‘To suggest a drastic change in the scope of character of corporate activity is to suggest a drastic alteration in the structure of society…All of this is to suggest not that the corporation cannot be touched but that to touch the corporation deeply is to touch much else beside’ – Edward Mason (1960),

In the first of a major seminar series, organized in collaboration with the federal and state-funded Centre for International Finance and Regulation, leading scholars examine the impact of the global financial crisis on corporate governance design.

The starting point is a revisiting of a seminal volume on the perennial corporate governance problem of the separation of ownership and control, The Corporation in Modern Society (Cambridge, MA: Harvard University Press, 1960). The symposium, led by Professor Edward Mason, former Dean of the Graduate School of Public Administration at Harvard (since renamed the Kennedy School of Government), was based on recognition that the problem of managing the corporation’s role in modern society transcends debates over legal form or the privileging of private rights.

The problem pivots rather on what constitutes the appropriate exercise of power and legitimacy, which are ultimately questions of political design. As Mason (1960, 15) put it, ‘it is a little difficult to see in the ownership of corporate securities the source of that invigorating moral, social and political development’ that eighteenth century theorists saw in private property. ’The fact seems to be that the rise of the large corporation and attending circumstances have confronted us with a long series of questions concerning rights and duties, privileges and immunities, responsibility and authority, that political and legal philosophy have not yet assimilated (Mason, 1960, 19).’

The 2008 global financial crisis and its outworking have made these questions even more pressing. The crisis is an existential one that has severely shaken confidence in liberal economic theory and policy – and in liberal capitalism more generally. The costs associated with the privileging of the politics of austerity, combined with ongoing concern about the capacity of the sovereign to manage accrued private sector debt, have, in turn, generated ‘wicked’ problems of acute social and legal complexity that have profound implications for both the theory and practice of corporate governance. The crisis demonstrates the vacuity of the rules versus principles bifurcation in corporate governance design. Both approaches have proved incapable of limiting corporate irresponsibility. But what should it be replaced with? Can integrity be embedded into corporate design? If so, on what basis could its presence or absence be measured within a replicable framework?