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.The division between public and private is itself a historical construct.Economic and political categories are not natural and inevitable, nor is thedivision of labor between them.What the state does and what others do ishistorically constructed, constituted in the way that states and other institu-tions develop.Many of the activities that states routinely conduct havebeen and some continue to be handled privately.Private groups havebuilt roads, supplied water, adjudicated disputes, protected people from en-emies, disposed of sewage, educated children, and issued currency.Stateshave in contrast performed such  private tasks as producing consumergoods, trading commodities, speculating in land, and investing in enter-prise.The boundaries that separate modern polities and economies couldhave been very different.The corporation could have continued as a kindof state agency, an organizational means of mobilizing private resources toserve collective or state interests.For example, the financial market institu-P U B L I C A N D P R I V A T E E N T E R P R I S E 45tions developed in tandem with the federal treasury (Ardent 1975).Ratherthan sell securities through private brokers, the state could have sold, andat times attempted to sell, securities directly.These boundaries must be ex-plicitly explained, not simply taken as natural.Thus the private sphere is not the natural home for corporations, whicharose after public and private spheres had been not only constructed, butradically redefined and the distinction between them deepened.The orga-nizational features, the social relations constituted among directors, own-ers, managers, workers, and customers, were all socially constructed.Whencorporations were public, they were accountable to the government and, inprinciple, to the people, so profit was only one organizational goal.In orderto have the privilege of limited liability, gain access to the bountiful supplyof Wall Street capital, and achieve the right to act as legal individuals, theincorporating individuals had to pledge fealty to the state.They had to beaccomplishing something for the public good, at least as legislators definedit.Those who pursued private profits for personal gain were on their own.They had to risk their own assets, as business norms dictated responsibleindividuals should.Even when they supplemented their own resources withthose of other similarly liable individuals, the law treated them as their ownnatural person without the shield of a corporate entity.But they owed noth-ing to any larger authority or broader public.Profit could be pursued forthe sake of profit private enterprise for private ends.To say that states and other institutional structures are built, not discov-ered, is not to say that historical development is entirely accidental or thatthere are no general principles that help explain the particular structuresthat did develop.This chapter will show that the corporation arose as aquasi-state activity and became privatized as the result of concrete politicalconflicts over the nature of the state.The debate was not about whethercorporations should be located in preexisting public and private sectors.Rather, the conflict over the corporation coincided with a broader move-ment for a new definition of appropriate state powers, one that would con-struct a private sphere that was eventually understood as though it wereseparate.Within this broad process of socially constructing the boundariesbetween state and economy, my focus is on the large corporation and thepolitical movements and conflicts that shaped it.THE CORPORATION AS A PUBLIC INSTITUTIONIn 1772, George Washington led a movement in the Virginia legislature tocreate a company to make the Potomac River navigable.After the AmericanRevolution and some interstate squabbles delayed the project, the PotomacCompany was created in 1785, with Washington as president and ThomasJefferson as one of the directors.By 1801, despite numerous problems andsetbacks, 338 miles of river were open for navigation at a total cost of abouthalf a million dollars.Maryland and Virginia had supplied over half the46 C H A P T E R T H R E Ecapital, and foreign (Dutch) investors were also involved (Davis 1917;Littlefield 1984).What made this project unusual was its interstate natureand the prominence of its organizers.For Washington, an owner of consid-erable Virginia land, private interest conveniently coincided with public in-terest, another common feature of early corporations.Ultimately it was afinancial disappointment and technical failure.One historian concludes that indeed its significance lies primarily in its demonstration that joint-stockcompanies were poorly equipped to carry out major internal improvementswithout massive and reliable government aid, especially during the first fewdecades after independence (Littlefield 1984, 565).1Before the liberal revolutions of the eighteenth and nineteenth centuries,European governments extended sovereignlike legal status to many corpo-rate bodies (Sewell 1992).Guilds, municipalities, associations, and corpo-rations were granted particular rights and the authority to enforce theirown law.Each individual was subject to the law of the corporate bodies towhich he or she belonged, often without recourse to adjudication to ahigher authority [ Pobierz całość w formacie PDF ]