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The rise of the modern corporation has brought a concentration of economic power which can compete on equal terms with the modern state - economic po… - Adolf A. Berle
" "The rise of the modern corporation has brought a concentration of economic power which can compete on equal terms with the modern state - economic power versus political power, each strong in its own field. The state seeks in some aspects to regulate the corporation, while the corporation, steadily becoming more powerful, makes every effort to avoid such regulation... The future may see the economic organism, now typified by the corporation, not only on an equal plane with the state, but possibly even superseding it as the dominant form of social organization. The law of corporations, accordingly, might well be considered as a potential constitutional law for the new economic state, while business practice is increasingly assuming the aspect of economic statesmanship.
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About Adolf A. Berle
Adolf Augustus Berle, Jr. (January 27, 1895 – February 17, 1971) was an American lawyer, educator, author, and diplomat. He was the author of , a groundbreaking work on corporate governance, and an important member of U.S. President Franklin Roosevelt's "".
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Adolf Augustus Berle, Jr.
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Additional quotes by Adolf A. Berle
Why have stockholders?... What contribution do they make, entitling them to heirship of half the profits of the industrial system, receivable partly in the form of dividends, and partly in the form of increased market values resulting from undistributed corporate gains? Stockholders toil not, neither do they spin, to earn that reward. They are beneficiaries by position only. Justification for their inheritance must be sought outside classic economic reasoning.... [and] can be founded only upon social grounds... that justification turns on the distribution as well as the existence of wealth. Its force exists only in direct ratio to the number of individuals who hold such wealth. Justification for the stockholder's existence thus depends on increasing distribution within the American population. Ideally the stockholder's position will be impregnable only when every American family has its fragment of that position and of the wealth by which the opportunity to develop individuality becomes fully actualized.
The Russian revolution was nominally based on Communist dogma; but its significant struggle was to find some instrument by which a vast backward country could be mauled into industrialization. The capitalist revolution in which the United States was the leader found apter, more efficient and more flexible means through collectivizing capital in corporations.
Where such a separation is complete one group of individuals, the security holders and in particular the stockholders, performs the function of risk-takers and suppliers of capital, while a separate group exercises control and ultimate management. In such a case, if profits are to be received only by the security holders, as the traditional logic of property would require, how can they perform both of their traditional economic roles? Are no profits to go to those who exercise control and in whose hands the efficient operation of enterprise ultimately rests? ...Furthermore, if all profits are earmarked for the security holder, where is the inducement for those in control to manage the enterprise efficiently? When none of the profits are to be received by them, why should they exert themselves beyond the amount necessary to maintain a reasonably satisfied group of stockholders.
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