Herbert Spencer on Corporate Governance

Abstract

Herbert Spencer (1820–1903) wrote on the emergence of railroad corporations and corporate governance matters. Since Spencer is typically considered a staunch libertarian, the fact that he expressed some criticisms over the emergent corporate capitalism might surprise many. But what Spencer did was mainly identifying the so-called “agency problem,” which he considered very much worth addressing, especially in a market economy. Writing on the “railway mania,” Spencer was appalled by fraudulent schemes. But he did not consider them an inevitable feature of the capitalist economy. He focused on the institutional dimension of conflict of interests within the then-emerging corporation, and suggested to uphold freedom of contract in its strictest meaning, as to offset those. Spencer’s theory may be seen as a pure freedom of contract answer to agency problems, that stands in striking contrast with theories – such as Adolf Berle and Gardiner Means’s – that stresses the need for a technocratic solution, to make corporate capitalism viable in society.

Herbert Spencer, Sociological Theory, and the Professions

“…Dealing with the protection of the liberty of all in social relationships providing that none should infringe the like liberty of another is the proper sphere of government. To work to ensure “justice” in this sense is for Spencer an expectation placed upon the conduct of professionals and professional institutions (Mingardi, 2015 ). This liberal conception of “justice,” which Spencer consistently held as a writer on social matters, limited the role of government in peaceful, “industrial” states, to the protection of the equal liberty principle.…”

The Concept of Human Unity and Islamic Inclusive Education: A Study of KH. Imam Zarkasyi’s Thought in Social Change

“…The industrial type was a society more "developed" and more "individualized", where an ever more complex division of labor brought by an increasing differentiation between individuals. Uniformity declined, pluralism sprang up (Mingardi, 2013).…”

Olive Schreiner, Sociology and the Company She Kept

“…Its impact was profound although not perhaps quite what Spencer might have wanted, for in 1895 Schreiner wrote to a friend that, while it had showed her that systems of political and ethical thought could replace religious ones, she had rejected its mechanism and had to 'transmute' this into workable ideas (OS to Betty Molteno, 24 May 1895; see Olive Schreiner Letters Online) The 'social organism' aspect of Spencer's thinking and his ideas concerning increasing social complexity attracted Schreiner. However, contra Spencer, she rejected a 'progress' view of social change over time, with her eye remaining on what she termed the 'backwards' and 'downwards' movements that occurred, while the strong individualistic emphasis in Spencer's thinking and his rejection of state 'interference' are poles apart from Schreiner's communitarian and socialist-federalist stance (Stanley, 2002;Mingardi, 2013;Francis and Taylor 2014).…”