Corporate Stakeholders

Abstract

Chapter 5 echoes the growing sentiment that corporations need to take into account other interests besides that of their shareholders. It traces the origins of the idea that corporations exist solely to increase the wealth of their shareholders and explains how this belief in shareholder primacy came to be accepted as a truism by many scholars, judges, and commentators. When Milton Friedman originally popularized this idea in 1962, he wrote that corporations should serve shareholder interest “within the rules of the game.” These days the rules of the game are influenced tremendously by business lobbying. The chapter explains how the political influence of labor waned and was replaced by business influence in the 1970s. Since that time, Congress has done very little to protect labor because business interests have become extremely powerful lobbyists and substantial donors to political campaigns.