The Centre for International Studies and Diplomacy (CISD) at the School of Oriental and African Studies (SOAS), London (UK), invites proposals for single or joint papers on corporate strategies and organisation in the global economy. Our particular focus will be on the role of limited corporate liability, but we are interested in contributions on a wide range of themes broadly relating to this particular focus.

Papers from the conference will be considered for inclusion in a Special Issue of the Cambridge Journal of Economics (edited by S. Blankenburg, D. Plesch and F. Wilkinson), as well as for a separate edited volume of conference proceedings.

Conference Theme and Objective
For some time now, the increase in corporate power under the auspices of the global implementation of a neoliberal policy-agenda has been controversial. The role of corporate neo-liberalism is one of the key issues of international diplomacy as well as of the academic study of international economics. After the fall of socialism and of the Berlin Wall, a rapid expansion of neoliberal capitalism – often simply called ‘globalisation’ – followed suite. Yet, the glorious promise of the early days of more freedom and more prosperity is by now widely perceived to have failed the majority of the citizens of the newly globalised world: What dominates the headlines are tales of corruption, declining life expectancy and health in the population, weak labour rights and social security, of war and terrorism, of increased inequalities and social tension.

This conference is designed to make a specific and focused contribution to the on-going debate about the future of globalisation by taking a critical look at one of the central players –private corporations – and at an important ‘rule of the game’ that has become the preserve of these players in particular: corporate limited liability.

Business centred liberal democracy, as we know it, rose to power on the promise of equality before the law, equal opportunities for all, democratic accountability of its major institutions, and a considered balance between individuals’ right to freedom of choice and decision, with a duty to account and be liable for the consequences. The much hailed ‘good governance agenda’ of leading international organisations, such as the World Bank, in many ways restates these principles and makes aid to developing economies dependent on their adherence to policies promoting free markets, democratic accountability, the rule of the law and political transparency. Of course, reality and principle have long been at loggerheads in many respects and many places. However, the fundamental exception - fundamental, because of its entrenched, largely un-refuted legal status and systematic application – is the exemption of one group in society from liability for their actions and decisions: The owner-shareholders of corporations operate under the legal rule of corporate limited liability.

In our view, a thorough re-examination of the role of corporate limited liability in today’s global economy is, therefore, of utmost importance, and a central and useful conduit to a larger enquiry about the organisational patterns and strategies of private corporations and their impact on and relationship with the definition and organisation of public interests.

Further Background
Corporate limited liability (CLL) has been an important theme since the inception of modern political economy. In The Wealth of Nations, Adam Smith already remarks that "to establish a joint stock company, however, for any undertaking, merely because such a company might be capable of managing it successfully; or to exempt a particular set of dealers from some of the general laws which take place with regard to all their neighbours, merely because they might be capable of thriving if they had such an exemption, would certainly not be reasonable." (Book V, ch. 1, pt iii, art i). Throughout the 19th century, CLL continued to attract the attention of economists, such as Marshall, and campaigners, such as Robert Peel, alike. Ironically, the scientific and political debate surrounding CLL faded into near oblivion exactly at the moment at which it became central to the operation of large capitalist corporations, in the 1930s and 40s. That the significance of CLL has remained obscured ever since, is at least partly explained by the fact that socialism raised more fundamental objections to capitalist property rights, and that, where capitalism was not superseded by socialism, the dominant assumption was that it would operate within the framework of a mixed economy.

With the advent of neo-liberalism and economic globalisation, however, large corporations have risen to new heights of near-unfettered power, buttressed by the efforts of international organisations, such as the WTO and the OECD, to extend and entrench an agenda that favours the unencumbered reign of Anglo-American business practice in the name of free markets. Just as the collapse of Eastern European socialism prompted the triumphant claim that capitalism constituted ‘the end of history’, so the idea that corporate managers should act exclusively in the interest of owner-shareholders has been declared ‘the end of history for corporate law’ (Hansmann and Kraakman 2000).

