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26 J. Corp. L. 737 (2000-2001)
Berle and Means Reconsidered at the Century's Turn

handle is hein.journals/jcorl26 and id is 747 raw text is: Berle and Means Reconsidered at the Century's Turn William W. Bratton I. INTRO DUCTION ......................................................................................................... 737 II. DEWEY AND DOUGLAS: SUCCESS IN THEORY, FAILURE IN PRACTICE ...................... 741 A. John Dewey and the Theory of the Firm ............................................................ 741 B. William 0. Douglas and Corporate Reorganization .......................................... 743 1. Douglas and the Rise of Chapter X ............................................................... 744 2. Douglas and the Fall of Chapter X ................................................................ 747 III. A NEW LOOK AT BERLE AND MEANS ....................................................................... 750 A. Law and Economics Before Law and Economics ............................................... 751 B. The Enduring Separation of Ownership and Control ........................................ 753 C. The Separation of Ownership and Control, and Fiduciary Duty ....................... 759 1. Corporate Property as Public Property ......................................................... 760 2. The Trust M odel ............................................................................................. 762 3. Judicial Enforcem ent ..................................................................................... 765 IV . C ON CLUSION ............................................................................................................ 769 I. INTRODUCTION Adolf Berle and Gardiner Means's The Modern Corporation and Private Property1 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. This history has two phases. During the first phase, which lasted for fifty years, the book, and particularly its recommendation of stepped-up fiduciary constraints, became the basis of a paradigm that dominated the field. The second phase began in the early 1980s, when the book lost its paradigmatic position along with the general collapse of confidence in regulatory solutions to economic problems. A body of hostile criticism also had an effect.2 Some claimed that events had superseded the book's salience.3 Others asserted it to be wrong on the facts.4 Yet today, . Samuel Tyler Research Professor of Law, The George Washington University Law School. My thanks to Larry Mitchell, Dalia Tsuk, and participants at workshops at the Arizona, George Washington, and Rutgers- Camden Law Schools for their comments on earlier drafts of this Essay. 1. ADOLF A. BERLE & GARDINER C. MEANS, THE MODERN CORPORATION AND PRIVATE PROPERTY (rev. ed. 1991). 2. It was memorialized by a 261-page obituary published in The Journal of Law and Economics in the guise of a fiftieth-anniversary symposium. See Corporations and Private Property: A Conference Sponsored by The Hoover Institution, 26 J.L. & EcoN. 235-496 (1983). 3. Walter Werner, Management, Stock Markets and Corporate Reforms: Berle and Means Reconsidered, 77 COLUM. L. REV. 388 (1977). 4. See Harold Demsetz, The Structure of Ownership and the Theory of the Firm, 26 J.L. & ECON. 375 (1983); see also Henry G. Manne, The Higher Criticism of the Modern Corporation, 62 COLUM. L. REV.

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