The Problem of The Legitimacy

The Problem of The Legitimacy

The problem of the legitimacy

The problem of the legitimacy of management power is basically a political one. The large company frequently is criticized as being an undemocratic institution. By democracy we generally mean a political system in which those persons who are in positions of authority receive their power from the people over whom it is exercised and use the power in conformity with the wishes of the majority. Therefore, for power to

be consistent with democratic principles, it must (1) be legitimate (i.e., derived with the consent of the governed), and (2) be exercised responsibly (i.e., in accordance with the will of the majority). Whether or not an organization is democratic depends on whether its leaders acquire their power legitimately and whether the power can be taken away from them if it is exercised irresponsibly.

As we have seen, a few thousand top managers actively control the destinies of big business in America. But who selected these men, and to whom are they responsible? The answer to the first question is easy: They selected themselves. The management groups of large corporations are self-perpetuating oligarchies. One of the major tasks of aging top executives is to select and groom their successors. There is no generally accepted answer to the question of management responsibility, however, and it constitutes the problem of the legitimacy of management power. Those with a legal orientation argue that corporate managers must be responsible to the stockholders. They contend that if the link between the owners and managers is ever entirely dissolved, management will lose the legal basis for its existence. What real claim will managers have to their positions, they ask, if they do not own the company or represent the owners' interests? The implication of this line of reasoning is clear: to the extent that management is not directly responsible to the stockholders, its powers are not legitimate and big business is undemocratic.


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