Gardiner C. Means and the 1980s Shareholders' Attempted Revolution

Abstract

Gardiner C. Means was one of the first twentieth-century economists to have noticed the concentration of corporate power in the hands of managers. He believed that this power arrangement caused production inefficiency and inappropriate resource allocation. Means advocated for the redistribution of control among four groups of stakeholders—consumers, workers, managers, and shareholders. He believed an equitable distribution of economic power will increase macroeconomic stability and growth. During the 1980s Deal Decade, shareholders and corporate raiders attempted to take power away from the managers by mean of hostile takeovers. The shareholders did not succeed because managers retaliated by erecting legal barriers to protect themselves. I argue that the shareholders' revolution failed because shareholders did not heed Means' advice. If the shareholders had been more willing to share power with workers and consumers, they could have defeated the managers.