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Henry Manne on academic corporate law

Law and economics superstar Henry Manne has a fabulous essay in the latest issue of the Emory Law Journal, A Free Market Model of a Large Corporation System, in which he makes a telling observation about recent corporate law scholarship:

Scholars have for too long been led by events into accepting the status quo and building on it. As the total picture gets more and more complicated and messier and messier, it is much easier to do limited "event studies" or other partial equilibrium analyses. This necessarily results in a loss of a sense of history and a lack of a proper cynicism about the beneficence or legitimacy of previous government regulation.

Academic careers can be ruined by too much departure from the conventions of the moment, even though the cumulative effect of this is to limit any chance for large-scale rethinking of a whole field. What is needed now is a larger debate on the real costs and benefits of market and regulatory alternatives to corporate governance. This could in time result in a very different accepted wisdom about large corporations.

52 Emory L.J. 1381, 1400 (sub. req'd). [Ed.: Thunderous applause in the hall.]