Corporate purpose, deriving meaning from work, and viewpoint diversity – some thoughts after reading Yosifon’s MOBY DICK AS CORPORATE CATASTROPHE
Professor David Yosifon’s new article, Moby Dick as Corporate Catastrophe, brings to life a number of corporate law issues – corporate purpose, agency costs, aligning incentives of agents (managers) with that of the owners, misbehaving corporate leaders, the role of general counsel, etc. I will discuss three of them here:
My favourite passage from the book is below. I like it because Yosifon provides us with a side of the corporate purpose debate that he is not an advocate of. I think we have something to learn about academic practice and about corporate law in this article.
Melville paints both sides of the corporate purpose debate, and while anyone can find confirmation of their priors in the text (as my preceding paragraphs well show), the honest reader is also confronted with complexity that must in the end leave them uncertain. Novelists do not have the policymaker’s responsibility to finally make legal decisions and settle designs with particularity, as must be done. But knowing the complexities in a beautiful way can make us humble about our policy choices and unsanctimonious towards our opponents. Just when you are sure that shareholder primacy has made a mess of everyone involved, this comes: Ishmael brings along his new best friend Queequeg, a Pacific-Islander tattooed from head to foot, to sign up with the Pequod too. Queequeg gives the managers a brief demonstration of his harpooning skill by striking a bulls-eye through a small tar-stain floating in the water off the side of the ship. Captain Bildad quickly offers him the “90th lay”, a far better rate than was given to Ishmael. The profit-motive is narrow, so narrow that it can sometimes sneak a path right through the worst demons of human nature. Queequeg is judged not by the inked icons on his skin, nor by racist presumptions about his character, but by the content of his harpooning skill. This anti-racist policy is dictated not from Bildad’s Bible, nor any conscious humanitarianism, but from the acid bath of the market. [Works of Richard Epstein and Thomas Sowell are referenced for this last claim]
Deriving meaning from work
Another passage in the article I like, speaks to the meaning we find in our work and how corporations fit into that idea:
But thinking it through, he comes to understand the inevitability of human connection:
I saw that this situation of mine was the precise situation of every mortal that breathes; only, in most cases, he, one way or other, has this [conjoined] connexion with a plurality of other mortals. If your banker breaks, you snap; if your apothecary by mistake sends you poison in your pills, you die. . . . [H]andle Queequeg’s monkey-rope heedfully as I would, sometimes he jerked it so, that I came very near sliding overboard. Nor could I possibly forget that, do what I would, I only had the management of one end of it.
Ishmael’s recognition that he is inevitably involved with other people is catalyzed by his first conceiving of his situation as being like a joint-stock company. He builds from that idea to a mature, accepting understanding of the relatedness of all humankind.
Yosifon links this “what sentiment of being the idea of the corporation might provide to” Ishmael “to help him make a gratifying sense of himself, and his relationship to others”. I like this passage and the idea Yosifon draws from it because we all do derive some sense of being from where we work. It is what makes us take a job even if it pays a little less than another – we are looking for intangibles that might help us with that “sense of being”.
Diversity of views and perspectives
Last but not least, I want to highlight a passage that shows the value of people who can speak up against bad decisions:
It takes a special hubris for an executive to scheme as wildly as Ahab, but just common human frailty for a corporate lawyer like Starbuck to let him get away with it. Subordinate to a charismatic leader, who has the frothy allegiance of the crew, Starbuck is motivated to find reasons not to act against the tide sweeping over the ship. Being creative and intelligent, he is able to find those reasons. He sees that something is seriously wrong but decides that there is still plenty of time before he needs to act, if indeed he needs to act at all. Maybe the problem will work itself out. The harm may potentially be great, but maybe it is not very likely to occur after all.
Although this passage focuses on the general counsel, I would draw on this to think about corporate boards and executives as well. The idea here is probably closest to my research because I argue when I write about diversity that to really use the benefit of different perspectives and viewpoints available, we should be able to create a culture that allows dissenting views to be voiced.
I’d recommend Yosifon’s article on Moby Dick and corporate law with the same enthusiasm with which I recommended his previous paper, corporate law as an existential project.
Now to get to Scrooge from a Christmas carol, a conversation between Amy Willis and Sarah Skwire at OLL is interesting. I agree with Skwire when she says that it is not the business that’s at fault, rather the man that’s at fault. In any case, the entire conversation is fun. The conversation also discusses Dickens’ other book, The Chimes but I won’t say anything about that because I have not actually read The Chimes!