This chapter critically examines the rise of board primacy as an alternative theory of firm governance. The chapter begins by categorizing such theorists as either “wise ruler” theorists or “long-term interest” theorists. In either case, board primacy theorists have responded to the revelation that shareholders, like other corporate constituents, have quite heterogeneous preferences not by extending voting rights to those constituents but by further distancing the shareholder electorate from real corporate decision-making. Their move conflates two different aspects of group decision-making processes: the responsiveness of the system and composition of the electorate. And by holding fast to exclusive shareholder voting, the theorists have just further detached their governance structures from the underlying preferences of corporate constituents without substituting anything in their place. We should instead investigate treating other constituents more like shareholders rather than the other way around.

Theorists of community cling to one form of civic friendship—associations—as if no society-wide friendship could exist. Small groups may be friendlier, but they fall short of being truly civic when they fail to guarantee individual rights. John Locke’s liberalism is safer because it bases rights on property. Locke’s theory is also descriptively accurate because it still operates today, under cover of newer theories, for example in the beliefs of electoral majorities that earners deserve to keep the fruits of their labor and that “paying one’s own way” is dignified. Yet communitarians are correct that property rights obscure civic friendship. Aristotle’s psychology of commercial exchange builds on Lockean property, showing how money is a marker for honor, the civic analogue of love. Societies in which workers are paid a fair wage are friendly societies; where this does not occur, society is full of malcontents. Workers feel dishonored by low pay. Similarly, societies that honor civic patrons enjoy a concord that is like friendship; where public service is not honored, the wealthy desire revolution, according to Aristotle. Money and honor tie citizens to the larger society.