Market liquidity foucault governmentality
Examples of this new understanding was most evident in the work of people like Berle and Means when it came to corporate governance, but was also evident in the emergence of things like dedicated business schools Khurana, and cost accounting Miller, These changes accompanied the rise of large, oligopolistic corporations, legitimating the activities of corporate entities as opposed to individual business owners; in turn, these entities became the centre of cost-based planning and production according to Bratton Neoliberalism is characterized by a distinct epistemic and social order when it comes to corporate governance and corporate form.
However, what really distinguishes neoliberalism from laissez-faire is the emphasis on contract and contractual relations over and above fictive natural market ones; that is, the market is conceived as a series of contracts and not price interactions or cost calculations.
This enables anything to be remade as part of the market in neoliberalism since everything can be turned into a contract e. Transaction costs are described as the costs of contracting e. Neoliberal scholars developed this contractual perspective through their direct engagement with the theory of the firm; for example, the likes of Jensen and Meckling and Fama have very explicitly identified corporations as a nexus of contracts between contracting parties e.
In so doing, they assume a number of things:. This contractual perspective seeks to reframe internal transaction costs e. What this contractual perspective helps explain is the contradiction in neoliberalism highlighted above — that is, between an emphasis on the market and the legitimation of monopoly.
Here I outline three ways that the co-production of corporate governance and corporate form in the neoliberal era has come to legitimate corporate monopoly:. It has involved a new view of corporate identity and personality. There has been a resurgence of the aggregate or contractual view of the corporation, which had briefly flared up at the end of the nineteenth-century Harris, ; Gindis, ; Veldman, This resurgent conception of the corporation is based on the idea of the firm as a nexus of contracts, outlined above, as well as a legal fiction Bratton, Unlike the nineteenth-century version, however, it treats contract as the basis of market interactions cf.
It thereby legitimates the market-distorting power of corporations by imagining the corporation as a collection of disparate and different market actors who are contracting with one another. From this perspective, a large, monopolistic corporation is no longer a problem for the functioning of the market because it is actually and merely a group of individuals contracting with one another, not a massive and powerful entity in its own right.
Thus the corporation or firm is theorized away, according to Bratton It has involved new forms of governance and control. These trends were accompanied by the growth in the economic and market power of institutional investors themselves see Deakin, ; Davis, ; Dobbin and Jung, ; Soederberg, This eventually fed into the adoption of specific governance mechanisms. Some were internal e. This transformation reflected a broader shift from managerial capitalism — associated with the embedded liberalism — to shareholder capitalism and was tied into wider trends in the reconfiguration of predominantly American business schools; this involved a reorientation around fields like finance and objectives like shareholder value as curricula increasingly incorporated principles from financial economics Khurana, ; Fourcade and Khurana, ; Locke and Spender, It has involved a new view and implementation of antitrust regulation.
What Davies highlights is the way that economic theory — especially notions of transaction costs derived from Coase see above — informed a shift in antitrust laws in the USA that contrasted with earlier critiques of corporate monopoly see Barkan, The focus on nexus of contracts meant that business organization — and hence corporate monopoly — could be cast as more efficient than the market where economies of scale led to reduced consumer prices Davies, Whether this transformation of antitrust was driven by epistemic claims or corporate power is difficult to untangle.
This discussion implies that the co-production of neoliberal epistemic and social orders is based, in part if not whole, on the conceptualization of contractual relations as equivalent to market price interactions, such that neoliberalism — as a supposedly market-based order — is made compatible with monopolistic business formations, which are treated as markets in themselves.
The key point to emphasize is that contract actually trumps price or cost as the epistemic basis for thinking about the market within neoliberalism, at least when it comes to corporate governance. Moreover, Letza et al. Now, my point is that the implications of this contractual-based epistemic and social order are important, not only when it comes to analyzing the evolution of corporate governance and corporate form see Table 1 , but also when it comes to understanding neoliberalism as an analytical category used to criticize certain forms of political-economic decision-making.