Not surprisingly, this dominant ideology of shareholder primacy in corporate affairs has met with opposition, in particular in the wake of spectacular corporate scandals, such as Enron and World.com, but more broadly in response to the increasingly apparent destructive impact of unfettered corporate power on the growth prospects of many developing economies, on the natural environment and on mass social welfare in advanced economies. So far, the opponents of contemporary corporate power have focused on two main strategies: The growth of local initiatives to strengthen networks of non-corporate organisation and production, e.g. cooperatives (Hines 2000), and the promotion of voluntary reforms directed at an enhanced ‘corporate social responsibility’ (CSR) of large corporations (Kotler and Lee 2005, Vogel 2005, www.csr.gov.uk). The latter movement has, in turn, suggested two core approaches to the control of corporate power: The first calls on corporate decision-makers to adopt a practice of ‘good corporate governance’ aimed at fairness, transparency and accountability. The second centres on the idea of increasing the power of owner-shareholders.

Neither of these strategies have proven very successful. While in particular the CSR movement remains popular, doubts about its effectiveness are fast gaining a growing audience (e.g. Christian Aid (2004), Behind the Mask: The real face of CSR). One reason is that the inherent vagueness of the ‘good corporate governance’ concept has made it easy for corporate business to turn it from a rallying cry to curb its powers into a convenient marketing tool. Another reason is that the call for increased powers for owner-shareholders, presumably as a means to make large corporations more accountable for the social consequences of their activities, completely ignores a central device on which corporate power is built, namely CLL. CLL explicitly exempts owner-shareholders from responsibility for the actions of the companies in which they have a share. That is, CLL establishes a unique legal case for the separation of ownership rights from obligations for a select special interest group.

This suggests that, rather than ‘good corporate governance’ or CSR, it is a critical take on CLL that is key to an effective strategy to reign in unfettered corporate power. Two lines of reasoning underlie this argument: First, the significance of CLL in contemporary capitalism must be seen in conjunction with the well-known separation of ownership from control in large corporations. Together, these two features of corporate organisation ensure an almost total insulation of a small group of private decision-makers from social control: The manager-directors in control of the use made of assets are accountable only to a special interest group (the owner-shareholders) that, by legal definition, is exempt from any responsibility for the social consequences of the manager-directors’ decisions. Consequently, "the connection of the shareholder with the business is no more intimate or permanent than that which the holder of a ticket in the Derby Sweeps has with the horses; and he certainly takes less interest in its activities. [...]" (Sraffa, unpublished papers). In this sense, CLL is an essential source of corporate power. Second, CLL constitutes a flagrant and arbitrary violation of the most basic formal principle of legitimacy on which capitalist societies pride themselves – equality of all before the law. It also makes a mockery of the dominant opposition to regulatory intervention into free markets: If regulation distorts free market outcomes and is, thus, harmful to economic prosperity, on which grounds can CLL be exempted from this logic? From this broader perspective of the self-legitimisation of capitalism, CLL represents an unjustifiable exception from basic principles. It is no exaggeration to note that owner-shareholders (and by extension manager-directors) are beyond the law to an extent not (formally and explicitly) enjoyed by the Central Committees of Communist Parties, and more akin to the status of the aristocracy in the Ancien Regimes of the pre-enlightenment. After all, even the OECD (2001: Behind the Corporate Veil: Using Corporate Entities for Illicit Purposes) has pointed out that contemporary corporate power, emanating from its systematic insulation from social control, is prone to abuse and corruption.

From both these perspectives – i.e. the significance of CLL for the property rights and control mechanisms underlying contemporary corporate power, on the one hand, and its incompatibility with the ideas from which capitalism derives its legitimacy, on the other– CLL is central to a critical engagement with, and in particular to an effective internal critique of the role of powerful private corporations in contemporary capitalism. This critique would have to address the main argument advanced in support of CLL from its beginnings, namely that CLL and shareholders’ privilege, rather than protecting corruption, in fact safeguard those responsible for the creation of wealth and prosperity. In this view, the special status granted to private corporations and shareholders through CLL is (a) a source of continuous public benefits in the form of the best possible and historically most successful form of wealth creation, and (b) profoundly democratic since anyone can become a shareholder (e.g. Micklewaith and Woolridge 2003). Apart from a critical analysis of the supposed ‘democratic nature’ of shareholder organisation, this will require a thorough discussion of the history of CLL: After all, the industrial revolution was well under way before CLL became the norm at the start of the 20th century (initially mostly for Anglo-American capitalism). In addition, approaches to liability other than CLL, have not only remained important throughout the 20th century (the Californian pro-rata liability system until the 1930s, Lloyd’s of London, the professions) but have been associated with successful economic performance.

