Corporate Governance, the Rule of Law, and Glimpses of the Infinite

Non-sequitur alert. Try to figure what the next two segments have to do with each other. I will get back to you about it below the fold.

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The other day I posted what at the time I thought was a grumpy comment to a post by Jennifer O’Hare of Villanova over at Conglomerate. The gist of her post was whether the failure of a corporation to have a “succession plan” for the CEO position could be laid at the doorstep of the board of directors in the form of liability for breach of fiduciary duty – I suppose either the duty of care or the duty of loyalty in the sense of the more recent Delaware decisions. The genesis for Professor O’Hare’s post was a report in the Wall Street Journal that only 50% of public and private corporations had “succession plans.” I remind my students from time to time that I’m an ex-corporate shill, and to take any view I profess with that in mind, so readers here are advised similarly.

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I seem to have gotten fixated over the last few weeks on the words “Justice” and “Rule of Law.” This all started back in July at the Law & Society Association annual meeting in Berlin, first at an “Author Meets Readers” session about Brian Tamanaha‘s Law as a Means to an End, and later at a roundtable on which I was honored to participate about the New Formalism. Larry Solum organized both sessions, so it’s appropriate to hearken back to my paraphrase at the time of his words capsuling the issue: “We grapple with an antinomy between a sense of permanence or immanence or determinacy in the legal rules by which our social relationships are regulated or constituted, on one hand, and our manipulation of those rules to achieve individual purposes on the other – in a word, instrumentalism.” Or to put it in the context of the sociology of Niklas Luhmann (about which there was a concurrent series of sessions going on): it’s only within the legal system that the participants operate under the delusion there is Justice or Rule of Law. From the outside looking in, the paradox is obvious: we want to believe there is either a transcendent or immanent, but more importantly, objective right answer, even while we argue from subjective and instrumental positions. The only way the legal system works is with a kind of doublethink; believing in this dialectic that objective truth can somehow arise out of the clash of instrumental interests (to which, of course, Brian Tamanaha objected).

We are, like everyone else, in the faculty appointment job talk part of the year, and I have now heard the idea of Justice and Rule of Law discussed several times in different contexts. One set of job talks had to do with the idea of juvenile justice. Juvenile lawyers (and in our case, juvenile legal clinicians) have to deal with two competing concerns, the best interest of the child, and the obligation of zealous representation in delinquency trials. To put it more plainly, confession may be good for the soul, for healthy development, and for the making of good citizens, but it’s bad for the juvenile defendant and his lawyer.

The idea surfaced again in a job talk about school desegregation, and the fact that Brown v. Board of Education (Brown I) was cited in support of three different positions in the recent Supreme Court case on school desegregation (i.e. colorblindness, integrationist, and a hybrid view). The candidate had an interesting thesis: that Brown has a colloquial or popular meaning apart from its technical legal holding. I like that idea, but it seems to me all it is saying is that Brown has become a shorthand reference for “Justice” or the “Rule of Law” in the context of racial equality. So it’s no more surprising that everybody cites Brown than than everyone insists, in an instrumental way, that its view is the one consistent with justice or the Rule of Law.

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Well, I have some street cred on the subject of corporate governance, and almost none on juvenile justice or school desegregation, but I am still fixated on these paradoxes in the ideas of Justice and the Rule of Law. So below the fold, I’m going to ramble a bit about corporate governance, the paradoxes of the Rule of Law, and glimpses of the Infinite.


I have a book in front of me by John D. Barrow, “professor of mathematical sciences at the University of Cambridge and a Fellow of the Royal Society,” entitled “The Infinite Book.” (I should note this book is worth reading if only for the following sentence fragment: “‘make me one with everything’ as the mystic said to the hamburger vendor”.) There is a diagram pointing out a fairly obvious paradox of limits and asymptotes: you can make polygons with an infinite number of sides, but they merely approaching being a circle.

It seems to me we can make an infinite number of rules, but analogously, they merely approach being Justice or the Rule of Law. This is not, by the way, a distinction between rules, on one hand, and principles, on the other, because we can also make an infinite number of principles, and, again, they merely approach being Justice or the Rule of Law.

