Adolf Berle was really quite cool. As co-author of The Modern Corporation and Private Property (1932), Berle kicked off the next 7 decades of corporate governance debates, and offered insights whose full value has arguably been under-appreciated (specifically, the notion that “owners” is an outdated way of describing shareholders, who are but claimants on uncertain residual claims, and also that corporations must be understood as political as well as economic entities). In politics, Berle served in the FDR administration in a variety of roles, helping to craft the New Deal. After WWII, Berle returned to writing about changes in the American economic system and the role of corporations. In a 1959 book, Power Without Property, Berle presents updated data on the concentration of economic power and his own analysis of new developments (particularly interesting: he foreshadows the rise of large institutional investors, like pension funds, which would become a key topic of corporate governance research in the 1980s).

Here’s the best quote so far, summarizing some of the things Berle has to say:

We live in a system described in obsolete terms. We have come to believe our own repeated declarations that our society is based on individual initiative – whereas, in fact, most of it is no more individual than an infantry division. We assume that our economic system is based on “private property.” Yet most industrial property is is no more private than a seat in a subway train, and indeed it is questionable whether much of it can be called “property” at all. We indignantly deny that we are collectivist, yet it is demonstrable that more than two-thirds of our enterprise is possible only because it is collectivist: what is really meant is that the State did not do the collectivizing. (p. 27)

Berle and Means wrote something similar in the last few chapters of The Modern Corporation, but obviously Berle felt the need to repeat and refine this argument (reasonably enough as the argument was mostly ignored by those citing TMC): we continue to think the economy in terms that made sense to Adam Smith even though our system looks incredibly different. We think of shareholders as owners, but what do they own? What decisions are they entitled to make about the thing they supposedly own, the traditional definition of ‘owning’ something?

Berle also has a lot of nice arguments about why separating out economics and politics makes so little sense in an era dominated by large corporations who are checked by labor unions, governmental regulation and public opinion much more than by the vagaries of the marketplace (here he echoes Galbraith, but the argument goes back further). Berle suggests that we should think of corporations as non-Statist political actors, and that we should think of economics and politics as inseparable:

“The two systems are, and perhaps always were, interlocked. … It is a fair question now whether sound academic distinction can be made between political science and economics.” (p. 17)

I would have loved to sit Berle and Polanyi down in a room together and ask them to swap notes. Berle’s thesis that the economic and political systems are “interlocked” is a nice complement to Polanyi’s argument that economy is “embedded” in society. And perhaps if the two had met, Polanyi would have been able to come up with a better analysis of the rise of the large corporation (something missing from The Great Transformation and I don’t think found in his later work, though I have not yet searched exhaustively).