31 Pages Posted: 31 Mar 2010 Last revised: 14 Jun 2010
This article, published in a symposium edition on the work of Adolf Berle, reconsiders the first and last four (“the Five Chapters”) of The Modern Corporation and Private Property. The standard account of the Five Chapters paints Berle in the shareholder primacy camp. This paper challenges that view, and shows that Berle viewed separation of ownership and control as a symptom, rather than the disease afflicting the emerging corporate system. The paper focuses not only on a reading of the Five Chapters in historical context, but also by reference to the four scholars Berle directly cited in the Five Chapters - Thorsten Veblen, Adam Smith, Walther Rathenau, and S.H. Nerlove, and the important scholar that he indirectly cited - Frank Knight. The paper argues that Berle used Adam Smith as a “straw man” to further his major agenda - combating or transforming the myth of individualism that blocked the road to a needed reshaping of the institution of private property and a needed adjustment in the national government’s economic role. The article demonstrates that Berle’s direct and indirect references to Veblen, Rahtenau, and Knight are the key to understanding his actual beliefs and political agenda.
Keywords: Adolf Berle, Walther Rathenau, Thorsten Veblen, Shareholder Primacy, New Deal, Individualism, Frank Knight, Corporate Governance, Coase, Modern Corporation and Private Property, Entrepreneur, Uncertainty, Separation of Ownership and Control, Power, Myth-making, Intellectual History, Corporate theory
Suggested Citation: Suggested Citation
O'Kelley, Charles R.T., Berle and the Entrepreneur. Seattle University Law Review, Vol. 33, No. 4, 2010. Available at SSRN: https://ssrn.com/abstract=1579220