Power Without Property, Still: Unger, Berle, and the Derivatives Revolution
Seattle University Law Review, Vol. 33, p. 889, 2010
41 Pages Posted: 24 Feb 2010 Last revised: 9 Jun 2010
Date Written: February 23, 2010
This paper was produced for “In Berle’s Footsteps,” a symposium marking the launch of the Adolf A. Berle, Jr. Center on Corporations, Law and Society at the University of Seattle School of Law. It considers the light that the “derivatives revolution” sheds on the theoretical perspectives of Roberto Unger and Adolf Berle. While an unlikely pair, both Unger and Berle focused, in different ways, on the same issues: property, the power associated with property, and the impact of “smashing the atom” of traditional property rights. For Unger, breaking down consolidated property holding at the societal level was a pro-democratic move. For Berle, analyzing corporate law, the separation of ownership from control risked promoting exactly the kind of concentration of power that Unger, through destabilization, sought to destroy. Financial derivatives products deconstruct property well beyond what Berle contemplated, and through a fundamentally different mechanism than what Unger envisioned. Both the differences and the similarities between real life and theory are illuminating. We describe the effects of derivatives at three levels: at the level of corporate law; of financial firm practices and the originate-to-distribute model, and of the global over-the-counter derivatives market. In each case, we find that the fluidity produced by disassembling traditional property rights creates a space within which sophisticated parties are able to consolidate and reaffirm their power. Thus while Unger’s claim about the necessity of “destabilization rights” still resonates, Berle’s insight into the human will to power is central to understanding the risks associated with that destabilization.
Keywords: destabilization rights, property, Unger, Berle, derivatives, legal theory
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