Considering the increasing privatization of public schools in the United States, the authors of this chapter utilize contractarianism to critique neoliberal practices. Textual evidence is drawn on to show the influence of contractarian arguments on neoliberal thinkers such as Milton Friedman and Friedrich Hayek. After an explanation of the contractarianism of Thomas Hobbes and Jean-Jacques Rousseau, the authors show that the neoliberal versions of the social contract are both incompatible with the tradition writ large and internally inconsistent philosophically. Rather than a public characterized by privatization, and the undermining of public schools that results, the authors argue for a public in which responsibility, obligation, and freedom are not contradictory terms, and a vision of public schools in which teachers successfully bring about those ethical goals.

Stakeholder capitalism results in a loss of accountability, as executives who are responsible to everyone are responsible to no one. Stakeholder capitalism would be extremely difficult to implement. Proposed means of doing so – such as constituency boards, codetermination, and team production – are all unworkable. Stakeholder capitalism is inconsistent with democratic capitalism. Shareholder value maximization is the result that would emerge if shareholder and stakeholders could bargain (the so-called hypothetical bargain). Shareholder capitalism is pro-social. The profit motive results in socially efficient resource allocation. The profit motive is an essential motivational spark for innovation. The profit motive promotes freedom.

The US is often placed within a liberal-utilitarian model and the EU is often positioned within a social model. In corporate law theory, this distinction is presented as contractarianism versus communitarianism. The latter has traditionally represented the EU’s approach to corporate regulation, while the former represents the US approach. Rather than adhere to such neat divisions and other binary choices such as regulatory models versus voluntarist models such as the corporate social responsibility model, this chapter argues that the true resolution of difficulties associated with capitalism lies in the development of a new theoretical framework driven by an ethical challenge to those acting behind the corporate veil or under its shadow. This chapter exhorts that if we move on from binary divisions and present a meaningful ethical challenge to corporate actors such as shareholders and management, we can ensure better outcomes.

Chapter VI turns to the US, where various states developed diverse solutions to shareholder conflict for over one hundred close corporation legal forms. While many US states recognize withdrawal as a solution to majority-minority shareholder conflict in US close corporations, several states have resisted or even renounced withdrawal. The attitude towards LLCs, which are rapidly growing in popularity across the US, is more ambivalent, as state legislatures and judges have been slow to respond to problems of intracorporate conflict and oppression. While the contractarian-led scholarly debate on whether corporate law should be mandatory or default is instructive, the reality that withdrawal is often missing from state LLC statutes is not attributable to state legislatures taking reasoned policy positions. Rather, withdrawal’s absence in LLCs is caused by incentives created by federal taxation policy. There are signs that history moves in circles as withdrawal remedies seem to be (re)emerging in LLCs.

Chapter III centres on the jurisdiction-neutral analytical framework applied in Chapters IV–VII, the target jurisdiction-specific chapters. The analysis covers the history, grounds, scope of protection, applicable parties, and the mandatory/default nature of each jurisdiction’s withdrawal remedy. Key findings from each jurisdictional chapter are summarised and compared, with salient similarities and differences, such as the fault/non-fault distinction, between the jurisdictions in these aspects highlighted. Observations about the legal actors (judges, legislators, scholars) involved in the creation and development of withdrawal regimes, and other themes emerging from this, are made. Further, this Chapter identifies the phenomenon of ‘spontaneous functional convergence’ of the four jurisdictions towards two distinct conceptual models of withdrawal (‘corrective’ and ‘insurance’ models), situating this contribution within the broader corporate law convergence and divergence debate. The comparative findings and insights from the four target jurisdictional studies in this Chapter form the basis of a model withdrawal remedy that is presented in Chapter VIII.

The Book’s theoretical core, Chapter II focuses on two fundamental concepts: the close corporation, and withdrawal. After explaining the close corporation’s distinctive features, I set out its cardinal problems: conflict between minority and majority shareholders, and the enhanced risk of inter-shareholder exploitation. Over time, leading jurisdictions have converged upon shareholder exit as the ultimate solution to shareholder conflict. This Chapter introduces the concept of ‘withdrawal remedies’ as legal mechanisms enabling voluntary shareholder exit from the corporation coupled with an enforceable monetary claim for the value of the withdrawing shareholder’s membership interest. I show how withdrawal remedies are the only class of solutions that 1) resolve intractable conflict and 2) protect minority shareholders. Reasons why shareholders (minority and majority) might find access to withdrawal desirable – and why they might not – are analysed by applying insights and concepts from behavioural law and economics such as ‘sticky defaults’ to the close corporation withdrawal context.

