The Corporation in America

In November 1932, in the pit of the Great Depression and within a week of Franklin Roosevelt’s election, Macmillan published Adolf A. Berle and Gardiner C. Means’s The Modern Corporation and Private Property. The book quickly became a classic referent in the debate about the social role of the corporation, and it still is. Berle and Means observed that in the modern corporation ownership is separated from control. Stockholders (owners) are effectively passive; their only real power is their ability to sell off shares. The fear of losing shareholder confidence may constrain managers, but very imperfectly. They further observed that modern corporate wealth was highly concentrated—the smoking gun was Means’s calculation ...