Representative Agency: The Fundamental Trust Relation of All Social Structure

Representative agency is defined and illustrated as a fundamental building block of every social organization. An analytical framework emerges that is used to reformulate the normative paradigm advanced in Milton Friedman‟s famous (1970) essay identifying maximization stockholder profits as the sole social responsibility of corporate managers. The paper‟s representative agency framework clarifies moral duties for both principals and agents who are bound together in long-term trust relations. The framework renders superfluous much of the existing distinctions claimed to differentiate stakeholder from stockholder analysis of social organizations. Representative agency is simply portrayed as a resource control mechanism, constituted as a durable trust relation, capable of application to social /business/governmental institutions, but requiring investment in character development and other techniques for ultimately making it accountable and more productive than associations secured by more extensive government regulation, monitoring, enforcement effort, and private transaction costs.