Corporate Economy

Abstract

‘The Corporate Economy’ is a term of art used loosely to refer to the way the economic system of rich industrialized societies evolved after 1900: a system in which a major part of the production side of the economy is organized by large limited-liability corporations whose shares are traded on organized stock markets. The phrase itself was first used openly in this sense in the title of a book edited by R. Marris and A. Wood published in 1971 (Marris and Wood 1971). Associated with it are other terms such as ‘The Organizational Revolution’ (Boulding 1953), ‘The Managerial Revolution’ (James Burnham 1941) and more recently ‘The Managerial Paradigm’. The last expression is intended to convey a body of ideas amounting to a picture of the world that is both internally consistent and an agenda of questions and answers. As such, the ‘managerial’ paradigm is clearly distinguished both from the neo-classical paradigm and from a more loosely conceived ‘neo’ Marxian paradigm. It particularly depends on the proposition that in the large corporation, owing to inherent difficulties for shareholders in monitoring the performance of managers, there is considerable separation between the vicarious role of stockholders, on the one hand, and the control, operating and policy-making roles of management, on the other. This state of affairs was first identified in a classic work published in 1932 by A.A. Berle and Gardner Means (1932).