Corporate law as public policy

Corporate law is a public policy balance. The state creates the corporation and provides its legal features. ‘Micro’ aspects of the corporation, like separate legal personality, limited liability, and perpetual succession, were each provided by the state for public benefits rather than for their evident private benefits. Widespread utilisation of the corporation provides ‘macro’ public benefits. Corporations can also harm third parties, and the state should balance benefits and harms. Yet modern corporate law theory downplays the state’s role. Those who focus on the state also tend to miss the state’s foundational role in setting the contours of the corporation and corporate law and encouraging certain behaviour. Identifying that corporate law is, descriptively, best seen as a public policy outcome shows the state is not a benign white knight which can only restrain corporations but instead should be seen as culpable in any perceived social harms caused by corporations.