Chapter IX summarizes this Book’s key findings and explores applications and extensions of the corporate law concepts and comparative law methodology developed in this Book. This Book contributes to legal scholarship in three ways. First, it establishes a coherent set of corporate law concepts and terminology that clarifies and expands our understanding of shareholder conflict and withdrawal across diverse jurisdictions. Second, it develops and applies a novel comparative law method (named the ‘tripartite method’). Third, I identify and analyse the phenomenon, which I call ‘spontaneous functional convergence’, in withdrawal law. This subtype of convergence occurs where jurisdictions appear to have – largely independently of other jurisdictions – developed legal regimes that are functionally similar but formally different using mostly, if not exclusively, domestic legal sources and inspirations. The spontaneous convergence observed in the withdrawal regimes of the target jurisdictions point to withdrawal as an evolutionary milestone for close corporation law.

The problem of polarization – our growing inability to talk to each other across lines of disagreement – is the most fundamental challenge facing modern societies. The only viable response to this challenge is to identify a moral vocabulary that has more than one dimension, but whose dimensions are broad and coherent enough to provide a common point of orientation. This is what a liberal theory of freedom provides. Liberal freedom, like liberal society itself, has two distinct and complementary dimensions, which give rise to two distinct and complementary moral projects; on the one hand to create the social conditions under which we are fit to be held responsible for what we do, and on the other hand to carve out a domain of conduct within which we are not responsible to anyone else for what we do except by choice. Contractarianism, with its focus on identifying principles of justice that all reasonable people should accept, tends to exacerbate the problem of polarization that liberalism is best suited to solve.

The eighteenth century was a period of dramatic change in political and legal thought. Much of the way in which we currently conceive of democratic institutions and the responsibilities and rights attached to citizenship can be traced back to concepts that dominated eighteenth-century thought. The social contract was debated by figures such as John Locke, Algernon Sidney, David Hume, Edmund Burke, and Mary Wollstonecraft. Among the many issues under deliberation were the validity of consent, the will of individuals, the role of virtue, and the rights of self-governance. Legal thought was very closely tied to political thought because law was a foundation of political authority. Natural law, which was associated with divinity, rose in importance because it protected inalienable rights, such as self-preservation. Positive law, that is, laws of civil society such as common law and statute law, could be reformed and updated as civil society evolved. This flexibility was praised by jurists such as Lord Mansfield, but it also drew attempts to clarify and systematize law by Sir William Blackstone and Jeremy Bentham, as they prepared the citizenry for a growing engagement with the law.

This chapter focuses on contractarian arguments to bring PSID into our political community. The most obvious argument is by showing that it is advantageous for other members of the community to include them in their ‘cooperative venture.’ This inclusion can be done either directly – by thinking of PSID’s social input differently – or indirectly – by showing that their integration into our community indirectly benefits us, even if they were mostly passive beneficiaries. This first kind of justification, I argue, seems empirically dubious and the latter offers a problematically derivative or contingent status to PSID. I conclude that taking a collectivist, multipartite stance on reciprocal relations to elaborate a kind of rule-contractarianism remains a promising avenue. However, for this argument to be convincing, the contingency objection ought to be met by rendering the inclusion of PSID as less of an opportunistic happenstance and more of a necessity based on their traits and on the nature of the contribution they can provide.

This chapter focuses on the essay “Justice Through Trust,” by Leslie Francis and Anita Silvers, which in my view makes the best contractarian argument to include PSID among the rank of contributing contractors. Silvers and Francis insist on abandoning the misleading metaphor of the social contract as a tit-for-tat exchange. Instead, they argue that society is more accurately conceived of as a complex net of transactions which fundamentally requires a climate of trust in which any being able to trust or be trustworthy can participate. PSID’s contribution to fostering a climate of trust can be said to occur not in spite of their disability and its corollary vulnerability and exploitability, but partly because of it. Although a trust-based conception of contractual justice goes a long way in integrating PWD, I argue that it contains inherent tensions. Certain conceptions of trust may fail to justify the robust moral status of PWD, while others may not be as essentially connected to social contract theory as Silvers and Francis argue. These tensions tend to confirm that contractarian theories have difficulty genuinely accommodating people with particularly severe disabilities.

In this chapter, I introduce the notions of ‘PSID’ (persons with severe intellectual disabilities) and of ‘robust moral status.’ I also explain social contract theory and its two main branches: contractarianism and contractualism. I present my hypothesis that contractual moral and political thought cannot provide a compelling justification for the robust moral status of PSID and I justify the choice of this hypothesis.