Neoliberalism and the corporate economy stand in fundamental contradiction. First, corporations are created and sustained through government intervention in the economy, contradicting neoliberal strictures. Second, the neoliberal attempt, in the face of this contradiction, to square the corporation with free market principles by treating it as a private partnership of stockholders, as opposed to a state franchise, renders the corporation dysfunctional. Particularly damaging has been the application of a distorted version of agency theory that, as I show, is indebted to game theory, in which stockholders are modeled as the “principal” and management (and workers) as their opportunistic agent. This exaggerated “agency problem” has been addressed through a massive reallocation of firm revenues, from reinvestment and workers, to executives and stockholders. Far from supercharging capital accumulation, as widely assumed, neoliberalism has the opposite effect, decapitalizing the corporation, the state, and the worker in order to enrich the stockholder and stock-compensated executive. In contradiction to its ideals, neoliberalism applied to a corporate economy lowers investment, slows growth, heightens irresponsibility, intensifies worker coercion, and sharply raises economic inequality. And for all this, it fails to reduce the corporation’s dependence on government intervention.
David Ciepley is Associate Professor of Political Science at the University of Denver. He publishes in the fields of democratic theory, liberal theory, and corporate theory. He has held a variety of national fellowships, including at the Woodrow Wilson International Center for Scholars (Washington, D.C.), at the Center for Human Values (Princeton), at the Institute for Advanced Study (Princeton), and at McGill University as a Fulbright Scholar. He is currently a Visiting Faculty Fellow at the Institute for Advanced Studies in Culture at the University of Virginia. He is the author of Liberalism in the Shadow of Totalitarianism (2006); “Beyond Public and Private: Toward a Political Theory of the Corporation” (APSR 2013); and “Is the U.S. Government a Corporation? The Corporate Genesis of Modern Constitutionalism” (APSR2017). His current book project, Our Corporate Civilization and its Neoliberal Crisis, recovers the corporate roots of the democratic constitutional state and analyzes the changing relationship between this state and the business corporation.