Adolf Berle and Gardiner Means’s The Modern Corporation and Private Property has been thoroughly mined by scholars and used to support numerous theses, yet it still provides a rich source for consideration. Corporate legal theory has not yet determined how best to treat the issue of separation of ownership and control or fully resolved “who should receive the profits of industry.” Berle’s belief that corporate powers should be exercised in trust for shareholders has had limited traction, but his ideas continue to influence debate. This Article takes Berle’s statement that “when a convincing system of community obligations is worked out . . . the passive property right of today must yield before the larger interests of society” to argue for the creation of social businesses. Social businesses are entities that are profit-making, but not profit-maximizing—non-loss, non-dividend firms dedicated to serving a social goal. Just as The Modern Corporation was, in part, a response to the political and economic times in which it was written, our current economic struggles and the wrath directed at corporate communities provide an opportunity to consider alternatives to current business models and to think about how we might expand our view of the role and purpose served by business entities by encouraging social ventures. Such an expansion will benefit not only the populations reached by businesses’ activities, but also the perception of business itself.
Some may doubt that social businesses can be created and maintained. After explaining the concept of social businesses and why Berle might have supported their creation, I will suggest legal frameworks that could accommodate them and discuss several social businesses currently in operation in Bangladesh. By no means do I suggest that all businesses should operate in the social business form. I argue instead that there is room for both traditional profit-maximizing firms and social businesses in the corporate lexicon, and that the addition of social businesses will greatly enrich the landscape. Berle was prescient in noting, “[B]usiness practice is increasingly assuming the aspect of economic statesman-ship.” Business entities play a critical role in society, beyond their economic impact. Social businesses allow the “social” aspect of the social science of economics to regain credibility in the conversation about the function of business.
Celia R. Taylor, Berle and Social Businesses: A Consideration, 34 SEATTLE U. L. REV. 1501 (2011).