Article by Faith Stevelman Kahn
Both Al Qaeda's attacks and Enron's collapse were the tragic products of antidemocratic extremism-Islamic fundamentalism in the former case and “market fundamentalism” in the latter. The U.S. government has responded to the threat posed by Islamic extremists with a military response and increased attention to heightened physical security. At a conceptual level, Al Qaeda's destruction of the self-proclaimed Centers of World Trade forces us to consider what it was that made this icon of the markets, from the terrorists' perspective, “worth” bombing? And from the perspective of American free market ideology, in contrast, what in the values and systems of organization that animate capital markets and corporate firms merits a vigorous, vehement defense?
The corporate financial accounting and white-collar crime scandals erupting onto the national landscape, seemingly continuously, in the spring and summer of 2002, have revealed a different but similarly virulent threat posed by disdain for democratic government, liberal values, and the rule of law. Since the Reagan era, a radically privatist, generally “antilaw,” “greed is good” ideology has pervaded not only the culture and practices of business and Wall Street, but even government itself and legal academia. The latter is illustrated, for example, by the nearly wholesale embrace of the methodology and values of neoclassical economic science by many elite corporate legal scholars.
Enron's poses a threefold challenge to law reformers. First, this challenge encompasses crafting an appropriate legal response to the financial conflicts of interest that have broadly eroded the checks and balances intended to protect shareholders' and, ultimately, the public's interests. Second, attention must be directed to restoring the eroded architecture of federal and fiduciary antifraud protection. Finally, the profound social harm caused by corporate fraud and insider secret profit taking challenge government, legal academia, and the business community itself to reinvest corporate “governance” and the commitment to “free” markets with the democratic, egalitarian values, guarantees of opportunity, and protections against opportunism implied by the notions of “governance” and “free” markets. Corporate “disinformation” is incompatible with meritocratic values, the promise of democratic accountability, and the commitment to personal liberty that must continue to inhabit the American corporate, capitalist economy if it is to reassume its historic strength and durability. These are the values that American soldiers are fighting for in foreign lands, and the values that are being tested in the many public and private sector “corporate responsibility” initiatives being adopted and explored post-Enron.
About the Author
Faith Stevelman Kahn. Professor of Law, New York Law School.
Citation
76 Tul. L. Rev. 1579 (2002)