It is to these analytical issues that I turn to next. As Crouch outlines, competitive and free markets are theoretically incompatible with the organization of any economic activity, in whatever form. On the one hand, a strong version of this claim would problematize any form of contractual regulation and management of economic activity within an organization since this entails forms of hierarchical rather than market coordination — that is, according to the work of people like Coase and others on transaction costs.
Obviously this strong version is incompatible with twentieth and twenty-first century capitalism in which over half of all economic activity takes place within organizations and not markets Hodgson, On the other hand, a weak version would stress the market distorting power of large, monopolistic organizations e.
Hayek, Friedman, Ropke, etc. This would imply that a neoliberal, market-based order would be incompatible with business monopoly; yet this is far from the case, both empirically and conceptually. While this paper has not addressed the former, it is not due to a lack of evidence to support the idea that economic and market power has become increasingly concentrated.
To start, it is important to note that contract and contractual relations are central planks of neoliberal thought — many early neoliberals, for example, were lawyers or interested in law — and, hence, it underpins their conceptions of social order. What he means is that free social interaction i. For example, several critics of neoliberalism have sought to show how neoclassical economic ideas have infiltrated legal scholarship, with the clear example being the law and economics movement developed at the University of Chicago e.
These critics show how economic analysis has come to influence concepts and principles in the law itself. While this is important work, it is not my focus here. Rather I want to consider neoliberalism as a contractual theory — not simply a market-based one — by examining the relation between neoliberalism and contract law Zamir, First, it is possible to conceive of neoliberalism as a contract-based order in light of the contractual theories of the firm, corporation and corporate governance outlined in the previous section e.
In particular, Weinstein argues that the new contractual theory of market relations developed by the likes of Jensen and Meckling was meant to frame the firm as the market; this is evident in subsequent positive and normative claims about proper corporate governance and corporate forms.
Let us say that there was a shift from a representation of the market order as a multilateral system of simultaneous, anonymous relations to a representation in terms of bilateral relations that are necessarily personal, and from coordination through prices and equilibrium to coordination through negotiation and contracts. This made it possible to reduce the opposition between market and firm, or even reduce the firm to a particular market.
Famously, Jensen and Meckling According to Weinstein , this view enabled Jensen and Meckling to align their contractual theory with an organizational structure, namely the firm or corporation — sometimes the distinction is not well made in this corporate governance literature ; however, they did not argue — merely assume — that the contracts constituting the firm represent a market structure.
Second, the idea that all business transactions are only or mainly discrete, one-time interactions seems incongruous. Ongoing, relational contracts — highlighted in the literature on trust in business — are more common in business; however, this is ignored in most neoliberal conceptions or deployment of contract and contract language Trakman, Importantly, when the market is conceived as one-time contractual relations, any extension of the market necessarily increases transaction costs — because it increases contracting — and thereby reduces the efficiency of the market.
Third, according to Paul Treanor In this sense, neoliberals conceptualize the market as a contractual structure, as opposed to property- or price-based one — both of which are naturalized as givens. Treanor goes on to argue that neoliberalism promotes an extension of market contracts to everything, an increase in the frequency of market contract negotiation, a decrease in their duration, and intensified forms of contractual audit; in this sense, neoliberalism is conceptually based on the number, frequency, duration and intensity of contractual transactions.
With neoliberalism, everything should be turned into a market contract, and these contracts should be re- negotiated constantly, reduced to the shortest possible timeframe to enable constant re- negotiation, and watched constantly — a starker utopia than the market-based order critical scholars generally present. This implies that as more activity — economic, social, political, etc.
The increase in contracts or transaction costs would be phenomenal if everything was swept up into the market, and it would likely lead to the market grinding to a halt. In fact, it would seem that the only way to resolve this dilemma is to standardize contractual arrangements; that is, to construct a range of standard form contracts to cover different social activities.
Standard contracts, however, raise yet more contradictory issues for neoliberalism in concept and practice. Recently, Aksikas and Andrews Their point is that even though neoliberalism may be a contract-based order, this does not mean that it is based on free and voluntary contract. More apt, perhaps, is the notion that neoliberalism is underpinned by standard contracts with all the inherent problems this entails. A standard contract — or boilerplate contract — is a contractual arrangement in which one party — usually buyer or consumer — has no input in determining the terms of the contractual agreement e.
