A more incendiary title for this book might have been Private Power >Public Law, which is the gist of the regulatory story it relates for Germany and the United States. Against a background of increased financialization of the advanced capitalist economies between 1990 and 2007, and the near-death experience of the subsequent financial crisis, John Cioffi shows how parties of the center-left wagered their political fortunes on an alliance with financial elites to reform corporate governance. This was a reform agenda justified in the name of shareholder rights, but one which served the material interests of those financial elites. The ploy of citizen-as-shareholder failed to take off as a salient political identity, leaving the left parties with a sucker's payoff: no new electoral coalition to give enduring life to the Third Way, and only a “politically toxic” tie to the financial industry to show for its reformist efforts (p. 11).

One of this book's contributions is to combine a political scientist's nose for power plays with a lawyer's subtle grasp of the details of regulation and jurisprudence. In corporate governance, the political question is how power is allocated among various players within a company: its shareholders, its managers, and its workers. On this score, the United States and Germany started from very different places in 1990: “[T]he juridical nexus of American corporate governance empowered managers, weakened shareholders, and exiled labor;” its German counterpart encouraged the exercise of control via concentrated ownership and included “formal governance roles for labor through codetermination law” (p. 14). As Cioffi's analysis emphasizes, the regulatory vogue for transparency and disclosure of information in the 1990s was merely market enabling. It was politically easy to pass such reforms into law because they did not undercut the structural regulations that governed power relationships at the firm level. In other words, they were low-hanging fruit, allowing companies to attract the foreign capital that was racing through international capital markets without fundamentally changing the allocation of power in the company. Structural reform is a more difficult proposition altogether, one that depends on extraordinary circumstances in order to succeed.

Cioffi draws empirical support from a series of policymaking episodes in the two countries. In Germany beginning in the early 1990s, managers of leading financial firms pushed a reform agenda in corporate governance; the Social Democrats, attempting to position the party as economic modernizers while stirring up resentment against the cozy arrangements of postwar German capitalism, seized on this agenda as a plank of its new approach to regulation. What followed was a series of reforms that appeared to place Germany on the brink of abandoning its stolid old model for the altogether sexier world of finance capitalism: “Together, the KonTraG [Control and Transparency Act] and tax reform legislation … eliminated the principal antitakeover defenses in Germany,” presaging the unraveling of concentrated shareholding that had made hostile takeovers a rarity in Germany (p. 162).

The revolution never came, however. German managerial elites, who had no problem with modernizing the financial sector and adopting the transparency and disclosure standards favored by international markets, mobilized politically to defeat those laws that threatened to reach further into the structural regulation of German companies: the European Union Takeover Directive, the German Takeover Act, and amendments to the Stock Corporation Act in 2005. In each instance, corporate Germany fought to defend the existing arrangements. As Cioffi concludes his German chapter, “Managers and managerialism may have been the unintended winners in corporate governance reform” (p. 188).

The last decade in the United States saw government pass two structural reforms fiercely opposed by American corporate elites: Sarbanes-Oxley in 2002 and Dodd-Frank in 2010. These reforms both happened in extraordinary circumstances, when organized business had been laid low by public condemnation: the post-Enron crisis for Sarbanes-Oxley, the post-2008 financial crisis for Dodd-Frank. This temporary depression of business power allowed Senate Democrats to pass a 2002 bill that injected the federal government into corporate governance in an unprecedented way, aiming to reallocate power at the board level by requiring independent audit and compensation committees.

The composition of board committees in large public companies is hardly the sort of institutional change that excites most political scientists, who are much more likely to care about the minutiae of congressional committee jurisdiction. Cioffi's work shows that board composition—the heart of power in the modern corporation, at least in law—is explosive stuff because the stakes are high. Such loci of organization constitute what Peter Gourevitch has called the “micro-institutional patterns of the economy” (Suzanne Berger and Ronald Dore, eds. National Diversity and Global Capitalism, 1996: p. 241). Cioffi's contribution is to illuminate the macropolitics of these microinstitutional sources of power in democratic capitalism.

The American cases also reveal some of the cracks in Cioffi's partisan argument. While Dodd-Frank was surely a product of the Democratic hat trick of capturing the presidency and both houses of Congress in 2008, Sarbanes-Oxley came into being when Republicans controlled the House and the presidency. If both X and not-X lead to Y, we need to look elsewhere for the causes of Y. In these cases, it was the intense public pressure on parties of both the Left and Right to “just do something!” about business excesses that explains the timing and the extent of change in these laws, not the fact that they were pushed by the Democrats. What requires explanation is not only how the parties of the center-left came to support a pro-shareholder agenda—at which this books succeeds admirably—but also what defined the moments in which the center-left was able to convert these preferences into policy change. And those moments were surely defined by the intense demands of a scandalized citizenry.

Public Law and Private Power is a welcome addition to the proliferating literature on the comparative politics of corporate governance. Most of this work is motivated by the insight that the centrality of companies to modern capitalism makes the allocation of power within the firm an intrinsically political question. The central debate in this literature is how we should conceptualize the power struggles that take place over these rules—through political party action, interest group coalitions, or the preferences of the median voter in society.

The careful case studies in this book leave this debate unresolved, as proponents of each will see in the outcomes their preferred causal construction. Scholars who look to voter preferences will say that Germans turned against neoliberal reform after 2000 because Herr Median Voter in Germany lives at least a few houses to the left of his American neighbor. Those who emphasize interest group power will nod in vigorous agreement at the conclusion that “financial interests … have grown more influential in recent decades, but they have not yet displaced managerial elites in terms of political power” (p. 138). Yet Cioffi's book also provides ample evidence in favor of his claim that center-left partisan political entrepreneurs have allied with financial interests to push a pro-shareholder agenda, and that this agenda resulted in some of the major financial reforms of the past 20 years. There is no doubt that this alliance paid off handsomely for financial elites; for parties of the Left—not so much.