ABSTRACT
In the early 1930s, Adolf Berle and Gardiner Means made an interesting discovery. While no one was looking, the American economy had ceased to be driven by small, owner-operated businesses, but had come to be dominated by the large corporation1 (Berle and Means 1932). Alarmingly, they noticed, corporations were coming increasingly to be managed by salaried professionals rather than by their equity owners. From this Berle and Means concluded that one could no longer count on markets to discipline corporations and that one could expect managers to “plunder” stockholders for personal gain. Here at once were fanned the two great populist fears about the corporation: concentrated power and the separation of ownership from control. Berle and Means were long on seemingly ominous statistics but short on analysis of the corporation as an institution. What was its rationale, its logic, its dynamic? What was its role in the economic process? Neoclassical economic doctrines were not much help. Like Berle and Means, they started from the assumption of small ownermanaged firms as a normative standard, and thus what light they could shed revealed the same dark possibilities of concentration and plunder.2 On the whole, indeed, the Depression decade of the thirties was an ideological low-point for the large corporation, an institution never blessed in any era with favorable press.