An everyday example would be an end user license agreement EULA between software provider or similar and customer — this is a generic contract we enter into on an almost daily basis.
Standard contracts are, in this sense, no longer negotiated or even negotiable. It is hard, therefore, to consider them to be free and voluntary arrangements since one party has no power to enact their demands; yet, as Hayek claimed, they are necessary for modern capitalism since without them every transaction would need to be individually negotiated, monitored and enforced — an enormous cost for any society to bear.
They are everywhere, and they are not limited to individual consumers — business, the state and consumers use them on a daily basis. According to Zamir ibid. Standard contracts highlight at least three significant contradictions here with current analytical conceptions of neoliberalism:. As standard contracts become increasingly complex and differentiated from one another it becomes almost impossible to compare suppliers and prices.
Contract law is, in this sense, central to neoliberalism because it enables the extension of market-like relations — or, more accurately, contractual ones — to all areas of society; without standard contracts, transaction costs would militate against the extension of market-like arrangements.
This conflicts, however, with the idea that the market is the best or should be the central mechanism for coordinating either society or the firm. If the market was the best or only mechanism needed, then there would be no need for contract law. However, the latter is crucial for ensuring transactions can and do happen without too high a cost. More critically, the more that our social relations are converted into market-like interactions, the less efficient the market will be unless those interactions are reduced to standard and non-negotiable contracts; this is hardly the basis for liberty or choice.
This point goes back to the s when Slawson What this implies, and as Miller The stipulation of non-negotiable terms and conditions in standard contracts, based on asymmetries in power between business and customer, severely limits any sense of freedom of contract. The rationale behind this paper is my desire to understand neoliberalism better, especially the tensions and ambiguities in our current conceptualization of it.
The main issue that concerns me is the contradiction between the conceptualization of neoliberalism as a market-based epistemology and social order and the neoliberal accommodation with the rise and dominance of large, monopolistic corporations.
This central problematic, as I call it here, is based on the view that corporate monopoly should be anathema to neoliberalism Crouch, ; however, neoliberals have become very comfortable with corporate monopoly and market power see van Horn, ; ; van Horn and Mirowski, ; Nik-Khah, My solution to this contradiction is to attempt to find some way analytically to reconcile neoliberalism as a concept and a social order.
Overall then, and despite the rhetoric about the market as the arbiter of value, my analysis in this paper is meant to illustrate — in some small way — that neoliberalism is not only or mainly underpinned by a market-based epistemic and social order, at least when it comes to corporate governance. What this reframing hides, however, is the difference between market interactions and contractual relations.
These can be summarized as follows:. All of this has several implications for how we understand neoliberalism, how we criticize it and how we engage politically with it. First, it is important to stress that what neoliberals write about their faith in freedom and liberty does not always tally with the implications of the implementation of market-based policies. What is clear is that neoliberal ideals are not reflected in neoliberal practice; the main example here is the contradiction between the market as the best mechanism for coordinating society and the resurgence of corporate power in the last three to four decades.
Most economic activity, social relations, political decision-making, ecological conservation, and so on is now managed — in some way or another — by and on behalf of private economic organizations, especially multinational corporations. It is difficult, to say the least, to reconcile this state of affairs with neoliberal claims about individual liberty, freedom and choice.
Second, the increasing reliance on contract, especially standard contracts, necessitates an increase in both quasi-state and state oversight, enforcement and regulation of individual decisions, which are themselves increasingly dominated by contractual forms of social interaction.
Individuals, social groups, communities, etc. This is why a number of scholars argue that neoliberalism is not an analytically useful term because it ignores the expansion of regulation and governance in both private and public forms and at many national and global scales. None of this involves the market per se ; all of it is about power and the constraints on politics and political decision-making.
Third, analytically it is important to rethink the idea that neoliberalism — in theory or practice — is only about the market. Critics of neoliberalism can fall into the trap of accepting neoliberals at their own words by representing neoliberalism as a market-based theory and order. Consequently, neoliberals have had a free pass for decades because they are able to draw rhetorically on notions of free markets, free exchange, individual choice, individual responsibility, and so on.
