provides a suitable foundation
for thinking about the legal issues of the structure of business
organizations, the relations between employers and employees, the
goals of business, and business governance.
The purpose of this article is not to propose concrete legal
reforms, but to introduce readers to John Paul II’s vision of how
economic activity and business fit into human life and into the
effort to achieve human fulfillment. This question may seem
far removed from day-to-day legal issues about employer-employee
relations, the role of community interests in business
decision-making, or the powers of directors. It is, in fact,
far removed from them in the sense that careful legal and economic
analysis is required to translate a vision of business activity as
it relates to human fulfillment into workable legal
principles. On the other hand, an adequate understanding of
these great issues is the essential foundation for a satisfactory
resolution of the technical issues. If form follows function,
as Louis Sullivan, the father of modern American architecture,
taught, we cannot hope to regulate businesses intelligently without
an adequate grasp of their purpose and their role in human
life. But our understanding of the purpose of business and
its role in our lives must ultimately rest on a view of what it is
to be human and to achieve human fulfillment.