…Until the 1980s, and over the previous half century, law had served (albeit unevenly and incompletely) as the main institutional vehicle for policing corporations in aid of public interests, thereby protecting people, communities, and the environment from corporate excess and malfeasance. Over the course of the 1980s and thereafter, however, law’s protective role began to diminish, and privately promulgated voluntary regimes (hereinafter “private regulation”) emerged in its place.
Importantly, no such diminishment occurred in relation to law’s parallel and prominent role in protecting corporations and their interests. Here, state legal regimes continued to operate as robustly as ever; incorporate companies; establish their mandates; protect their rights as “persons”; shield their managers, directors, and shareholders from legal liability; compel their officers to prioritize their “best interests” (typically construed as increasing shareholder value); articulate and enforce their contract and property rights; and repress dissidents and protesters who opposed their growing power.
Corporations— indeed, corporate capitalism— could not exist without these legal foundations and supports, which taken together represent a massive infusion of state legal power into society. Despite that massive infusion, many private regulation advocates and commentators presume that globalization eviscerates state legal power, and prescribe, on that basis, that private regimes should take law’s place. This Article challenges that presumption and prescription. Following examination of the rise of private regulation in Part I, Part II reveals how private regulation advocacy and commentary often obscure, and effectively render invisible, law’s robust role in constituting and protecting corporations, thereby exaggerating globalization’s alleged diminishment of state legal power. Part III claims that private regulation weakens the rule of law and its democratic potential, with the effect, Part IV explains, of exacerbating corporate threats to public interests…..