Rescuing Business: The Making of Corporate Bankruptcy Law in England and the United States

Rescuing Business: The Making of Corporate Bankruptcy Law in England and the United States

Rescuing Business: The Making of Corporate Bankruptcy Law in England and the United States

Rescuing Business: The Making of Corporate Bankruptcy Law in England and the United States

Synopsis

Corporate bankruptcy is a defining characteristic of the market economy. It encapsulates the fundamental conflicts between capital and labour, owners and managers, debtors and creditors, the state and the market. Yet, with one or two notable exceptions, the political and social dynamics of bankruptcy law and practice have been overlooked by serious socio-legal scholars. This book remedies that neglect. Adopting an approach that compares English and American law, the authors identify the underlying political forces that established corporate bankruptcy law on both sides of the Atlantic. The book demonstrates how, by a recursive loop of professional self-interest, corporate insovency regulation is the creation of the lawyers who interpret and administer it. This book will be welcomed as an important sociological study and advances our understanding of how substantive law results from conflicts among the professionals who help to create it.

Excerpt

A property rights perspective offers a new way to comprehend the balance of power among corporations and their neighbors in the credit network. Meta-bargaining over property rights, or struggles among players in the political arena, are well exemplified in the field of bankruptcy law, because the stakes are high; statutes on corporate bankruptcy have far-reaching influence on power relationships among all organizations. However, meta-bargaining outcomes rest on two related processes: the dynamics of law-making itself, and the politics of those professions trying to control jurisdictional rights. In socio-legal studies, neither statutory law-making nor the politics of professions in law-making have been well treated. Yet theoretical initiatives on both law-making and professional innovation promise to expand our understanding of metabargaining over rights in general, and meta-bargaining over the law of corporate reorganization in particular.

Recent neo-institutional theory offers a promising start for an account of professional influence in legal change. Neo-institutionalism has stimulated a resurgence of sociological interest in the importance of law and professions for organizations of all sorts. While law has been taken for granted and professions considered generally irrelevant in many theories of corporate power, neo-institutional perspectives situate organizations in a context defined by law and the state.

The neo-institutionalist school in organizational sociology has developed a number of key insights. Neo-institutionalists recognize that organizations depend on external resources, and that, to survive, organizations must "fit" with their environment (what they sometimes term "organizational fields"). But they diverge sharply from classic sociological ideas about how such a "fit" emerges. In particular, neo-institutionalists argue that formal organizational structure frequently serves as a symbol or signal that helps to legitimize the organization in the eyes of key constituencies (Meyer and Rowan 1977; Scott and Meyer 1991). If an organization depends on an outside group for critical resources, it will try to placate them symbolically. In the creation of suitable appearances, organizational practices often become decoupled from formal structure. Neo-institutionalists have also remarked on the uniformity or isomorphism characteristic of organizational structure. Simply put, many . . .

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