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The Modern Corporation and Private Property
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In
the early 1930s the impact of Berle and Means can be attributed in large
part to the crisis in capitalism which was then engulfing the developed
world. In the US it was taken up as a key text for those intent on reforming
the American economic system and certainly by the Roosevelt "New Deal"
supporters. As the authors of this online article note, "... the New Deal
did not reject the theory and practice of free
enterprise, rather it turned down the classical economic theory as the basis for operating a capitalist system. The significance of such a revolution were twofold: first, it was recognized that the modern economy was not an economy of small enterprise but that its dominant characteristic was big enterprise; second, it was recognized that the pricing process was significantly different from that assumed in classical theory (Means, 1962b: 24-26). In the modern huge corporation, business enterprise has come to be primarily a problem of administration and management, while the aspect of trading has been reduced to a minimum (Means, 1933: 11)." One of the most vigorous forms of interdisciplinary study in recent decades has involved the joining of law and economics. Later in this course we will look at some aspects of this rather peculiar marriage, but this article deals in some detail with the way Berle and Means affected US legal studies of the corporation, beginning with the assertion: "Adolf Berle and Gardiner Means' The Modern Corporation and Private Property (2) still speaks in an active voice. Since it first appeared in 1932, corporate law has been reckoning with its description of a problem of management responsibility stemming from a separation of ownership and control." |