The Separation of State and Corporation in Capitalism

This paper is concerned with a particular subset of the separation between the political and the economic central to the legitimation of capitalism, namely that between state and corporation. The separation of state and corporation is a central feature allowing the rise and spread of corporate power – both historically and actually – because it fundamentally misrecognizes the political constitution of the corporation, the centrality of corporations in governing social life, and shields both states and corporations from liability and accountability. The separation of state and corporation is central to the dominant corporate governance paradigm and practice of shareholder value maximization conceiving the corporation as a nexus of contracts among market individuals. However, the separation is also perpetuated by critics of corporate power who reify the state as the seat of politics and democracy and the corporation as an economic market actor, reproducing the ideological separations between the political and the economic, state and society, and public and private. The paper traces the separation of state and corporation in three historical periods: 1) the corporation as a body subject to the state in the early modern period; 2) as a rights-bearing person in 19th century Anglo-American corporate law; and 3) as a nexus of contracts or bundle of assets owned by shareholders, reducing the corporation to individual market transactions. In all three instances, the corporation is emptied of social and political content, origin and authority by conceiving it analogously to a body, person or individual.