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Abstract

We analyze Berle’s overall corporate governance project in accordance with what we see as its four core sub-themes: (A) the limitations of external market forces as a constraint on managerial decision-making power; (B) the desirability of internal (corporate) over external (market) actors in allocating corporate capital; (C) civil society and the public consensus as a continuous informal check on managerial decision-making power; and (D) shareholder democracy (as opposed to shareholder primacy or shareholder wealth maximization) as a socially instrumental institution. We seek to debunk the popular misconception that Berle’s early work was a defense of the orthodox shareholder primacy paradigm of corporate governance. This prefaces our analysis where we set out and, in turn, examine each of the above four sub-themes of Berle’s overall thinking on corporate governance. A recurring theme in this part of our discussion is the over-simplicity of attempting to connect Berle’s thinking to the later agency costs paradigm of corporate governance, which we believe fails to reflect the normative and institutional richness of Berle’s overall social-scientific project. We build on these insights by assessing the effects of our reinterpretation of Berle’s work on contemporary corporate governance debates. We suggest here that Berle’s lifetime work on corporate governance, when considered in an integral and non-selective way, provides the basis for a realistic and dynamic understanding of the concept of shareholder democracy and its relationship with wider civil society processes of public and political opinion formation.