In reality, freedom, individualism, liberty and all those good things neither underpin neoliberalism conceptually nor in reality; neoliberalism is a wholly regressive philosophy and order based on the limiting capacity of contractual relations, especially asymmetrical, standard form contracts.
Politically, critics of neoliberalism can turn the rhetorical tables on neoliberals by re-appropriating the language of freedom and democracy. This meant it did not survive very long before being replaced by real entity theory. Finally, real entity theory, which was partially derived from German legal concepts, enabled managers to claim control over corporate activities to the exclusion of shareholders ibid.
However, it is still possible to illustrate, empirically, the concentration of economic power in the hands of large business organizations, especially corporations. Lynn outlines how a range of product and sectoral markets are dominated by a small number of firms as well as the concentration of supply chains behind these markets; and finally, Bellamy Foster et al. Moreover, sellers with one-sided contracts simply have discretion as to how they treat their customers and will be lenient because they want to maintain their reputations, while customers with more equal contracts simply seek to exploit sellers.
His current research focuses on rethinking neoliberalism as a concept and on the implications of finance to life science innovation. His book We have never been neoliberal was published by Zer0 Books in The implications of contractual theories of corporate governance to the analysis of neoliberalism The political economy of corporate governance.
Introduction How is it that neoliberalism — as an analytical category, political-economic project, or epistemic community — sits very comfortably with the expansion and dominance of large, monopolistic corporations?
Co-production as a theoretical framework Co-production is a conceptual perspective in science and technology studies STS and is associated with the work of Sheila Jasanoff and her collaborators. Neoliberalism as a market-based concept and the contradiction of corporate monopoly For a topic much discussed, neoliberalism is still a fuzzy term and concept.
The main critical perspectives include the following: Foucault and later Foucauldian analyzes emphasize that neoliberalism is a form of governmentality — or art of governing — in which a specific market-based rationality and set of technologies of power help to mould people into suitable members of society.
Neoliberalism has been defined as a political project to restore class power by Marxists like David Harvey and others e. Economic sociologists have argued that neoliberalism is a form of institutional restructuring involving the introduction of markets and market values into formal institutions, normative assumptions and cognitive principles e.
Campbell and Pedersen, ; Prasad, ; Mudge, Political scientists have argued that neoliberalism is a set of powerful ideas involving new forms of problem definition and solution based on neoclassical theories of the market e. Blyth, ; Swarts, This contradiction provides the starting point, but not finishing line, for this paper. My aims are twofold. First, and primarily, my aim is to contribute a new angle to critical understandings of neoliberalism as an analytical category, especially by questioning the notion that neoliberalism is best thought of as a market-based order.
This aim is really about questioning neoliberals and the tenets that underlie their epistemic and moral claims about the world e. Second, to undertake this first analytical goal, I address what I see as the central contradiction in understanding neoliberalism as a market-based social order, which I briefly highlighted above re.
Neoliberal epistemic claims are underpinned by paeans to the market and its wondrous capacity to resolve all social problems, yet neoliberalism as a social order has entailed the legitimation of corporate monopoly and concentrations of market power, whether or not this produces significant distortion in the market. In this paper, the first aim builds on the second. Co-production is particularly useful for this task because it emphasizes the need to understand the relationship between the epistemic order — how we understand and represent the world — and the social order — how those claims are realized and enacted or not.
It is my contention that the co-production of neoliberal corporate governance and form provides a way to then unpack and rethink neoliberalism as an analytical category, which will hopefully provide a new way to critique the epistemic and moral claims of neoliberals and other free market advocates.
I first outline the theoretical framework of co-production in more depth and explain how it can be usefully extended to political economic analyzes. I then discuss neoliberalism as an analytical category in the critical literature. I then focus on the evolution of corporate governance and corporate form in order to illustrate the usefulness of the co-production framework and to show how current understandings of neoliberalism are too focused on conceptualizing neoliberalism as a market-based order.
