Berle and Means Were Partly Right
| Peter Klein |
Check out Kenneth Lipartito and Yumiko Morii’s revisionist account of The Modern Corporation and Private Property (1932) — what they call the “ur-text of managerial capitalism” — and its influence on the academic and policy literatures. Well known interpretations of the Berle-Means thesis from Robert Gordon, James Burnham, John Kenneth Galbraith, and others were far different from the original. Berle and Means cared little about efficiency, argue Lipartito and Mori, but were more interested in problems of power and social responsibility. They were wrong about dispersed ownership — stockholdings were actually more concentrated in the US than in other Western economies — but right that particular agents could exercise disproportionate control over corporate assets through family control and pyramid structures. Berle and Means’s main concern, in other words, was entrenchment more generally, not simply entrenched managers taking advantage of passive shareholders.
The paper is provocative but doesn’t cite the best modern work on corporate structure prior to the 1930s such as Holderness, Kroszner, and Sheehan (1999), which worries me. Worth a look in any case.