Families and Fortunes: Accumulation, Management Succession and Inheritance in Wealthy Families
Gilding, Michael, Journal of Sociology
Each year the business magazine Business Review Weekly (BRW) compiles a list of the 'Rich 200' in Australia. As far as possible, this is a list of the richest 200 individuals in Australia. Yet it is not entirely so: hence the ambiguity of the phrase 'Rich 200'. There are in fact two lists in the Rich 200: the longer one consisting of 'individuals', the other of 'families'. Even then, there remains ambiguity. Roughly one-tenth of the entries in the list of 'individuals' actually consist of more than one individual, invariably related through kinship: spouses, siblings and multi-generational groups.
There is no doubt that BRW would prefer to make the individual its unit of analysis. It is more consistent with the underlying narrative of the Rich 200: that any individual can become super-rich in Australia. Accordingly, on one occasion BRW heavily culled its list of families, transferring entries to its list of individuals. Yet the problem is intractable. Ultimately BRW is listing fortunes--or, to put it in more colourful language, 'piles of money'. The problem is that fortunes are rarely vested in individuals alone. For a variety of reasons--notably, tax minimization, business partnerships, the terms of inheritance, and protection against bankruptcy and criminal proceedings--they are usually spread out among groups of individuals. Most commonly, these groups of individuals are related through kinship. Ultimately it is a qualitative judgement on the part of the compilers of the Rich 200 as to when a particular individual exercises such control over a fortune as to make it an 'individual' fortune; when an 'individual' fortune has become dispersed enough to count as a 'family' fortune; and when a 'family' fortune has became so dispersed as to become a number of 'individual' fortunes.
This article uses the BRW Rich 200 as a launching pad to examine the institution of the family and its enduring influence in the accumulation and transmission of wealth. First, it addresses the long-standing literature concerning capitalism, the capitalist class and the family. Second, it describes the methodology of this article, based upon interviews with 43 individuals drawn from the Rich 200. The article then addresses the enduring influence of family relationships in wealth accumulation, management succession and inheritance. This influence is exemplified in a complex of family business institutions, ranging from family businesses, to family investment companies, to family offices.
Capitalism, the capitalist class and the family
The family was once at the heart of capitalist enterprise. Family businesses were the units of production and accumulation, with one of the satisfactions of ownership being the family name by which the business was known. Succession was guided by family continuity, creating dynasties across generations. Many historians now describe this era in terms of 'family capitalism' (Rose, 1995).
In the 1920s Adolphe Berle and Gardiner Means documented a fundamental shift in the ownership and control of large companies. Public companies, in which shares were bought and sold through the stock exchange, had broken the nexus between ownership and control. The dispersal of share ownership had progressively undermined the influence of owners, notably family dynastic groups. Instead, there had emerged a new class of professional managers, who depended upon training and technical skills rather than birthright or family connections for their position (Berle and Means, 1968). By the post-war decades, Berle and Means' 'managerial thesis' had become an orthodoxy; not just in the United States, but in other English-speaking countries such as the United Kingdom and Australia (Burnham, 1945; Wheelwright, 1957; Baran and Sweezy, 1966; Galbraith, 1969). It was also the basis for more wide-ranging arguments--across the political spectrum--about the irrelevance of the family in relation to the organization of the capitalist class (Bell, 1960; Playford, 1970). …