Eagleionline

By Jesse Stellato, January 29, 2007 

Professor Kent Greenfield of Boston College Law School and Professor Gordon Smith of the University of Wisconsin Law School squared-off on Friday in East Wing 120, and considered “Whether Corporate Law Can Save the World.” Boston College’s American Constitutional Society (ACS) sponsored the event, which also included lunch and was attended by approximately one hundred students and faculty.

At stake was the definition of corporate law itself. Representing the traditional position, Smith argued that corporate law was a simply regulatory system between executives and shareholders. Many of the flashpoint issues that arise in the course of business, he said, can and should be dealt with in other areas of law, such as employment and environmental law.

Greenfield, by contrast, argued that corporate law’s current incarnation is myopic, because it has failed to successfully respond to the public interest. Greenfield suggested that better decisions would be made by requiring more diversity of opinions on corporate boards. He offered Germany “co-determination” laws, which have required in some cases fifty percent of board seats to be filled by workers.

In response, Smith argued that Greenfield’s proposals would result in American corporations operating at a competitive disadvantage with corporations in other countries. The restrictive Sarbanes-Oxley Act, he said, has already partially resulted in the rise of listings in the stock exchanges of England and throughout the world.

Smith was an engaging speaker, and the audience responded to his many jokes. At one point in the debate, Smith analogized Greenfield’s thesis to those found in popular nineteenth-century socialist utopian fiction. “I am not calling Kent a Commie,” Smith quipped to a round of laughter.

Questions from the audience followed the speeches. In one exchange, Professor Frank Garcia, who teachers International Business Transactions at BC, asked Smith why his regime failed to shield directors from liability arising out decisions to prioritize some community interests at the expense of some corporate profits. Professor Smith responded by noting that under existing law, directors have the right to consider community constituencies.

Greenfield countered that proposals like Garcia’s would correct existing market failures. Using Walmart as an example, Greenfield argued that Walmart has successfully externalized its cost of doing business. By some estimates, he said, the American people subsidize each low-level Walmart employee by $2,000, due largely to Walmart’s failure to provide its workers with more healthcare.

Greenfield, who teaches Corporations at BC, is a proponent of “progressive corporate law.” In his recent book, The Failure of Corporate Law: Fundamental Flaws and Progressive Possibilities (University of Chicago Press, 2006), Greenfield has argued that the laws controlling firms should be more protective of the public interest and of the corporation’s various stakeholders, such as employees. Greenfield argues that his proposed changes in corporate governance would enable corporations to meet the goal of creating wealth for society as a whole rather than merely for shareholders and executives.

Professor Gordon Smith specializes in corporate and securities law, with a particular emphasis on entrepreneurial businesses and venture capital. In the spring of 2004, he published, with Professor Cynthia Williams of the University of Illinois College of Law, an casebook entitled Business Organizations: Cases, Problems & Case Studies (Aspen Publishers). Professor Smith is currently working on a casebook regarding the law of entrepreneurial finance.

David Bartholomew ‘08, President of the American Constitutional Society, said of the event: “Corporate Law is playing an ever-larger role in society. As future lawyers, it is important for us to think about the values we want corporate law to reflect. The American Constitutional Society is honored to provide a forum for prominent scholars to share their views with each other and the greater Boston College community.”

[Editor’s Note: The following comments were made anonymously on Eagleionline’s previous site. They are included here for historical purposes only, and do not necessarily represent the views of Mr. Stellato or Eagleionline.]

1. on 29 Jan 2007 at 4:45 pm Anonymous

   I think that the laughter that erupted at Professor Smith’s “Kent Greenfield is a Commie” joke was the most revealing part of the debate. I was in Con. Law some time back when Dean Garvey used the word “Commie” as well. He also got some laughter from his audience.

   I wonder why the topic makes people laugh? What is so funny about being a “Commie”? And what is a “Commie” anyway?

   I think it was used in the Smith-Greenfield debate as a proxy for injecting “social values” in the discussion. And the (nervous) laughter that came about as a result is a pretty good example of how tough a row it is to hoe any sort of morality into our discussion of the law.

   Professor Smith would like us to think that his version of corporate law is wholly rational and value-neutral. I believe he said something to this effect on Friday. But we all know that one’s truth sometimes lies buried deep beneath ones words. And that truth, awkward as it may seem to say here in law school, is that money drives Professor Smith and money drives the vast majority of students here at BC Law (the ones laughing, anyway).

   “Commie” means considering the social consequences of one’s rules. Isn’t that what it means to be a BC Law student? Are we afraid of that fact? Should we be?

   The only metric for wealth that Professor Smith seems to have for society is money. I seem to recall another Professor Smith who published a book in 1776 on the same subject… Have we not learned anything since then?

   It seems to me pretty crazy that corporate law should only be about money. Professor Greenfield got it right last Friday, and I’m so glad he’s a professor at Boston College Law School.

2. on 30 Jan 2007 at 11:48 am David Bartholomew

   Well said! Money is not a value. People cling to economic arguments because they seem so concrete. But sacrificing morality for easily quantifiable arguments is a huge mistake.

   I think the comment above by Anonymous should be posted on the main page (so that more people will be exposed to it). Anonymous, Email me at Barthold@bc.edu if you are interested.

3. on 31 Jan 2007 at 1:41 pm Anonymous

   If people knew how sympathetic I am for morality-based arguments in the law, I would lose credibility as a lawyer. So I’ll pass on being featured on the front page. Thanks anyway though.

4. on 06 Feb 2007 at 1:27 pm Anonymous

   “Ronald Reagan lacks distinction, even as an actor.” Those were the words of Martin Luther King, Jr. If MLK were alive today, he would probably agree with me that Ronald Reagan also lacks distinction as a political philosopher. In any case, I would just note that “Ronald Reagan” has resorted to ad hominem attacks FIRST, before addressing any substantive issues. I seem to recall this happening before. Oh yeah, the eighties.

January 22nd, 2007 by Jesse Stellato