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Whether or not ‘the love of money is the root of all evil’, access to money is the root of much enterprise. Ideally, banks should channel savings into investment. Banks make loans, and so have huge influence on economic activity. If banks give more credit, people spend more money. If everyone spends money wisely, if more people are productively employed and the supply of goods and services expands proportionally, this creates beneficial economic development. But if more people spend (without improving productivity) and the supply of goods and services does not expand, the increased competition for limited resources will result in inflation: price rises, relative to people’s income or wealth.
With nation states and international organisations, the corporation is probably the most significant ‘social institution’ in modern history. But what exactly is it? How are corporations created? Who runs them? And to what extent are they accountable in their exercise of power? Leading company law textbooks engage all of these questions.
For life to improve on Earth, energy will be clean. Electricity will come from wind, solar, hydro or geothermal sources, with battery or pump storage, and not from coal, oil or gas. Today we use electricity for light, computers, anything that plugs in. It is used for heating and transport (Chs. 14 and 15), though gas and oil remain. To electrify transport, generation must expand by 10–50 per cent, and electric heating requires more electricity again. But electricity is more efficient than fossil fuels: it consumes only a quarter of equivalent energy used in oil, and the benefits of renewable electricity go far beyond stopping climate damage.
Even ‘if your aim is not to understand all of law’s effects on corporate activities but only to grasp the basic legal ‘constitution’ or make-up of the modern corporation’, wrote the former Dean of Harvard Law School, ‘you must, at the very least, also gain a working knowledge of labor law’.
‘ou sIf yeek economic growth, if you seek opportunity, if you seek social justice and human dignity’, said George W. Bush as the economy collapsed in 2008, ‘the free market system is the way to go.’ The problem is, the ‘free market’ is based (unlike its ideology) on binding public norms. Markets result from many people interacting in the light of the law. Trust and good faith, for confidence in doing business, come from rule-based institutions, not some free-for-all.
Major enterprises shape our lives in countless ways: big tech and 'surveillance media' that affect democratic debate, algorithms that influence online shopping, transport to work and home, energy and agriculture corporations that drive climate damage, and public services that provide our education, health, water, and housing. The twentieth century experienced swings between private and public ownership, between capitalism and socialism, without any settled, principled outcome, and without settling major questions of how enterprises should be financed, governed and the rights we have in them. This book's main question is 'are there principles of enterprise law', and, if they are missing, 'what principles of enterprise law should there be'? Principles of Enterprise Law gives a functional account of the 'general' enterprise laws of companies, investment, labour, competition and insolvency, before moving into specific enterprises, from universities to the military. It is an original guide to our economic constitution and human rights.
In this book’s introduction, the thesis was proposed that enterprise law can be regarded as a coherent subject. It is a preferable framework to understand the economic constitution and human rights than systems which artificially segregate corporate, labour, competition or insolvency from one another, and each from public policy. On the contrary, the investor, worker, consumer, creditor and member of the public is often the same person. Dividing these actors against themselves is a diversion from unaccountable corporate power.
Theories of enterprise law go to the heart of economics, politics and a just society. First, there are ‘positive’ theories that explain how the world works. For example, a positive theory might argue that labour rights raise employment and productivity, and reduce inequality (see Ch. 5), or that public healthcare gives longer life than privatised or insurance health systems (see Ch. 90). As in natural science, social science frames hypotheses, develops methods for testing the hypotheses, finds results and draws conclusions.
As Chapter 6 explored, competition is meant to benefit consumers and the public, because people exercise choice and influence over what is produced. Enterprises producing what people want often get more business. But competitions also have ‘losers’, and all too much losing means insolvency. ‘Enterprises live (and sometimes die) by credit’, and corporate insolvency, like individuals’ bankruptcy, is an inability to pay debts.
Enterprise law is the regulation of finance, governance and rights of economic life. It includes everything from global tech corporations, to universities, to oil cartels, to arms-makers, to the health service. Enterprise law is probably the dominant cause of the most basic threats that we must resolve in the twenty-first century, namely escalating inequality, climate damage and war, because the enterprise is the primary type of association that stands between polities and families. In its literal sense, enterprise means ‘doing’ or ‘undertaking’, after the French word entreprende.
As Chapter 3 explored, corporate governance centres upon the accountability of directors through votes and duties to members. Membership is mainly monopolised by shareholders. So, who are shareholders, and what influence do they exert in financial markets? For many years, real people held shares directly. Characters like Mr Salomon with his boots, Mr Macaura and his (company’s) smouldering timber, and Mr Pender in his telecoms empire helped write the script, and still animate the world imagined in company law texts.