In this section I provide a short historical overview before focusing more explicitly on the neoliberal era. In the final section I return to neoliberalism as an analytical category in order to illustrate how neoliberalism can be considered as a contractual-based concept. I then conclude with some implications of this argument. Co-production is a conceptual perspective in science and technology studies STS and is associated with the work of Sheila Jasanoff and her collaborators.
Consequently, it is focused on understanding the articulation of scientific knowledge and socio-political order; especially how science and the nation-state evolve together.
According to Jasanoff b: In this sense, culture, social meaning, political discourse, and so on are embedded in our scientific knowledge as much as scientific knowledge is embedded in our culture, politics, etc. What this means, theoretically and methodologically, is that to explain something like scientific knowledge necessitates an examination of social and political institutions — both formal e.
In their work on science and technology, for example, Jasanoff and Kim They contrast nuclear policies in the USA and South Korea to show how particular national narratives have driven specific scientific pathways: More generally, this perspective can be applied to other forms of epistemic order and social order.
Any specific social order necessarily entails the co-production of an epistemic order; that is, the world and our claims about it are entangled with one another, making it difficult to identify how either ideas or institutions cause one another. The explanatory strength of co-production rests on this approach.
First, it has the capacity to explain how new epistemic claims and artefacts are created, understood and integrated in prevailing institutions and infrastructures at the same time that it can explain how those same institutions and infrastructures are challenged, changed and legitimated by new epistemic claims and artefacts.
Second, perhaps its greatest explanatory power rests in the fact that co-production does not lead to either techno-scientific or social deterministic claims. While co-production has explanatory power in some areas, there is a significant gap in its analytical arsenal: In order to extend co-production as a theoretical perspective it is important to think about how it might be used to analyze the development of political economy as both epistemic and social orders.
Doing so necessitates an examination of epistemic understandings of political economy e. Incorporating such an analysis will complement the state-centric focus of Jasanoff a, b , Jasanoff and Kim and others, with a more economic- or market-focus of people like Jessop ; see also Ponte and Birch, My intent in this paper is to apply co-production as a theoretical approach to the evolution of corporate governance i.
Before doing this, however, it is necessary to first highlight how neoliberalism and monopoly are contradictory. For a topic much discussed, neoliberalism is still a fuzzy term and concept. It has been used to mean anything from corporate power and malfeasance through to the systemic instability and collapse of the financial markets in — and much in between. It is a term that is difficult to pin down or come to agreement about. This is despite the fact or perhaps because of it that the term is largely used in a pejorative sense by critics of free market systems and institutions rather than by proponents of a market-based order itself.
Friedrich Hayek, Milton Friedman, etc. Austrian, British, Chicago, etc. There are at least two reasons why it is difficult to either identify or agree on one version of neoliberalism.
First, neoliberalism has a complex, shifting and often contradictory intellectual history stretching back to the s if not before. Neoliberalism emerges from a range of disparate strands of new liberalism — most of which had rejected the discredited laissez-faire version dominant in nineteenth-century Britain.
Early work on neoliberalism by Michel Foucault , for example, identified two schools of neoliberalism: The key difference between the two is their position on the role of the state in ordering Freiburg or interfering Chicago with markets Siems and Schnyder, There is a long history to these differences that belies this simple characterization — those interested in these details should read Friedrich , Foucault , Gerber , and Siems and Schnyder , amongst others.
The evolution of these distinct schools of neoliberalism could not be more different; on the one hand, the Freiburg School was pivotal in the founding of the German social market economy — the epitome of coordinated capitalism — while, on the other hand, the Chicago School is implicated in the emergence of Anglo-Saxon free market capitalism Gerber, ; Siems and Schnyder, It is possible to argue that while both schools emerged from a similar critique of laissez-faire , they eventually diverged as their epistemic arguments evolved.
For example, the Freiburg school maintained its conception of markets as social constructs, while later Chicago School thinkers shifted more towards the view that markets are natural , emerging from a liberal notion of the freedom to contract rather than from government fiat see Bowman, Second, critics do not adopt the same analytical meaning or concept when writing about neoliberalism.
