Abstract
<jats:title>Abstract</jats:title> <jats:p>This chapter reviews the familiar ‘firm vs markets’ analysis, associated in particular with Ronald Coase and later scholars including Oliver Williamson, observing that markets build and rely upon trust. Corporations build and rely upon loyalty. The enduring success of the corporation may thus be seen as a tacit endorsement of faith in human loyalty: of faith in faithfulness itself. Alfred Chandler, in his famous study of the modern business corporation, argues that with improving technology and growing markets, the administrative coordination under a managerial hierarchy proved a more profitable means of allocating resources than the market. Then, once such hierarchies became established, ‘the hierarchy itself became a source of permanence, power and continued growth’. The allocation of resources through the market may reflect the aggregate impact of uncurated self-interested human interaction. Within the corporation, however, outcomes reflect concerted human action. Yet, it is not the action, or the will, of the ‘members’ (i.e., the shareholders) of the corporation (or of any other corporate stakeholders) that defines the corporate mandate. Rather, it is the directors and officers whose duty it is to discern, define, and then serve that collective will. If the effect of conscious human deliberation in the form of managerial decision-making actually refines and rehabilitates, then the corporation may not only be a great producer of wealth but may also serve as one of the most powerful civilizing forces in the modern world.</jats:p>