Berle and the Entrepreneur
Berle and the Entrepreneur Charles R. T. O’Kelley† I. INTRODUCTION In the first and last four chapters (“the Five Chapters”) of The Mod- ern Corporation and Private Property,1 Adolf Berle, Jr. describes in sweeping terms a fundamental transformation of the American econo- my.2 At the beginning of the nineteenth century, the dominant economic actor was the sole proprietor, who owned and controlled all aspects of his business. By the first quarter of the twentieth century, the “corporate system,”3 and the few hundred large, quasi-public corporations of which it was composed, had taken control of many sectors of American indus- try and promised in years to come to gain an increasingly larger share of America’s economic wealth and power.4 Berle identified separation of ownership from control as the central characteristic of the corporate sys- tem and its constituent corporations.5 Shareholders supplied the wealth but none of the control. Managers exercised control but took none of the risks. As a result, Berle asserted, one of the fundamental assumptions underlying our system of private property no longer held true. In the early nineteenth century, we believed that allowing the businessman to † Professor and Director, Adolf A. Berle, Jr. Center on Corporations, Law and Society, Seattle Uni- versity School of Law; Martin E. Kilpatrick Chair Emeritus, University of Georgia School of Law. My thanks to Kelli Alces, Anita Anand, Jayne Barnard, Michal Barzuza, Jill Fisch, Tom Joo, Joe Knight, Ken Lipartito, Jim Mooney, Rafael Pardo, Margaret Sachs, Michael Siebecker, Faith Ste- velman, Fred Tung, Michael Wachter, Jessica Wang, and Harwell Wells for commenting on an earlier draft of this article.
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