John,

Since 1962, our society has been operating under a damaging assumption that shareholder primacy is the “natural” law of the market. It’s the theory that a corporation must create value for its shareholders above all else.

In a new feature released this week in Boston Review, our Executive Director Lauren Jacobs is one of several thought leaders responding to a compelling critique of shareholder primacy by economist Lenore Palladino.

Lauren writes:

“Palladino argues rightly that shareholder primacy represents an ideology, not a fact of nature. Corporate actions, as they currently exist, are not due to a metaphysical wisdom of the market. They are due to decisions—decisions that have their roots in, among other things, an ideology of white supremacy and a belief in oligarchy that obscures the true community investments that enable corporations to function.”

She puts the ascendance of shareholder primacy into historical context, explaining that “In the midst of an emerging and successful civil rights uprising in the southern states, and at the close of one of organized industrial labor’s most successful decades, Milton Friedman declared that the interests of shareholders (who were largely white, wealthy, and male) should govern the actions of the corporation. By engineering a relentless mission to deliver and optimize shareholder value, he was able to define the needs of labor and of communities as in perpetual conflict with the corporation.”

Read Lauren’s full response and the other commentaries here.

We hope you’ll find this article thought-provoking. Together we can question long-held assumptions that keep us divided and disenfranchised and forge a new vision for our economy and our communities. Want to help spread the word? Share the article on Facebook. 

Sincerely,

Partnership for Working Families
 

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