Consumers face their other responsibility: as a voter [1]
My current job is to support, coach and teach a new generation of students to become legal professionals in the arena of International and European law. Our program is new, and thus we have ongoing discussions among the members of our faculty on the development and scope of the various elements of our curriculum. One area is Corporate Law. We concluded last year, with our first group of students, that we came only half way convincing our students that business and commerce is worth studying, both from the legal point of view and its wider context, from the view of the general public interest.
It is not uncommon for law students to harbor a distinct preference for matters of public interest, such constitutional law and human rights and for the causes that can be associated with it. Especially our students coming from countries with a recent background of conflict and war tend to be highly motivated in these areas. Rules that govern the conduct of private citizens or their (business) associations seem popular only with those who look out for a commercial career themselves, either as a corporate lawyer or simply as an entrepreneur.
But even for those students with a predominantly “public” outlook, there is a good reason to develop a keen interest in the rules of business and commerce. First of all: most of the rules that govern commercial processes have the public interest at their heart. We all benefit from effective commercial or corporate legislation and its compliance, both from the view of private predictability (pacta sunt servanda) and from the point of view of (public) accountability.
Secondly, we live in a time when many call for a fundamental reassessment of the rules of private enterprises, for instance of financial institutions and capital markets. This happens after a significant period which saw considerable public property move to the private sector and in which the rules of the market enjoyed a great popularity even as the – alleged - mechanism for improved service and cost reduction in areas traditionally belonging to the public domain.
Thirdly, corporations grow into ever larger conglomerates, assuming (or strengthening) a global market control surpassing the scale of control in the hands of any currently existing (international) public institution.
Royal Dutch Shell: more powerful in the world than many single nations
“While the amount of mergers continue to climb, statistics indicate that the average size of the smaller American law firm have decreased, reflecting an overall lean in the industry towards the megafirm.” [2]
The need for new rules regarding financial institutions today is perhaps most strongly felt in the US, following the collapse of major banks. But even the recent election of a new US President can not overnight swap away the greatly increased influence and actual power of large, multinational financial and other commercial corporations. But they will, by virtue of this irreversible development of increased scale and economic influence, increasingly become subject of public scrutiny at the same time. Or at least: this is what we should wish to happen.
It is therefore paramount that legal professionals, professionals especially of International and European law!, should fundamentally understand the principles and mechanics of corporate law and essential elements of private law (such as torts, contracts, litigation), at the same time. This will be in the interest of the scope and effectiveness of corporate law as much as those of public international law. The rules governing the owner (mostly: the owner of capital) should be well balanced against the interests of society, i.e. the public interest.
But what is the definition of “public interest”? When do we wish to be regarded as free consumers and when should we stress our responsibilities as a citizen? As experience tells us, this definition is in evolution all the time. We have to establish and reestablish our sense of public interest every time and again. We live in such a time; a time of some profound redefinitions. This most certainly is one of them: the redefinition of capitalist’s duties and privileges versus the interest of the lager society’s well-being.
An other important principle that drives the conduct of private business is the principle of freedom. In the western world we have clearly chosen for free enterprise and the primacy of consumer autonomy (of which the idea of a free market economy is a necessary corollary). Despite all regulations of both corporate responsibility and product composition, our economies are largely based on real-time consumer preferences. At the same time we allow for a wide range of mechanisms aimed at influencing consumer behavior.
A cynical view would picture this state of affairs as nothing less than a situation comparable with mass slavery. Consumers have no real choice, we are all driven by greater powers to empty our pockets largely to satisfy theirs. Indeed, we can stage our world as an epic drama not of capitalists and consumers but of vicious predators versus the enslaved masses. Enslaved not by force but by seduction. Consumerism is slavery in the disguise of sweets, candies and endless entertainment with no other purpose than to satisfy the selfish desires of the ignorant.
Lawyers indeed can look at private enterprise, public responsibility and consumer behavior with a great deal of cynicism. Much of our current legislation stems from this – kind of – basic lack of trust (in humanity), however may – politically – be professed otherwise. Legislators are humans too, one must remember.
Nevertheless, at crucial points in history legislation came about that was founded in trust, and that projected a new perspective of hope and improvement, for instance at the level of constitutions or acts of independence (“We the People….”), or at the level of national legislation, such as increased voter’s rights and civil rights. We say: yes of course! But this is not always self-evident. Quite a few treaties, and quite a few national laws had been subject of severe strife before they came about. The soul of any law is the struggle it took to get there; history, debates, memo’s and parliamentary questions.
Equally, when we look at corporate law and market regulation from a positive view: that it should all be there to benefit consumers and to benefit the entrepreneurs who service all those various markets, and not simply to restrict them, or curtail commercial innovation, etcetera. And at times, businesses are crucial as partners in times of change and ongoing – and uncertain – innovation. And this is where the private and the public meet again, at many intervals, for instance in our present time.
Above I mentioned the relatively limited influence of a US President even in the face of major economic crises. But one should say that the influence of this office potentially is very great, as the historic example of F.D. Roosevelt convincingly demonstrates, and not just his. Perhaps I can refer you to a speech of President-Elect Obama, which he held back in February this year [3], standing in a GM Car plant and explaining his view on the desired economic policies. At that time, the financial crisis had not yet surfaced. Yet he was making his point right in the hall of one of the big automobile corporations, General Motors, the same corporation that right now begs for public = taxpayer’s money.
We should as much be critical of the public ideologies as of the market ideologies which govern the rules, but also the debates. And we should be very interested in the development of both, exactly in this forthcoming period of shifting paradigms in almost all spheres.
All of the above is to encourage a sense of curiosity among our students in the corporate side of (international) public life, not in contrast but rather to strengthen their emerging competences in overall international law.
Owners do have entitlements, and so have consumers, but there is our responsibility as a voter too. We all must have some common sense of the forces that drive us to more or less cooperation in the modern world, whether they stem from greed or the desire for power, superstition or whatever kind of idealism. Corporate law is one such territory where careful balances have been stricken. It serves freedom and competition, but it secures their broader responsibilities (or potential liabilities) too.
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[1] ) This essay was originally written as an introduction to the scope and relevance of (International) Corporate Law in the curriculum of the International Bachelor of Law program at The Hague University.
[2] ) (The Illinois Business Law Journal, Nov 13 2007, “Megafirm Merger Mania”:
http://iblsjournal.typepad.com/illinois_business_law_soc/2007/11/megafirm-merger.html).
http://iblsjournal.typepad.com/illinois_business_law_soc/2007/11/megafirm-merger.html).