The main critical perspectives include the following:. Despite these different schools of neoliberal thought and different critical analyzes of neoliberalism, it is still possible to identify certain common characteristics across these definitions. The most obvious is the emphasis placed on markets — or, one kind of market i. Within neoliberal thought the competitive market is positioned as economically efficient and politically liberating, and therefore the best and most ethical means to ensure social order e.
Critics of neoliberalism also highlight the notion of a market-based order as the central premise of neoliberalism. For example, Bourdieu argued that neoliberalism is a political project to eradicate social collectives e. Seemingly, there is now a general agreement amongst academic critics that neoliberalism does not entail the erosion or hollowing out of the state, primarily because the state is necessary to institute, maintain and enforce the market.
Consequently, neoliberalism is distinct from laissez-faire in that it is based on an acknowledgement of the social construction of markets rather than their natural emergence Mirowski, What neoliberalism naturalizes, however, are the origin of markets in liberal notions of freedom to contract cf.
It is not simply a positive epistemic programme in this sense, it also seeks to legitimate the introduction or extension of the market as an efficient mechanism for organizing society; thus it is both a positive i.
There are two contradictions to this notion of neoliberalism as a market-based concept pertinent to the rest of the paper. First, the concept of a market-based order, as imagined by neoliberals, entails the extension of the market and market thinking into all areas of life. The reason for this is outlined by Colin Crouch Consequently, the neoliberal market provides no room to not participate in the market; everyone and everything must be priced — which has obvious implications for individual freedom.
Second, with a market-based conception of order everyone must be a price taker and not price maker since market power distorts the workings of the market, meaning that monopoly is deeply problematic because it distorts market signals i. While the former contradiction is important for understanding neoliberalism analytically, the latter raises questions about conceptualizing neoliberalism as only — or primarily — a market-based order and concept. Neoliberalism has an interesting history when it comes to perceptions of business monopoly.
Almost all neoliberals, from whatever school of thought, were opposed to any form of monopoly — private or public — up until the s and s. These early neoliberals had a negative view of private monopoly as distorting market competition, on which their epistemology and normative claims rested. However, the attitude of later Chicago School neoliberals changed quite dramatically from the s.
According to van Horn ; and van Horn and Mirowski this change in attitude resulted from two major projects undertaken at the University of Chicago in this period: These projects went beyond the economics department, and were led by or involved academics from the law e.
Aaron Director and business e. They de-problematized private monopoly in the eyes of Chicago School neoliberals, although not those of other neoliberals; for example, ordoliberals never reversed their position on monopoly Gerber, According to Siems and Schnyder Evidence for this expectation, however, is not supported by subsequent events, as outlined below. What this change in attitude illustrates is a broader shift in representations of the market during the later twentieth century, especially in terms of what the market is, how it functions, and how we should understand it.
Put simply, it distinguishes neoliberalism from both laissez-faire notions of the market as a creator of prices and price competition Means, and from embedded liberal notions of the market as an outcome of cost-based transactions and cost accounting Miller, It is broader than this, however, since it involved a complex evolution of epistemic claims about markets, business and society and the social order bound up with those claims.
In order to understand the contradiction inherent in neoliberalism highlighted above — that is, between the market and monopoly — it is necessary to examine the co-production of neoliberal epistemic claims and neoliberal social order.
This section focuses on the co-production of corporate governance and corporate form as proxies for epistemic order and social order respectively. My starting point is that both corporate governance and corporate form have changed over time, but not necessarily towards greater efficiency.
What I mean by corporate governance and form are the organizational and legal characteristics and abstract understandings of the dominant form of business enterprise e.
All of this will then allow me to unpack neoliberalism as an analytical category in the final section. The starting point for this brief historical sketch is the argument that global capitalism is dominated by one hegemonic power during each epoch; in the nineteenth century it was Britain and in the twentieth century it was — and still is? Each period was dominated by the co-production of a specific epistemic order and social order; that is, specific economic, legal and management claims about the role of business in society epistemic order and the emergence and dominance of specific business formations social order.
