Enumerating Old Themes? Berle the Progressive
Seattle Law Review, May 2010
67 Pages Posted: 22 Feb 2010 Last revised: 7 Jun 2010
Date Written: February 19, 2010
Berle’s progressive vision of an economy of business organisations which operated in the interests of the community began to be realised in New Deal America and in post-war England. However, in the more recent period of neo-liberalism, corporations have reverted back to their longstanding ideological commitment to the protection and pursuit of shareholder value. That Berle’s work has not had a more longstanding effect on shareholder primacy hegemony, I state, may be attributed to a number of factors. First, whilst Modern Corporation is famous for empirically evidencing wide share dispersal and the resulting issue of director accountability, it is less known – in the UK at least – for its analysis of the changing nature of ownership in the context of share ownership. This has particularly important consequences in the UK, as much of the justification for shareholder primacy is based on a shareholder’s proper entitlement as owners. Second, as Berle acknowledged in his famous HLR debate with Merrick Dodd, much of the normative force of his model depends upon social context. Passive shareholding will only be ‘progressive’ in the context of a strong, socially concerned government. I will show here that post-war Britain’s welfare and nationalisation program was potentially such a context but that this changed with the triumph of the New Right at the end of the 1970s and because of internal contradictions within the labor movement. Finally, I will argue that because Berle’s separation thesis effectively relocates power to managements rather than shareholders (and incorporates an expectation that this tendency would increase with time), it is blind sighted by the emergence of more active, controlling owners. In enumerating Berle’s old themes in the current financial crisis it might be possible to see anew how we, as a society, should negotiate the balance of power and interests between all ‘stakeholders’ for the benefit of the community - concerns which are central to Berle’s work.
Keywords: Berle, shareholder primacy, corporate history, corporate governance, labor history, tripartite powers
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