The Mid-Victorian Reform of Britain’s Company Laws and the Moral Economy of Fair Competition

Abstract

This paper reconstructs the history of the reform of Britain’s company laws during the 1850s and makes three major arguments. First, the Law Amendment Society was the driving force for reform and organized the campaign for change. Second, the advancement of working-class interests and ideas of fairness were central to the conceptualization of these reforms and the course of their advocacy. Company law reform was broadly conceived to include the revision of the law of partnership, corporations, and cooperatives to create a level playing field in which smaller entrepreneurs could compete against established capitalists. Finally, central to this campaign was the institutional logic of “fair competition.” Socialists and liberals both used this logic, demonstrating how moral ideas can shape organizational change.

United Kingdom historical viewpoint

“…This returned limited liability from being a privilege dictated by the state to an automatic right that came with (now-easier) incorporation (Mackie 2011;Harris 2020). Many rationales have been put forward for the introduction of limited liability in the UK -from requirements by individuals in the UK's affluent Home Counties 38 who had accumulated savings and needed to invest them (Cottrell 1980: 45); to middle class dissent due to the failure of the Crimean War, with such middle class wanting to join the upper class in making money from share investments (Mackie 2011); to a desire to let those from lower socio-economic backgrounds to partake in such investments (Loftus 2002); the desire of Christian Socialists to help provide a venue for working class savings (MacQueen 2016: ch 3;Cottrell 1980: 48); to the effect of lawyers (Smith 2020); to the macro-economic push for economic growth (Griffin 2004). Whatever the socio-economic drivers, it is clear that companies in England had been trying -and failing -to achieve limited liability by contractual means, by stating wherever they could that shareholders enjoyed limited liability.…”

Review of periodical literature for 2021

“…Guimarães and Greenhill offer insights into how, in a rather short amount of time, the British merchant firm of Edward Johnston & Co. emerged as the market leader in the Brazilian coffee‐exporting business by the 1870s. Writing in Enterprise & Society , Smith interprets Britain's company law reforms, which were championed by the Law Amendment Society in the 1850s, as a morally motivated attempt to achieve fair competition. It was believed that fair competition would afford middle‐ and working‐class entrepreneurs, regardless of their capital, an opportunity to prosper.…”