The Separation of Corporate Law and Social Welfare — William W. Bratton, 2017

This paper traces the historical shift from corporations serving broader social welfare goals to prioritizing shareholder value. It argues that modern corporate law has increasingly separated economic production from social outcomes, narrowing its focus and raising questions about whether markets alone can deliver equitable or socially beneficial results.

1. Corporate law was once tied to social welfare

2. This “welfarist corporation” model broke down

3. Shareholder value replaced social welfare as the central goal

4. Markets—not the state—became the primary controlling force

5. Corporate law narrowed its scope to economic efficiency

6. Shareholder value does not equal social welfare

7. Wealth and power remain highly concentrated

8. Corporate restructuring had major social costs

9. Corporate law now ignores broader societal trade-offs

10. The separation between corporate law and social welfare is widening

11. This framework will persist unless a major shock occurs

⭐ Star Facts (The Separation of Corporate Law and Social Welfare)

• In the modern U.S., the top 10% of households own about 81% of all stock, with the top 1% owning nearly 38%, showing extreme concentration of shareholder power.
• During the 1980s takeover era, restructuring decisions affected over 550,000 workers, highlighting the social cost of shareholder-focused changes.
• Post-war corporations like General Motors once employed hundreds of thousands (up to ~850,000 at peak), compared to modern tech firms with far fewer workers.
• Today’s largest firms employ relatively small workforces:
  • Apple ~92,000
  • Google ~54,000
  • Facebook ~12,500
• Corporate governance as a concept only emerged in the 1970s, showing how recent the focus on internal efficiency is.
• In 1983, the top 10% owned about 89% of stock, and even after “democratization,” they still own around 81% today, meaning inequality remains largely unchanged.