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Agency problem: Difference between revisions
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===The agency problem and [[corporate personality]]=== | ===The agency problem and [[corporate personality]]=== | ||
This tension, between the overriding life goals of an [[agent]] and those of {{sex|her}} [[principal]] is the crux of the agency problem. They do align — but ''only so far''. | This tension, between the overriding life goals of an [[agent]] and those of {{sex|her}} [[principal]] is the crux of the agency problem. They do align — but ''only so far''. | ||
Theory: the “legal revolution” theorists — academics, [[GC]]s, [[COO]]s and [[thought leader]]s generally — make the [[category error]] of assuming the interests of client ''[[corporation]]s'' drive the market. This aligns with legal theory: a corporation is a person and has its own [[Legal personality|personality]], interests and desires. But the corporation as a “[[res legis]]” — a [[legally significant thing|''legal'' thing]] — is only a “[[Res cogitans|''thinking'' thing]]” through the agency of its representatives, each of whom is a [[res cogitans|thinking thing]] in her own right. | |||
The critical difference between human person and [[corporation|corporate person]] is that ''a [[corporation]] cannot speak for itself''. A ''human'' principal, being a thinking, animate thing, can apprehend the [[conflicts of interest]] of which {{sex|he}} may be a casualty, and police them. A pile of papers filed at companies house cannot. It can only ''crowd-source'' defence of its own interests to its “friends” who ''are'' animate, but who have interests of their own. It can seek to nullify any ''one'' agent’s conflicting interest by asking the aggregated weight of its ''other'' agents to represent its against that one agent in a kind of “wisdom of crowds” way — their ''individual'' interests disappearing through some kind of phase cancellation effect to which their ''common'' interest — furthering the interest of their mutual principal the [[corporation]] — is immune. This works as long as the self-interests of each of the other agents ''do'' cancel themselves out: if all the agents have a ''common'' self-interest which conflicts with the corporation’s interests, this crowdsourcing strategy won’t work. | The critical difference between human person and [[corporation|corporate person]] is that ''a [[corporation]] cannot speak for itself''. A ''human'' principal, being a thinking, animate thing, can apprehend the [[conflicts of interest]] of which {{sex|he}} may be a casualty, and police them. A pile of papers filed at companies house cannot. It can only ''crowd-source'' defence of its own interests to its “friends” who ''are'' animate, but who have interests of their own. It can seek to nullify any ''one'' agent’s conflicting interest by asking the aggregated weight of its ''other'' agents to represent its against that one agent in a kind of “wisdom of crowds” way — their ''individual'' interests disappearing through some kind of phase cancellation effect to which their ''common'' interest — furthering the interest of their mutual principal the [[corporation]] — is immune. This works as long as the self-interests of each of the other agents ''do'' cancel themselves out: if all the agents have a ''common'' self-interest which conflicts with the corporation’s interests, this crowdsourcing strategy won’t work. | ||