Protecting Markets from Society: Non-Pecuniary Claims in American Corporate Democracy
The state incentivizes investors to entrust capital to public corporationsby granting shareholders enforceable rights over managers. However, theserights create legal “access points” through which social movements can makenon-pecuniary claims on the corporation. I use original historical researchon the Securities and Exchange Commission’s administration of federalsecurities law to show that concern over non-pecuniary claims motivates thestate to enact the role of “market protector.” In this role, the Commissioninsulates managers of corporations from shareholders’ claims that it deemsillegitimate because they are insufficiently profit-oriented. Thus theinverse of Polanyi’s observation that society protects itself from marketsis also true: the state creates market boundaries so that “always embedded”markets function more like autonomous, profit-oriented markets.Accordingly, the extent to which corporate democracy represents general,social interests or narrow, profit-oriented interests is largely a functionof political contestation and state policy.