Ignored no longer: Contributions of the law of agency to principal-agency theory and congressional leadership

• DOI: https://doi.org/10.1016/S1059-4337(08)45007-X
• Date: 01 September 2008
• Pages: 235-254
• Published date: 01 September 2008
• Author: William J. Phelan

IGNORED NO LONGER:

CONTRIBUTIONS OF THE LAW OF

AGENCY TO PRINCIPAL-AGENCY

THEORY AND CONGRESSIONAL

LEADERSHIP

William J. Phelan, IV

1

ABSTRACT

Principal-agency theory was adapted from business and economics to

explain the behavior of various government actors. Yet the idea of an

agent and a principal is only depicted in a limited fashion when discussed

in light of the realm of business and economics. Legal studies has grappled

with the idea of agency well before political science or economics. I

lay out the basic principles of both agency law and Congressional

principal-agent theory. I then establish the groundwork for drawing

important connections between agency law and principal-agency theory.

I also analyze and attempt to ameliorate differences between these two

theoretical approaches.

As seen throughout history, particularly that of western civilization, a

frequent cloak dictators and depots dress themselves in is that they are

Studies in Law, Politics, and Society, Volume 45, 235–254

Copyright r2008 by Emerald Group Publishing Limited

All rights of reproduction in any form reserved

ISSN: 1059-4337/doi:10.1016/S1059-4337(08)45007-X

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operating for such intangibles as ‘‘the crown’’ or a deity. All along, most of

these leaders probably knew they were acting on their own behalf; claiming

to act for some common good was simply an attempt at pacifying the

masses. This tactic had some merit: revolutions aside, people were usually

hesitant to topple a leader who was supposedly put in place and acting

on behalf of, for example, God. Yet it was not till after the Enlightenment

and the creation of the democratic republic known as the United States

of America that a leader could truly understand and claim to be working

on behalf of the people. The representational government found in the

U.S. Congress is an excellent case in point. The members of Congress

are proportionally elected by their constituents to become leaders in

Washington, DC and represent them in a collective, deliberative body.

Further, within this legislative body, there are the leaders of these leaders.

Over the years, both the United States Senate (2007) and the United

States House of Representatives (2007) have developed unique leadership

structures that enabled the chambers to carry out business.

The manner in which the leadership structure of Congress has developed

was, in part, controlled by the attitudes of those who filled the leadership

positions. Speaker Joe Cannon, for example, made sure to advance rules

that helped keep his tight grip on the speakership and Rules Committee.

Such a course of action was a result of a desire to use the speakership as

a source of power to dominate the House. Yet early in the development of

Congressional leadership, Henry Clay had a different view on being elected

Speaker.

Gentlemen. In coming to the station which you have done me the honor to assign

me – an honor for which you will be pleased to accept my thanks – I obey rather your

commands than my own inclinations yShould the rare and delicate occasion present

itself when your speaker should be called upon to check or control the wanderings or

intemperance in debate, your justice will, I hope, ascribe to his interposition the motives

only of public good and a regard of the dignity of the house. (Shepsle & Bonchek, 1997,

p. 382)

Whether Clay actually was an agent for his House is not important; Clay

raises an early attitude found in Congressional leadership that can also be

seen today: the leader is an agent of the body that selected him. Clay wanted

the members to know that they were the ones principally in charge. He was

merely an agent/leader present to carry out their will.

The idea of being one’s agent is not novel. In fact, concepts of the agency/

principal relationship predate Clay’s notion by millennia. Currently, several

in the academic community have taken Clay’s sentiments and attempted to

formalize this principal-agent theory (P-A theory) in the field of political

WILLIAM J. PHELAN, IV236