The Role of the Corporation in Society: The Descriptive View

Abstract

The aim of this section is primarily descriptive in order to show that the corporate form is a legal creation of the state to serve the socio-economic goals of government. I shall look at the development of the corporate legal form from the first companies granted Royal Charter in the fifteenth century to the modern corporate legal form of today. The legal and economic development of the corporation reflects the role it has played in society and helps us understand the role the corporation plays in our society today. Interestingly, the evolution of corporate law is paralleled by a legal debate over the nature of the corporation which is reminiscent of the debate over corporate moral agency. The legal debate is primarily between three different positions; those who regard the corporation as a legal fiction, those who regard it as a nexus-of-contracts, and those who regard it as a real entity in a metaphysical sense. The influence of this debate on legislation shows the practical importance of the metaphysical status that we deem the corporation to have. I will be defending the view of the corporation as a legal fiction against both the views of the corporation as a nexus-of-contracts and the corporation conceived as a real entity.