The centrality of CLL to a critical debate on corporate power is increasingly being recognised by influential political actors (leading NGOs, UK and French MPs, etc.) who have begun to shift from a focus on CSR to the problematic of CLL. Yet, within academia, the analysis of the contemporary significance of CLL has remained more or less confined to the relatively narrow confines of specialised legal debates (Arlen and Kraakman 1997, Geraghty 2002, Gobert 1994).

The objective of the conference is to take an intellectual lead in the emerging public debate on CLL that takes on board, but goes beyond the mentioned legal discourse.

Papers from the conference will be considered for inclusion in a Special Issue of the Cambridge Journal of Economics on Corporate Limited Liability (edited by S. Blankenburg, D. Plesch and F. Wilkinson), as well as for a separate edited volume on conference proceedings. The conference is part of an ongoing CISD research programme.

Themes for Papers
We are open to suggestions and contributions that address this broad concern. Examples of specific topic of interest that would be welcomed include

• The historical origins and development of corporate limited liability (CLL) and the role of joint stock companies in the history of capitalism (US, UK, Western Europe, the role of CLL in European colonies, in contemporary developing and transition economies).

• The analysis of corporate limited liability and joint stock companies in the work of leading economists

• The significance of corporate limited liability in the operations of today’s national and trans-national private corporations, its effects on international prosperity and peace:

    # The role of corporate limited liability for international capital mobility
    # Can international corporations function without corporate limited liability?
    # The role of corporate limited liability for economic development

• The contemporary legal debate on corporate limited liability and its ramifications for the socio-economic dynamics of global capitalism

   # The legal shape of corporate limited liability in different countries
   # Corporate limited liability and corruption
   # States sovereign immunity and corporate sovereign immunity

• The role of CLL in specific socio-economic areas:

   # Health and Safety
   # CLL and Intellectual Property Rights (e-commerce, new technologies)
   # CLL in the professions
   # CLL and environmental externalities
   # The differing role of limited liability in the provision of private and public
      goods; CLL and public-private partnerships
   # Trade Union positions on CLL

• Strategies for the reform of corporate limited liability:

   # Restoring accountability in law - Abolish CLL and introduce insurance?
   # A balance of special interest privileges (mixed economy)?
   # Corporate social responsibility, stake-holding and self-regulation?
  # From the legal accountability of Heads of State to the legal accountability of owners?

Deadline for submissions:
Proposals for single or joint papers: Please send an abstract of not more than 500 words by email to Stephanie Blankenburg (sb123@soas.ac.uk) and/or Dan Plesch (dp27@soas.ac.uk) NO LATER THAN 15 APRIL 2007. Text, HTML, Word and PDF format attachments are acceptable. If you do not have access to the internet/e-mail, please send three copies of your abstract to:

Stephanie Blankenburg
Department of Economics
Faculty of Law & Social Sciences
SOAS
Russell Square, Thornhaugh Street
London WC1H 0XG
UK

Proposals for sessions and streams: Feel free to suggest themes for workshops, complete sessions or streams. In this case, please indicate exactly what you are proposing, giving the names and email addresses of the proposed speakers, and attaching the abstracts (of not more than 500 words each) for their papers. Send by email to Stephanie Blankenburg and/or Dan Plesch, as above.

For more detailed information (including background information) on this conference see

http://www.cisd.soas.ac.uk/index.asp-Q-Page-E-corporate-accountability-limited-liability-and-the-future-of-globalisation--2692813

or

go to http://www.cisd.soas.ac.uk/

March 5, 2007.