Jeffrey Gordon offers a typically insightful and provocative essay on the titular subject, which begins:
The question that emerges from proposals to elevate a corporation’s “purpose,”[1] the call for co-determination in Senator Warren’s Accountable Capitalism Act and now the Business Roundtable’s purported elevation of stakeholder interests, is whether corporate governance is capable of playing the important role in addressing social problems that some have posited. Such an approach seems to suggest that the social challenges we face can be dealt with at the level of the firm – that is, by specific corporations and their boards. This assumption seems to animate the argument for firm-specific tailoring of corporate governance in light of distinct corporate missions.
The alternative perspective is that the fundamental issues are more clearly viewed as the economic and social effects of a dynamic and global market economy in which companies operate and are forced to compete. And so rather than focusing on the firm as the unit of greatest concern, and assuming that companies themselves are responsible for, say, retraining workers whose skills have become obsolete, whose human capital has depreciated, I think the real issue is one of social insurance, of ensuring that we have the right form of government match to ensure the preservation and, where possible, the reinvigoration, of human potential over the lifetime of employees. Designing and implementing this kind of insurance is critically important in a dynamic economy like ours – an economy in which no single firm is able to offer thick enough insurance, including income preservation insurance, to compensate workers, especially aging workers, for the shrinking job security associated with technological change and obsolescence.
Kindly go read the whole thing.
