Berle and Means Discuss Corporate Control (Great Events from History II: Business and Commerce Series)
Article abstract: Berle and Means drew national attention to emerging corporate centralism and set the stage for developing new ideas and mechanisms to protect individuals’ property rights and interests.
Summary of Event
The 1932 publication of The Modern Corporation and Private Property by Adolf A. Berle, Jr., and Gardiner C. Means recognized and documented the corporate system that was gradually replacing the free enterprise system in the United States. The pioneering book brought to national attention the existence of a forceful trend that already had resulted in concentration of power and control. Such concentration of power within corporations was taking place at the expense of alienating a diverse group of owner-managers, innovators, and entrepreneurs, the same group of individuals that had made Adam Smith’s laissez-faire philosophy so workable. The thesis developed in the book has since become known as the paradigm of separation of ownership and control. According to this theory, the structure of corporate ownership, with numerous stockholders putatively owning companies that in fact were controlled by managers, led to owners having little control over their property.
Berle and Means’ claims regarding the emerging economic, social, and political order fell on deaf ears for some time. Theirs was not the message that economists, and possibly other scholars, wanted to hear. The separation...
(The entire section is 2070 words.)
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