Democracy and Dysfunction: Rural Electric Cooperatives and the Surprising Persistence of the Separation of Ownership and Control

Since the 1930s, corporate law scholarship has focused narrowly on the public corporation and the problem of the separation of ownership and control-a problem many now believe has been mitigated or even solved. With rare exceptions, scholars have paid far less heed to other business forms that still play important roles in the American economy. In this Article, we examine a significant and almost completely overlooked business form, the Rural Electric Cooperative (REC). RECs were founded in a moment of optimism during the New Deal. As with other cooperatives, their organizational rules differed sharply from those of for-profit corporations. They were owned by their customers, with each customer-member having one vote irrespective of their energy consumption, and it was hoped these owners would provide active oversight of the REC\u27s managers and activities. Reality has proven otherwise. Corporate governance innovations of the last forty years have passed RECs by, leaving an organizational sector mired in governance dysfunctions stemming from the separation of ownership and control. Here we explain why RECs evolved as they did and why New Deal planners seized on the cooperative form to electrify the countryside; how significant governance problems have persisted, largely unaddressed, from the 1930s to today; and how a change in corporate governance rules, allowing for a market for corporate control in RECs, could fix some persistent problems in this still-important sector. Alternatively, we propose that RECs take up a new public role as rural broadband internet providers with a reinvigorated federal regulator to police governance failures

Social-Republican Property

Economic democracy is the idea that the norms of equality and participation that classical liberalism confines to a narrowly defined sphere of government should apply to the sphere of economic life. Economic democracy thus entails a challenge to the classical liberal notion of property. In classical liberalism, property defines a realm of private enjoyment. No particular property right is a prerogative of, or a prerequisite to, citizenship, and the exercise of property rights by those who have them is not assessed in political terms. One alternative to classical liberalism responsive to the ideal of economic democracy is classical socialism. Classical socialism opposes to the liberal notion of private property the notion of state property – property controlled by the officials of a democratically constituted state. Another alternative to classical liberalism inspired in part by the ideal of economic democracy is social democracy or welfare-regulatory liberalism. Social democracy retains the classical liberal notion of private property rights, but it both qualifies them by regulatory restrictions on their exercise and supplements them with welfare rights to minimal subsistence funded and administered through a tax-transfer system. This essay is about aspects of a further alternative to classical liberalism inspired by the ideal of economic democracy. This alternative can be found in converging elements of the traditions of republicanism and market socialism. Like social democracy, the alternative rejects both state property and the unrestricted accumulation and exercise of private property rights. However, to a greater extent than social democracy, it pursues its concerns by encouraging a politically desirable primary organization of economic activity and distribution of income and wealth

Property in Land

Because human beings are fated to live mostly on the surface of the earth, the pattern of entitlements to use land is a central issue in social organization. As the epigraphs suggest, this issue has been the subject of fierce ideological controversy. Blackstone\u27s paean to private property comports with the mainstream Anglo-American exaltation of decentralized ownership of land. This vision underlies the Homestead Acts, the Jeffersonian wish for a polity of yeoman farmers, and the American dream of homeownership. Defenders of private ownership of land argue that it promotes individual liberty, political stability, and economic prosperity. Indeed, some economic historians have identified the emergence of freehold land tenure in Western Europe after the Dark Ages as a major source of the great release of energy that ensued there. To commentators such as Marx and Engels, by contrast, the creation of private property in land is a fount of evils, particularly inequality in wealth and the splintering of more organic communities into atomized, untrusting social environments of individual competition. The vision of collective living on shared land has had a broad and enduring appeal. It has inspired, among others, the Protestant sectarians, secular kibbutzniks, and counterculture experimentalists who have founded intentional communities. During the past century, skeptics of private property in land have come into power in a number of nation-states. In Israel, where the prevailing philosophy holds that land should belong collectively to the Jewish nation, 93% of the land area is stateowned; the Israeli Basic Law of Lands prohibits the government from transferring any of it except under special circumstances. Hewing to the program of Marx and Engels, Stalin collectivized Russian agriculture from 1929 to 1933 at the price of some nine million lives. Drawing on the same inspiration, Mao began China\u27s Great Leap Forward in 1957, precipitating a famine that killed some 20 million. Two decades later, land collectivizations contributed to a million deaths in Kampuchea and another million in Ethiopia. Beyond dispute, botched land policies have been the-chief domestic source of human woe during the past century

A Jeffersonian Republic by Hamiltonian Means: Values, Constraints & Finance in an Authentic American Ownership Society

This article, the second in a trilogy, interprets American ownership-spreading programs past and present under the aspect of a comprehensive theory of the American ownership society (OS) developed in its predecessor article, titled Whose Ownership? Which Society? It also identifies what appears to be a significant gap in our efforts to become a comprehensive OS thus far. By early in the 20th century, we had developed and implemented a number of highly innovative and successful programs dedicated to the task of spreading human and nonhuman capital (in the form of arable land in particular) quite broadly. Since about the 1930s, however, small-parceled land has receded in importance as a form of nonhuman capital such as can underwrite productive autonomy; and we now lack the land to dole out in that fashion in any event. To complete our OS in the manner that we began to do seriously in the late 19th century, we must turn to the prospect of spreading the ownership of business firms. Our home-spreading and education-spreading programs have modernized over the course of the later 20th and early 21st centuries in tandem with the modernization of finance technologies. Our share-spreading programs have not. The article accordingly surveys and preliminarily assesses some early proposals to spread shares in firms by means analogous to those employed to spread homes and educations. In doing so it also looks ahead to its sequel, which is devoted to updating those early proposals in a manner more sober than that of the earlier proposers

Approaching comparative company law

This paper identifies some common errors that occur in comparative law, offers some guidelines to help avoid such errors, and provides a framework for entering into studies of the company laws of three major jurisdictions. The first section illustrates why a conscious approach to comparative company law is useful. Part I discusses some of the problems that can arise in comparative law and offers a few points of caution that can be useful for practical, theoretical and legislative comparative law. Part II discusses some relatively famous examples of comparative analysis gone astray in order to demonstrate the utility of heeding the outlined points of caution. The second section offers a framework for approaching comparative company law. Part III provides an example of using functional definition to demarcate the topic "company law", offering an "effects" test to determine whether a given provision of law should be considered as functionally part of the rules that govern the core characteristics of companies. It does this by presenting the relevant company law statutes and related topical laws of Germany, the United Kingdom and the United States, using Delaware as a proxy for the 50 states. On the basis of this definition, Part IV analyzes the system of legal functions that comprises "company law" in the United States and the European Union. It selects as the predominant factor for consideration the jurisdictions, sub-jurisdictions and rule-making entities that have legislative or rule-making competence in the relevant territorial unit, analyzes the extent of their power, presents the type of law (rules) they enact (issue), and discusses the concrete manner in which the laws and rules of the jurisdictions and sub-jurisdictions can legally interact. Part V looks at the way these jurisdictions do interact on the temporal axis of history, that is, their actual influence on each other, which in the relevant jurisdictions currently takes the form of regulatory competition and legislative harmonization. The method of the approach outlined in this paper borrows much from system theory. The analysis attempts to be detailed without losing track of the overall jurisdictional framework in the countries studied