“Aspiring to be the Marx of the shareholding class, a great social critic who rallied people to corporate liberalism, he sought to transform the system rather than abolish it — a task he considered as revolutionary as uprooting capitalism itself “1
Adolph BERLE was born in Boston, Mass. on January 29, 1895. He graduated from Harvard with honors in history when he was 18, received an M.A. the next year, and at 21 became the youngest graduate in the history of Harvard Law School. Soon after he embarked on a highly successful career as a corporate lawyer in New York and, beginning in 1927, also taught corporate law at Columbia Law School.
In 1932, Berle wrote “The Modern Corporation and Private Property” with the assistance of economist Gardiner Means. The book became “the most acclaimed of the depression decade.“2
Berle entered public affairs in 1933 as an economic expert in Franklin D.Roosevelt‘s original “brain trust“. From 1934 to 1937 he worked simultaneously as a planner for the federal government and the city of New York. He prepared the Securities and Exchange Act and work in the reorganization of New York City‘s Government under Fiorello La Guardia. As U.S. assistant secretary of state for Latin American affairs from 1938 to 1944 he implemented the “good neighbor“ policy and promoted postwar agreements for collective security. In 1945—1946 he served as ambassador to Brazil. Berle was also president Kennedy‘s special advisor on Latin America. He died in New York in 1971.
With his experience in the corporate world and his understanding of history, Berle realized that the “old“ theory could not explain the economic relationships existing in the Twentieth century America. The growing number and power of big corporations were changing the obsolete concepts of property and power.
In this new scenario it is the manager the one that has the power over the owner‘s “property“, in return the owner‘s “property“ will increase with the profits.
The owner has the power to convert the securities into cash and then buy other securities or any good or service. It is in this liquidity discussion where the role of the government is first emphasized by Berle. The government is the one to secure the. liquidity, and thus the value of the owner‘s property.
Berle also uses the well—known philosophical proposition that any kind of property depends on a system of social order and has to be protected by a system of law. Both depend on the state. The next two paragraphs from Adolph Berle‘s “The American Economic Republic”, clearly define the two basic ideas in his economic theory: The property-power relations, and the allocation of power.
As a “liberal“ he firmly believed in the need for government intervention. Because of the unstopable growth of big corporations, control, regulation and planning were necessary in order to fulfill the needs and preserve the ideals of the American people. Berle attacked the theories of nineteenth century capitalism about the economy as a self-correcting mechanism.
Adolf Berle believed that “free market“ was a superior theory, but he knew that the conditions that must be present for the existence of free markets do not hold in the real world. “Free markets“ should not be, in his opinion, the only objective of an economy.
Berle was a very influential figure in economic, diplomatic and social affairs. He wrote about the power of the managers in the corporate world, and he asked for government intervention soon after the 1929 crash. These ideas became very popular in the economic community and specially among the political class. He is viewed by many as the main theorist of Roosevelt‘s “New Deal“. But outside from the opportunity factor and his political ability, Berle has contributed to a better understanding of the corporate economy. His works have been effective in analyzing the property-power relationships and defending the role of the state as a beneficial force in the economy. Schwarz in his book “Liberal Adolph A. Berle” summarizes his contribution in the next paragraph.
1. Jordan A. Schwarz: Liberal: Adolph A. Berle. (New York: The Free Press, 1987).p. vii.
3. Adolph A. Berle, The American Economic Republic (New York: Harcourt Brace& World, inc., I963) p. 21.
4. Berle, American, p. 26.
5. Berle, American, p. 27.
6. Berle, American, p. 27.
7. Berle, American, p.35,
8. Berle, American, p.75.
9. Adolph A. Berle, Power Without Property (New York: Harcourt, Brace 6 Company, 1959).p. 56.
10.Berle, American, p. 79.
11 Berle, Power, p. 84.
12. Schwarz, Liberal, p. viii.
The Modern Corporation and Private Property (New York: Harcourt, Brace 6 Company, 1933)
Economic Power and Free Society (New York: Harcourt...
The Twentieth Century Capitalist Revolution (New York:
Power Without Property (New Yor~k: Harcourt...,1959)
The American Economic Republic (New York: Harcourt..., 1963)
Power (New York: Harcourt...., 1969)