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chapter 4 Tribunes of the Shareholder Class It is surely a coincidence that the tragic destruction of the World Trade Center, located just a few blocks from the New York Stock Exchange, and home to so many stock, bond, and currency traders, was followed within the same decade by two other events that had significant impact on America’s financial industry: (1) the self-destruction of Enron and WorldCom, and (2) the 2008 world financial crisis, which did even more damage. These calamities are of vastly different meanings, but they do serve to illustrate just how naturalized, normalized, and pervasive giant corporations and their financial handmaidens have become in contemporary American life. The Enron implosion was dramatic, the largest bankruptcy to that time in history, and the 2008 meltdown was truly cataclysmic, but neither disaster seems to have had much of a ripple effect in either our politics or business culture. In the contemporary United States, corporate capitalism is truly hegemonic. This was not always so. In the post–Civil War history of American capitalism, the New Deal represented the most powerful, sustained, and culturally resonant effort to transform the corporation and accommodate it to an ethos that was far more democratic and pluralistic. The New Deal now seems radical to us, but only because we have become so complicit with the idea that the great American corporations are resistant to any fundamental reform. Indeed the ideological impulse behind the New Deal effort was neither socialist, anticapitalist, or authoritarian, but it was a radical experiment nevertheless, certainly when measured against the tepid reforms of recent years. The Great Depression was the occasion, the opportunity , the event that generated the ideological vacuum into which new ideas about corporate governance could pour. But those ideas had been germinating for more than a generation. The key text for this effort, the book that a contemporary described as “the law, the logic and the philosophy of the New Deal,” was The Modern Corporation and Private Property, published in August 1932 by Adolf Berle and Gardiner Means. Berle was a lawyer and Means an economist. Both were the offspring of Lichtenstein_ContestofIdeas_TEXT.indd 47 5/24/13 8:04 AM 48 capital, labor, and the state Congregational ministers, and both were familiar with the practical operation of the American corporation. Their collaboration began before the financial crash; indeed, when the book appeared three years later, they hardly took note of the Great Depression, because their argument hardly depended upon the existence of an immediate economic crisis. But the book, which instantly became a controversial classic, provided an ideological rationale for New Deal planning, consumer activism, labor organizing, and financial regulation of the large corporation and by extension of all American capitalism. Berle and Means argued that America’s two hundred largest corporations , which then controlled one-third of the national wealth, had themselves abridged the fundamentals of a liberal capitalist order. Berle and Means were not Brandeisian “small is beautiful” trustbusters. The giant corporation was “the flower of our industrial organization.” Concentration was a problem, but not for its own sake. Something more fundamental was wrong in that the immense power of those who ran America’s largest corporations was essentially unfettered, not only by the state but also by those who were their ostensible masters: the shareholder themselves. This is why Adolf Berle was happy to think of himself as the Karl Marx of the shareholder class.1 Wrote Berle and Means: “It has often been said that the owner of a horse is responsible. If the horse lives he must feed it. If the horse dies he must bury it. No such responsibility attaches to a share of stock. The owner is practically powerless . . . The spiritual values that formerly went with ownership have been separated from it . . . the responsibility and the substance which have been an integral part of ownership in the past are being transferred to a separate group in whose hands lies control.”2 Not only had oligarchy replaced competition, but also, and of even more consequence , management usurped the prerogatives of traditional ownership. If the shareholders had therefore lost control of the corporation to a set of unelected, self-perpetuating managers, then the modern corporation could best be understood not in terms of “the traditional logic of property and profits . . . not in terms of business enterprise but in terms of social organization.” And like the church, the military, and the state, such power had to be either regulated or democratized if...

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