Laissez-faire emerged as a social order from new understandings of the market and economy, and new forms of economic organization. Going back to Adam Smith, it was centred on epistemic claims that individual, self-interested action would create social benefits through market interaction Barkan, Market competition and prices were naturalized as objective forces, according to Bratton Certain forms of business enterprise dominated the British economy during this period, namely small- and medium-sized owner-managed firms and partnerships or unincorporated joint stock trusts which acted like partnerships Gillman and Eade, ; Guinnane et al.
These business enterprises did not entail a separation of ownership and control, and were part of a highly competitive, mainly familial business tradition; for example, they formed what Arrighi and Silver Their success and failure depended on price competition since success was supposedly rewarded and failure punished on the basis of market decisions Ireland, At the end of the nineteenth century, British hegemony was gradually eclipsed as a result of the so-called corporate revolution in American e.
Chandler, ; Fligstein, ; Roy, New understandings of markets and corporate governance were entangled with the emergence of these new corporate enterprises. These ideas promoted responsible corporate management and the societal benefits of large corporations Konzelmann et al.
There was an emphasis on understanding and promoting the positive role of large corporate entities in the wider US economy, especially in terms of promoting rising standards of living through mass production Locke and Spender, , as opposed to promoting laissez-faire markets.
Examples of this new understanding was most evident in the work of people like Berle and Means when it came to corporate governance, but was also evident in the emergence of things like dedicated business schools Khurana, and cost accounting Miller, These changes accompanied the rise of large, oligopolistic corporations, legitimating the activities of corporate entities as opposed to individual business owners; in turn, these entities became the centre of cost-based planning and production according to Bratton Neoliberalism is characterized by a distinct epistemic and social order when it comes to corporate governance and corporate form.
However, what really distinguishes neoliberalism from laissez-faire is the emphasis on contract and contractual relations over and above fictive natural market ones; that is, the market is conceived as a series of contracts and not price interactions or cost calculations. This enables anything to be remade as part of the market in neoliberalism since everything can be turned into a contract e.
Transaction costs are described as the costs of contracting e. Neoliberal scholars developed this contractual perspective through their direct engagement with the theory of the firm; for example, the likes of Jensen and Meckling and Fama have very explicitly identified corporations as a nexus of contracts between contracting parties e.
In so doing, they assume a number of things:. This contractual perspective seeks to reframe internal transaction costs e. What this contractual perspective helps explain is the contradiction in neoliberalism highlighted above — that is, between an emphasis on the market and the legitimation of monopoly.
Here I outline three ways that the co-production of corporate governance and corporate form in the neoliberal era has come to legitimate corporate monopoly:. It has involved a new view of corporate identity and personality. There has been a resurgence of the aggregate or contractual view of the corporation, which had briefly flared up at the end of the nineteenth-century Harris, ; Gindis, ; Veldman, This resurgent conception of the corporation is based on the idea of the firm as a nexus of contracts, outlined above, as well as a legal fiction Bratton, Unlike the nineteenth-century version, however, it treats contract as the basis of market interactions cf.
It thereby legitimates the market-distorting power of corporations by imagining the corporation as a collection of disparate and different market actors who are contracting with one another. From this perspective, a large, monopolistic corporation is no longer a problem for the functioning of the market because it is actually and merely a group of individuals contracting with one another, not a massive and powerful entity in its own right.
Thus the corporation or firm is theorized away, according to Bratton It has involved new forms of governance and control.
These trends were accompanied by the growth in the economic and market power of institutional investors themselves see Deakin, ; Davis, ; Dobbin and Jung, ; Soederberg, This eventually fed into the adoption of specific governance mechanisms.
Some were internal e. This transformation reflected a broader shift from managerial capitalism — associated with the embedded liberalism — to shareholder capitalism and was tied into wider trends in the reconfiguration of predominantly American business schools; this involved a reorientation around fields like finance and objectives like shareholder value as curricula increasingly incorporated principles from financial economics Khurana, ; Fourcade and Khurana, ; Locke and Spender, It has involved a new view and implementation of antitrust regulation.