Last modified: 2018-06-25
Abstract
This paper argues that current economic analyses of the activities of for-profit corporations fail to adequately appreciate both the intellectual history of the form, and its relation in political theory and history to other collective undertakings, and thereby demonstrate some of what has been lost in the move from political economy to economics. When we hear the word “corporation,” most of us think of for-profit firms guided by the idea of share-holder primacy, or the desire to maximize returns to investors. The conceptual predominance of this type of firm, however, is relatively short-lived in the long history of the corporation. Since its emergence in antiquity, the corporate form has characterized some of the most recognizable and consequential, not to mention diverse, structures in society, including municipalities, universities, and the medieval Church. Of course, some of these other types of corporations exist today, but the manner in which they are understood and analyzed, both popularly and professionally, obscures their relation to each other and to forms of the for-profit corporation.
This distinction is primarily the result of a process that culminated in the 19th century, when the means by which corporations were constituted became more administrative than political; to oversimplify, corporations were registered with the relevant agency rather than chartered by the representative assembly. Whereas most for-profit corporations have been created after this change, many of the most consequential corporations of other types predate it. A profound effect of this transformation in most western countries has been that the administrative law regarding for-profit corporations has become more complex, but the understanding of the relation of these entities to other collective undertakings has not kept pace. This is the environment in which economics emerged as the dominant mode of enquiry. Such intellectual compartmentalization has led us in many cases to evacuate questions of political theory from the economic analysis of for-profit corporate activity. One result has been an under-appreciation of questions of the rights and responsibilities of corporations as members of the body politic, whether domestically or internationally. A political economy rooted in history and political theory is necessary to nuance many popular and professional treatments of the corporation, and to deepen appreciation of the contingent nature of understandings of the corporation. In demonstrating this point, this paper examines the case of the Banca Romana between 1835 and 1894 for what it can show about evolving relations between firms and governments, the performance by private entities of what we would today consider “state” functions or markers of sovereignty, and the consequences of such actions for ideas of political representation.