I read with great interest Russell Powell's new paper Spirit of the Corporation (May 4, 2021). Seattle University Law Review, Vol. 44, No. 2, 2021, Available at SSRN: https://ssrn.com/abstract=3839820.
Abstract: Christian theologians have analyzed the productive and destructive qualities of institutions, sometimes attributing to them human virtues and vices. In City of God, Saint Augustine describes a utopian vision of human community within a Christian context as an alternative to the flawed “City of Man.” Contemporary theologians and sociologists have described collective structures of human behavior in institutions as having a kind of “spirit” analogous to the individual human “spirit.” Institutions are then assumed to take on an existence separate from the individuals within them, and in fact, the “spirit” of an institution influences the behavior of individuals. In The 20th Century Capitalist Revolution, Adolf A. Berle Jr. considers the tradition of religious utopianism and whether corporate capitalism has a spiritual character that impacts communities and individuals for good or ill and whether this might have implications for corporate managers. This Article provides a contemporary theoretical framework for Berle’s insight as a basis for considering its legal and ethical implications for corporate governance. It attempts to unpack contemporary understandings of spirit in order to provide a helpful working definition. It also considers the origins and essential traits of the modern business corporation in the United States, and discusses the question posed by Berle—whether corporations can or ought to have a sort of moral orientation. The Article ponders potential policy shifts that might tilt the orientation of the “spirit of the corporation” toward the common good and considers the limits of legal reform and the role of individuals and subgroups in changing corporate paradigms.
As longtime readers know, I am deeply skeptical of efforts to invest the corporation with a real personality or soul. My primary statement of this view is in my post Is the corporation an entity? With application to the SCOTUS. It elaborates on my favorite quote of all time, from Edward, First Baron Thurlow: "Did you ever expect a corporation to have a conscience, when it has no soul to be damned, and no body to be kicked?"
On close examination, however, it seems to me that what Professor Powell is really talking about is not some metaphysical spirit but rather what others might call corporate culture.
Powell states, for example, that "If the spirit of a corporation is formed in part by the institutions that support and constrain them (such as law), then legal change may result in a change in the essence of a corporation beyond isolated behaviors" (389). Compare that statement to these:
- "This corporate culture [of retaliating against whistleblowers] must change, and the law can lead the way." Carnero v. Boston Sci. Corp., 433 F.3d 1, 12 (1st Cir. 2006).
- "If we truly want to inspire long term changes in corporate culture, then we need to think carefully about how we might overhaul corporate and securities laws." Miriam H. Baer, Organizational Liability and the Tension Between Corporate and Criminal Law, 19 J.L. & Policy 1, 14 (2010).
Powell elsewhere quotes Walter Wink's observation that "the spirituality that we encounter in institutions is not always benign. It is just as likely to be pathological." (382) Compare that to:
- "This is not to deny that one might understand calamities like Enron in other ways. Clearly this was a pathological corporate culture ...." David A. Westbrook, Corporation Law After Enron: The Possibility of A Capitalist Reimagination, 92 Geo. L.J. 61, 127 (2003).
Interestingly, in Part V, Professor Powell shifts gears and discusses a number of case studies involving positive or negative corporate cultures using the word culture.
The question then is what do we gain by invoking the concept of a spirit? Powell's conclusion states:
There are strong theological arguments from a variety of traditions attributing a spiritual character to human institutions if not an individual spirit. A purely secular approach could conclude that such institutions have identifiable characteristics and cultures which, though created by human persons and other structures, take on an identity separate from those shaping them that may persist. I assert that both views may be identified as something we may understand as “spirit.”
Professor Powell deploys the concept of spirit to discuss a set of corporations whose "spirit" is oriented towards the common good and those who have a "negative impact" because their "essence has been 'corrupted.'"
I am--as most of you know--a big fan of law & religion scholarship. In this case, however, I'm not convinced invoking the concept of a corporate spirt does any useful work that could not be accomplished by invoking corporate cultures.
