French and Japanese style indicative planning. o The strong performance of the Japanese economy, and subsequently of other state-guided Asian economies, lent substantial credibility to this model even through the 1980s The principal instruments of state control over corporate affairs in corporatist economies have generally lain outside of corporate law. They include, for example, substantial discretion in the hands of government bureaucrats over the allocation of credit foreign exchange, licenses, and exemptions from anticompetition rules. Nevertheless corporate law also played a role by, for example, weakening shareholder control over corporate managers(to reduce pressures on managers that might operate counter to the preferences of the state) and employing state-administered criminal sanctions rather than shareholder-controlled civil lawsuits as the principal sanction for managerial malfeasance (to give the state strong authority over managers that could be used at the governments discretion) But the state-oriented model too has now lost most of its attraction. one reason is the move away from state socialism in general as a popular intellectual and political model Important landmarks on this path include the rise of Thatcherism in England in the 1970s Mitterand's abandonment of state ownership in France in the 1980s, and the sudden collapse of communism nearly everywhere in the 1990s. The relatively poor performance of the Japanese corporate sector after 1989, together with the more recent collapse of other Asian economies that were organized on state corporatist lines, has now discredited this model even further. Today few would argue that giving the state a strong direct hand in corporate affairs has much normative appeal D. Stakeholder Models Over the past decade, the literature on corporate governance and corporate law has sometimes advocated"stakeholder models as a normatively attractive altemative to a strongly shareholder-oriented view of the corporation. The stakeholders involved may be employees, creditors, customers, merchants in a firms local community or even broader interest groups such as beneficiaries of a well-preserved environment. The stakeholders it is argued, will be subject to opportunistic exploitation by the firm and its shareholders if corporate managers are accountable only to the firms shareholders; corporate law must therefore assure that managers are responsive to stakeholder interests as well While stakeholder models start with a common problem, they posit two different kinds of solutions. One group of stakeholder models looks to what we term a fiduciary' model of the corporation, in which the board of directors functions as a neutral coordinator 10. Andrew Shonfield. MODERN CAPITALISM: THE CHANGING BALANCE OF PUBLIC AND PRIVATE POWER(1967)10. Andrew Shonfield, MODERN CAPITALISM: THE CHANGING BALANCE OF PUBLIC AND PRIVATE POWER (1967). 7 French and Japanese style “indicative planning.”10 The strong performance of the Japanese economy, and subsequently of other state-guided Asian economies, lent substantial credibility to this model even through the 1980s. The principal instruments of state control over corporate affairs in corporatist economies have generally lain outside of corporate law. They include, for example, substantial discretion in the hands of government bureaucrats over the allocation of credit, foreign exchange, licenses, and exemptions from anticompetition rules. Nevertheless, corporate law also played a role by, for example, weakening shareholder control over corporate managers (to reduce pressures on managers that might operate counter to the preferences of the state) and employing state-administered criminal sanctions rather than shareholder-controlled civil lawsuits as the principal sanction for managerial malfeasance (to give the state strong authority over managers that could be used at the government’s discretion). But the state-oriented model, too, has now lost most of its attraction. One reason is the move away from state socialism in general as a popular intellectual and political model. Important landmarks on this path include the rise of Thatcherism in England in the 1970s, Mitterand’s abandonment of state ownership in France in the 1980s, and the sudden collapse of communism nearly everywhere in the 1990s. The relatively poor performance of the Japanese corporate sector after 1989, together with the more recent collapse of other Asian economies that were organized on state corporatist lines, has now discredited this model even further. Today, few would argue that giving the state a strong direct hand in corporate affairs has much normative appeal. D. Stakeholder Models Over the past decade, the literature on corporate governance and corporate law has sometimes advocated “stakeholder” models as a normatively attractive alternative to a strongly shareholder-oriented view of the corporation. The stakeholders involved may be employees, creditors, customers, merchants in a firm’s local community, or even broader interest groups such as beneficiaries of a well-preserved environment. The stakeholders, it is argued, will be subject to opportunistic exploitation by the firm and its shareholders if corporate managers are accountable only to the firm’s shareholders; corporate law must therefore assure that managers are responsive to stakeholder interests as well. While stakeholder models start with a common problem, they posit two different kinds of solutions. One group of stakeholder models looks to what we term a “fiduciary” model of the corporation, in which the board of directors functions as a neutral coordinator