I wrote an article a while back that tried in a different way to get at the mystery of the way rules approach but do not reach the Unconditioned, a concept that exists even in secular philosophical reasoning. (Freedom, Compulsion, Compliance and Mystery: Reflections on the Duty Not to Enforce a Promise, in Law, Culture, and the Humanities, 3:82 (2007)). I wanted to pose the idea of rule as reification of something either transcendent or immanent, and the paradox or antinomy implicit in that. I had in mind the idea of “singularity” which is how the cosmologists refer to the state of the universe just before the Big Bang. At the point of the singularity, there are no contradictions, morally, physically, or metaphysically (the Kantian idea of God as well – no tension between virtue and happiness). But then things pop and immediately reify. Hence, you find religious traditions fighting the idea of reification into rules or rituals, and instead searching for the singularity. The big monotheistic religions do it, but badly, and schism over aspects of the reification. So instead we have Kabbalah, or the Tao, or Unitarianism.

The fact is that we sense the singularity (Charles Taylor in A Secular Age refers to it as “fullness”) but can only allude to it in metaphor. Metaphor is related to analogy; analogy is related to form; form is the source of formalism.

If the Rule of Law and Justice are not the singularity (how could they be – they aren’t singular!), then they are close relatives. Again, I am thinking like Kabbalahist: the ultimate singularity is almost inconceivable; its name in Hebrew is Ein Sof, or “there is no end” (which in English would be “infinite”). What emanates from the singularity are concepts that hover between namelessness and concreteness, like God or beauty or justice or mercy. I think the Rule of Law or Justice are such emanations, but I don’t think they are the only ones. Justice and mercy, for example, are the classic antinomy. (Or as I said in a blog post title long ago “Being Right Isn’t All It’s Cracked Up to Be.”)

I think of legal formalism as a kind of misplaced reification. Formalism is a reification of a value that emanates from the singularity. Formalism means there is a human created form to which an immanent value is assigned, but the form, as it must, falls short of the singularity. Hence, contract formalists find “the mutual intention of the parties” immanent in a writing; constitutional formalists find the original intention or original public meaning of the Constitution immanent in its words. In both cases, we want to be just, or observe the Rule of Law, but don’t push the envelope much farther than that.

For some reason in law, the idea of the singularity has been co-opted by the critical scholars, starting with Robert Cover’s iconic article, Nomos & Narrative, which I find fascinating. Cover’s move from the paideic to the nomos is very much in the tradition of the Kabbalahistic move of Tzimtzum – in which the singularity withdraws from the universe leaving room for finite human institutions. The legal crits have pre-empted the category-analogy-metaphor arena by suggesting that all reification (hence all forms) is corrupt, and majoritarian views – including majoritarian views of scientific truths and moral universals – are a reflection of the corruption. Most legal scholars, I’d submit, are simply unwilling to, or incapable of, addressing the co-optation of the metaphysics on its own terms. I don’t presume that the majoritarian view is bad; it’s just the majoritarian view. I don’t see as distinct a line between the cognitive issues in knowledge and the cognitive issues in “understanding” (through narrative) as the critical scholars characterize, because I perceive more mystery in the process of hypothesization than most legal scholars talk about. “Abductive reasoning” – the formation of a hypothesis by means of analogy or metaphor is the dark corner of the philosophy of science that the empiricists don’t want to acknowledge.

Okay. Back to corporate governance. Here’s a claim: the business judgment rule incorporates this glimpse of the infinite. What it is saying is that the law embodies the problem of apparently infinite systems, whether of polygon sides, number, rules or principles. We can always define one more rule or one more principle, just like we can always add one more side to the polygon, or one more number in the count. But we can’t reach justice anymore than we can reach the circle or the last number. There’s no possible finite set of legal algorithms that can address the complexity of managing an organization (just like there is no algorithm of leadership). I don’t endorse the business judgment rule because I’m liberal or conservative or pro-management or pro-shareholder or progressive or reactionary, but because I have a sense (call it “fullness”) that making a hard decision looking forward, whether it’s about a company, or an investment, or disciplining my children, is a look into the abyss, the unknown, and going forward after the decision is stepping off a cliff. The consequence is that the legal system recognizes this glimpse of the infinite, and accords it all of the respect it deserves.

How then solve the problem of bad governance? Well, this post is too long already.

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