The Marketisation of European Corporate Control: A Critical Political Economy Perspective

The European Union (EU) is witnessing a transformation of its regulation of corporate governance - that is, those practices that define and reflect the power relations within the corporation and the way, and to which purpose, it is run. At the heart of corporate governance is the issue of corporate ownership and control. The market for corporate control, where the commodity traded is control rights tied to a company's shares, is assigned an ever greater role in the external governance of corporations. Yet, at the same time, (cross-border) takeovers are still highly contested, and the envisaged pan-European market for corporate control clashes with national regulations, protective measures and sentiments. Although there has been a steep rise in European merger and acquisition activity, most notably in hostile takeovers, an unfettered European market for corporate control is still far from an economic and legal reality. It is in this context that we see the changes in the regulation of corporate governance in the EU as an attempt, initiated and promoted mainly by the European Commission, to develop an EU-level regulatory framework aimed at the further development of a European market for corporate control. Rejecting the notion that changes in corporate governance regulation can simply be reduced to anonymous market pressures selecting the most efficient arrangements, we argue that it is essential to identify the inherently political and partly contingent underpinnings of this marketization process. To this end, we develop a critical political economy perspective that draws upon both Marx's analysis of capital as a social relation and Polanyi's "institutionalist" insights into the emergence of market society. The point of departure here is that markets are not the result of people's supposedly innate propensity to "barter, truck and exchange," but are social and political constructs.