In a comment over at the Conglomerate, Lyman Johnson observes that:
Steve Bainbridge does not ultimately disagree with the assertion that the law does not mandate that a corporation have as its purpose shareholder wealth maximization. He may not like my corporate purpose view--but he and I have disagreed about that before and anyway all organizations have express or implied institutional purposes that transcend those of their various constituencies--and prefers to operationalize the matter via the BJR but that does not detract from the view that the law, constituency statutes or not, does not mandate that particular goal. Corporate purposes are largely shaped by other factors, including misunderstandings of legal mandates
To which I responded: I don't "disagree with the assertion that the law does not mandate that a corporation have as its purpose shareholder wealth maximization" but only because I don't think it's useful to ask the question of "what purpose does the law mandate the corporation pursue?" (See this earlier post.)
The reason I don't like your corporate purpose view is that it necessarily rests on the reification fallacy. Purpose is always associated with the intellect. In order to have a purpose or aim, it is necessary to come to a decision; and that is the function of the intellect. But just as the corporation has neither a soul to damn nor a body to kick, the corporation has no intellect.
Our friend Joan Heminway has elsewhere cited Eric Engle, Extraterritorial Corporate Criminal Liability: A Remedy for Human Rights Violations? 20 St. John's J. Leg. Comment. 287, 293-295 (2006), for the proposition that “Historically, one argument against corporate criminal liability was that the corporationwas only a legal person and thus incapable of forming mens rea[,] for the corporation has no will independent of its employees and shareholders.”
If the corporation has no independent will and is thus incapable of having mens rea, it likewise cannot have a purpose, by definition.
As Arthur W. Machen, Jr. observed all the way back in 1911 (24 Harv. L. Rev. 253), "In addressing commands to a corporation, the law can speak only to the human beings who compose it or who manage and control its destinies. In form, punishment for violation of those commands may be inflicted on the corporate entity, but in so doing the law is using the corporate entity as a mere means of reaching the human beings who act for the corporation. Whether this method of reaching those human beings is the best or most effective need not now be considered. The point here is that in denouncing its penalties upon corporations, the law is using the corporate entity as a mere sight to direct its shots towards the human beings who are behind the entity."
Which is a nice explanation of why it is far more preferable to operationalize this discussion as a question of the fiduciary duties of corporate officers and directors rather than as a corporate purpose.
