ABSTRACT
Corporate governance reform is on the European Union's policy agenda following the publication of a study on "directors' duties and sustainable corporate governance" in July 20204 and a proposal for a directive on corporate sustainability reporting.5 Even the United Kingdom, which has arguably the most shareholder-centric regime of any developed economy, made a move in the same direction, amending its Corporate Governance Code in 2018 to nudge listed companies towards appointing a single worker director,6 although, characteristically for the United Kindgom's model of "gentlemanly capitalism," this remains optional in the final analysis.7 Towards the end of his account, Jacoby makes a reference to the Covid19 pandemic, which was presumably just beginning as the book went to press.8 As the pandemic has unfolded, it has indeed turned out to have implications for the governance of finance, and of labor. From the Enron and Worldcom "scandals," which triggered the Sarbanes-Oxley Act, through to the financial crisis of 2008 and the resulting Dodd-Frank Act, the response to systemic failure in the American corporate governance system was not just halfhearted, which it was in many respects, or beside the point, which it was in others. it was also counter-productive in advancing a supposed cure, shareholder empowerment, which would only exacerbate the disease.15 The British experience has been similar. In the 1960s, concerns over lagging economic competitiveness provided the background to the adoption of the city code on Takeovers and Mergers, which the then Labour government hoped would usher in the modernization of industry.16 In the 1970s, failures in the secondary banking sector prompted another Labour government to makes changes to companies legislation which increased the range of disclosures required of directors.17 In the early 1990s, the Cadbury report on corporate governance was triggered by the insolvencies of several large listed companies, which the system of reports and audits had entirely failed to see coming. During these years, legal and regulatory steps to empower shareholders were given various justifications: as a way of promoting corporate accountability;19 as a means of disciplining self-interested managers;20 and, relatedly, as a mechanism for reducing contracting costs.21 Then there were more ambitious claims: that enhancing shareholder protection would reduce the cost of capital, stimulate innovation, and more generally ensure the most productive use of a society's available resources.22 From the beginnings of the revival of shareholder power and influence in the 1970s, these ideas found intellectual justification in the linked disciplinary fields of corporate finance and the economic analysis of corporate law.
ABSTRACT
We consider the implications of the Covid-19 crisis for the theory and practice of governance. We define ‘governance’ as the process through which, in the case of a given entity or polity, resources are allocated, decisions made and policies implemented, with a view to ensuring the effectiveness of its operations in the face of risks in its environment. Core to this, we argue, is the organisation of knowledge through public institutions, including the legal system. Covid-19 poses a particular type of ‘Anthropogenic’ risk, which arises when organised human activity triggers feedback effects from the natural environment. As such it requires the concerted mobilisation of knowledge and a directed response from governments and international agencies. In this context, neoliberal theories and practices, which emphasise the self-adjusting properties of systems of governance in response to external shocks, are going to be put to the test. In states’ varied responses to Covid-19 to date, it is already possible to observe some trends. One of them is the widespread mischaracterisation of the measures taken to address the epidemic at the point of its emergence in the Chinese city of Wuhan in January and February 2020. Public health measures of this kind, rather than constituting a ‘state of exception’ in which legality is set aside, are informed by practices which originated in the welfare or social states of industrialised countries, and which were successful in achieving a ‘mortality revolution’ in the course of the nineteenth and twentieth centuries. Relearning this history would seem to be essential for the future control of pandemics and other Anthropogenic risks.