The Modern Corporation and Private Property. By Adolf A. Berle, Jr., and Gardiner C. Means. New York: The Macmillan Company. $3.75. The Coming Struggle for Power. By John Strachey. New York: Covici-Friede. $3.00. Democracy in Crisis. By Harold J. Laski. Chapel Hill: The University of North Carolina Press. $1.50. Dare the School Build a New Social Order? By George S. Counts. New York: John Day Company. 25 cents.
Property, in the modern world, can no longer be defined in the terms formulated by the eighteenth, and applied by the nineteenth, century as categories for its description. Property has lost its privacy; the property relationship, over the major areas of society, is no longer an individual relationship; in evolving into corporate property, it has acquired attributes which necessitate new concepts if it is to be understood, and new strategies if it is to be controlled. There are four recent books which share this common central assumption.
In “The Modern Corporation and Private Property,” Messrs. Berle and Means present the legal evidence of the transition from the individual business of three generations ago to the corporate organization of the end of the 1920’s. By observing the successive changes in practice successively sanctioned by the courts, they have developed a complete biology of corporate structure. Some two years ago, Dr. Harry Laidler, in his “Concentration in American Industry,” photographed, corporation by corporation, the expanding units which were pre-empting field after field of national production; this later book X-rays the inner process through which such corporations normally passed in the course of their expansion. The study of the regrouping, around the various factors in a corporate economy, of the rights formerly encompassed by the individual property owner, which constitutes the bulk of the book, is preceded by statistics on the two hundred largest non-financial corporations in the country in 1929 that strikingly establish their dominance. At that date there were some 300,000 non-banking corporations with assets of one hundred and sixty-five billion dollars and an income of nine and one-half billion dollars; the two hundred first in size controlled rather more than half the assets, received almost half the income, and were growing at a rate half again as fast as the rest. Under such circumstances, as this book points out, it is no longer the individual himself who uses his wealth:
Those in control of that wealth, and therefore in a position to secure industrial efficiency and produce profits, are no longer, as owners, entitled to the bulk of such profits. Those who control the destinies of the typical modern corporation own so insignificant a fraction of the company’s stock that the returns from running the corporation profitably accrue to them in only a very minor degree. The stockholders, on the other hand, to whom the profits of the corporation go, cannot be motivated by those profits to a more efficient use of the property, since they have surrendered all disposition of it to those in control of the enterprise. The explosion of the atom of property destroys the basis of the old assumption that the quest for profits will spur the owner of industrial property to its effective use. It consequently challenges the fundamental economic principle of individual initiative in industrial enterprise. It raises for re-examination the question of the motive force back of industry, and the ends for which the modern corporation can be or will be run.
From a diametrically opposite line of approach, such a re-examination is undertaken by John Strachey, in “The Coming Struggle for Power.” The cases and figures available to Messrs. Berle and Means stop at the end of prosperity; and the plan which they laid out for themselves did not include an examination of how corporate property-holding bears upon the large body of members of industrial society to whom it offers neither ownership nor control. The existing crisis raises doubts as to whether corporate unification can continue along former lines, and even graver doubts as to whether it will be allowed to. To the possibility of inner unsoundness in the economic structure is added the certainty of external pressure upon it. Mr. Strachey represents the pressure of the Communists; he would agree with Prud’-hon, question and answer: “Que est-ce que la propriete? C’est le vol,” Only the last chapters of his book, however, consist in a eulogy of the future Socialist Soviet of Great Britain; two thirds of it are occupied by an historical analysis, erratically brilliant, of the economic history of that country. The weakest of his sections is that on “The Decay of Capitalist Culture,” which groups the inadequate chapters on religion, science, and literature; the strongest, his resume of “The Political Struggle in Britain,” particularly “The Nature of Social Democracy.” So long as capitalism was in its expansionist period, he points out, it was possible for concessions, under the aegis of the Liberal parties, to be made to the demands of the workers. Fractions of super-profits supplied funds for the social service state. By the time the workers had begun to have independent representation, by the time, that is, that the various Social Democratic parties came within reach of power at the end of the war, economic expansion had stopped and regression set in. By consequence, it has been the lot of the workers’ own leaders to be the go-betweens between a declining capitalism which is withdrawing its concessions but is unwilling to relinquish control, and the workers who will receive a continually declining fraction of their product until they realize their situation and take over the organization of production.
At this particular point, Mr. Strachey’s analysis and that of Harold Laski, in “Democracy in Crisis,” run closely parallel. The recognition that Disraeli’s two Englands, one of the rich and one of the poor, are co-existent upon the same island cannot, Mr. Laski thinks, be very much longer postponed; and whether the two, once recognized as distinct, can co-exist within the same political commonwealth is to his mind an open question. Basing his case on the description of the British scene contained in Mr. Tawney’s “Equality,” he shows how that second term of the French revolutionary trinity is producing a crisis in democracy. The success of the British parliamentary system during the nineteenth century, the action and reaction of Government and Opposition, were possible, he submits, because on the most vital issue all parties were in substantial agreement. Now that the social service state is becoming progressively impossible for the reasons Mr. Strachey makes clear, the property issue is bound to be raised. Mr. Laski’s essays are an examination of the probable reaction of the various organs of the British state to a fundamental division, a division which would alter the frames of reference on which the democratic structure was built up. The Crown, the cabinet, the armed forces, the civil service, the judiciary—how would they react to a change in the system of property-holding whose protection has been at the center of their development? He concludes :
Having the constitutional means in its hands to change a government, any long period of failure will induce it (the working class) to try an alternative. Unless there is acquiescence in that experiment by those who have failed, the conditions emerge in which revolution is inevitable. That has always been the history of every regime which has been unable to meet the crisis by which it was confronted. Long years of industrial depression have produced a lack of faith in, an apathy about, our historic institutions which make them far more fragile than they superficially appear. Those who say that the working class does not want revolution are perfectly right. But it does desire economic security and an increasing share in the gain of living. It will not consent to the surrender of its expectation of these without using its power to pursue an alternative road.
No matter from what angle the analyst regards the situation, a redefinition of the idea of property is at hand; action upon new terms can no longer be postponed by the mechanism of the concession commonwealth. The action of the last century and a half has been upon hypotheses which are now inapplicable. New action is meaningless if conducted upon them. The primary task of the present period is to effect a general acceptance of a new hypothesis of property comparable to the new hypothesis of citizenship whose acceptance was effected by the French Revolution and its successors. The bearing of this situation on education is brilliantly outlined in George S. Counts’ pamphlet, “Dare the School Build a New Social Order?” One by one he lists the fallacies of the progressive movement whose revolt against the old rigidities carried laissez-faire into the school. In sponsoring a process of conscious indoctrination as over against the so-called freedom for spontaneous development fostered by most of the modernists (“There is the fallacy that man is born free. As a matter of fact, he is born helpless. He achieves freedom, as a race and as an individual, through the medium of culture.”), Mr. Counts would lead the child back from the random pastures of the Liberals’ wide-open world to a point within the definite confines of a corporate society.
We are not only at the end of the century and a half in which the development of corporate enterprise has quietly undermined Adam Smith’s hypothesis of property until a crash is imminent. We are likewise at the end of four centuries of individualism. Hypotheses of society, formal and definite in content, are emerging; in the general corporate consciousness the hypothesis of property is a major factor.