Abstract
The final section concludes by drawing together the various ideas about corporate governance and incentives that have been identified earlier in the book, and shows how these ideas are consistent with proposals for a possible future for the public corporation set out in the last chapter of The Modern Corporation and Private Property, by Berle and Means, published in 1932.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
Berle, A., & Means, G. (1932) The Modern Corporation and Private Property. New York: Macmillan. p. 354.
- 2.
As they say, “if these were the only alternatives, the former would appear to be the lesser of two evils”. Berle, A., & Means, G. (1932) p. 355.
- 3.
Berle, A., & Means, G. (1932) p. 354.
- 4.
The Economist. Good capitalism v bad capitalism (June 9, 2018) p. 30.
- 5.
Adam Smith (1776) An Inquiry into the Nature and Causes of the Wealth of Nations. Book V, Chapter 1, Part III.
- 6.
Standing, G. (2016). The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay. London: Biteback Publishing Limited., Streeck, W. (2016). How Will Capitalism End? Essays on a Failing System. London: Verso., Mason, P. (2015). Post Capitalism: A Guide to our Future. London: Allen Lane.
- 7.
Wolf, M. (2014). The Shifts and the Shocks: What We’ve Learned – And Have Still To Learn – From the Financial Crisis. London: Allen Lane. Jacobs, M., & Mazzucato, M. (2016). Rethinking Capitalism. Chichester: Wiley Blackwell. Mazzucato, M. (2018). The Value of Everything: Making and Taking in the Global Economy. London: Allen Lane.
- 8.
See, for example, Kay, J. (2003). The Truth About Markets: Their Genius, Their Limits, Their Follies. London: Allen Lane.
- 9.
Norman, J. (2018). Adam Smith: What He Thought and Why it Matters. London: Allen Lane.
- 10.
Ashraf, N., Camerer, C., & Loewenstein, G. (2005). Adam Smith, Behavioral Economist. Journal of Economic Perspectives, 19(3), 131–145.
- 11.
See Bratton, W., & Wachter, M. (2010). Tracking Berle’s footsteps: the trail of the Modern Corporation’s last chapter. Seattle University Law Review, 33(4), pp. 849–875.
- 12.
- 13.
Berle, A., & Means, G. (1932) p. 355.
- 14.
In the UK this would mean amending section 172 (1) of the Companies Act 2006 to make it clear that directors have a duty to promote the long-term success of the company for the benefit of all major stakeholders. Changes announced by the Department of Business, Energy and Industrial Strategy in June 2018 (The Companies Miscellaneous Reporting Regulations 2018) go some way towards this by requiring directors to report on how they have engaged with a wide set of duties contained in section 172. This requires them to have regard, among other matters, to the interests of employees, supplies, customers, the community and the environment, and to act fairly as between members.
- 15.
In the same way that Karl Popper resolved the problem of induction by turning it on its head and focusing on falsifiability rather than verifiability, I am suggesting that the remuneration committee’s dilemma can be “dissolved” (in the sense of being “made to go away”) by placing more attention on intrinsic, rather than extrinsic, motivation.
- 16.
Le Grand, J. (2003). Motivation, Agency and Public Policy. Oxford: Oxford University Press.
- 17.
See Chap. 4, n22.
- 18.
See, for example, the “fair pay charter” included in Standard Chartered Bank’s directors’ remuneration report for 2017 (p. 84 of the bank’s Annual Report 2017).
- 19.
Deakin, S. (2012). The corporation as a commons: rethinking property rights, governance and sustainability in the business enterprise. Queen’s Law Journal, 37 (2), p. 381.
- 20.
Mayer, C. (2013). Firm Commitment: Why the Corporation is Failing Us and How to Restore Trust in it. Oxford: Oxford University Press.
- 21.
Quoted by Keynes, J. (1956) “Alfred Marshall, 1842–1924”. In A. Pigou (Ed.), Memorials of Alfred Marshall. New York: Kelley & Millman, Inc, p. 16.
References
Anderson, E. (2017). Private Governments – How Employers Rule Our Lives and Why We Don’t Talk About It. Princeton/Oxford: Princeton University Press.
Ashraf, N., Camerer, C., & Loewenstein, G. (2005). Adam Smith, Behavioral Economist. Journal of Economic Perspectives, 19(3), 131–145.
Bakan, J. (2004). The Corporation – The Pathological Pursuit of Profit and Power. New York: The Free Press.
Berle, A., & Means, G. (1932). The Modern Corporation and Private Property. New York: Macmillan.
Jacobs, M., & Mazzucato, M. (2016). Rethinking Capitalism. Chichester: Wiley Blackwell.
Kay, J. (2003). The Truth About Markets: Their Genius, Their Limits, Their Follies. London: Allen Lane.
Keynes, J. (1956). Alfred Marshall, 1842–1924. In A. Pigou (Ed.), Memorials of Alfred Marshall. New York: Kelley & Millman, Inc.
Mason, P. (2015). Post Capitalism: A Guide to Our Future. London: Allen Lane.
Mazzucato, M. (2018). The Value of Everything: Making and Taking in the Global Economy. London: Allen Lane.
Norman, J. (2018). Adam Smith: What He Thought and Why It Matters. London: Allen Lane.
Streeck, W. (2016). How Will Capitalism End? Essays on a Failing System. London: Verso.
Author information
Authors and Affiliations
Rights and permissions
Copyright information
© 2019 The Author(s)
About this chapter
Cite this chapter
Pepper, A. (2019). The Modern Corporation’s Final Chapter. In: Agency Theory and Executive Pay. Palgrave Pivot, Cham. https://doi.org/10.1007/978-3-319-99969-2_6
Download citation
DOI: https://doi.org/10.1007/978-3-319-99969-2_6
Published:
Publisher Name: Palgrave Pivot, Cham
Print ISBN: 978-3-319-99968-5
Online ISBN: 978-3-319-99969-2
eBook Packages: Business and ManagementBusiness and Management (R0)