Advanced economies operate under different forms of capitalism and social order. Corporate law is fixed only insofar as a country’s political economy and social organization are static. This article explains why an advanced economy may choose inefficient rules. Korean rules are the product of past industrial development policies and current social-political-economic conditions; endogenous conditions align corporate law with nationalistic sentiments and the public interest. The cost of this policy is diminution of firm value. The benefit is the erection of a plausible distinction between rule- and fact-based control of key corporate groups. This system maintains de facto national control of major firms despite the legal structure of liberal foreign investment rules that are expected of an advanced economy and democracy. Contrary to the assumption of past critiques, enacting a more efficient corporate law is not the problem. From the perspective of Korean policymakers, the problem is the weighing of priority public interests and attendant costs given endogenous conditions, as neither the calculus of cost-benefit nor the conditions are fixed in time. Unique corporate rules and governance are products of each country’s political economy. Their determinants are the meta-dynamics of the endogenous forms of capitalism and social order. This idea is generalizable to American corporate law and governance. There is no exceptional reason why American law would be immune from shifting forces of social, political, and cultural change. If the form of American capitalism or social order has not reached an “end of history” and, in fact, endogenous conditions change in some fundamental way, the axiomatic conceptions that have governed the past forty years of the neoliberal consensus may give way to new models of corporate law and governance. At a time of much uncertainty and upheaval in American political, economic, and social conditions, we see a glimmer of this possibility in similar pronouncements on fundamental conceptions of American corporate law and governance that have been in place since the Reagan era by two ideological antipodes today, Senator Elizabeth Warren and the Business Roundtable.
Robert J. Rhee, The Political Economy of Corporate Law and Governance: American and Korean Rules under Different Endogenous Conditions and Forms of Capitalism, 55 Wake Forest L. Rev. 649 (2020)