Pluralistic：股东至上与“先知”CEOPluralistic: Shareholder supremacy and the precog CEO (13 Jun 2026)

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Shareholder supremacy and the precog CEO (permalink)

It's been 55 years since Milton Friedman – cursed be his name – published his NYT editorial, "The Social Responsibility of Business Is to Increase Its Profits," in which he invented the idea of shareholder supremacy out of whole cloth and declared it to be a universal, freestanding, inarguable truth:

https://www.nytimes.com/1970/09/13/archives/a-friedman-doctrine-the-social-responsibility-of-business-is-to.html

Friedman's editorial railed against the idea of "corporate social responsibility," arguing that corporate managers should confine the exercise of their consciences to projects involving their own money and resources. At work, managers must harden their bleeding hearts and do nothing except increase the returns to their shareholders.

Friedman wasn't merely arguing that this would give rise to better companies – the crux of his argument was that by adopting this "fiduciary duty" standard, it would be easy to determine whether a company was being well-managed or run into the ground:

https://pluralistic.net/2024/09/18/falsifiability/#figleaves-not-rubrics

Friedman argued that "being a good person" was a squishy, undefinable standard that could never be objectively measured. But "maximizing shareholder value" was a crisp, bright-line test that could be readily evaluated by any reasonable person. "Did this manager make as much money as possible for the company's owners?" feels like the kind of question we can all agree on, while, "Did this manager behave in an ethical way?" is much harder to answer.

But even a few moments' thoughts reveal the flaw in this line of reasoning. We can all agree whether a manager made money for the shareholders – but how can we know whether the manager made as much money as possible?

Think about how much "corporate social responsibility" cashes out to performative and insincere nonsense and/or cynical marketing. Target didn't stock Pride merch because they love their LGBTQ friends. They stocked it because they thought they could sell it (same goes for BP marketing its "green" gasoline). Google supports its coders' environmental/queer/antipoverty efforts because being the "don't be evil" company lets you hire in-demand workers who might otherwise go to work for Meta, and every engineer a Silicon Valley firm hires adds an average of $1m to the company's annual bottom line.

Further: it would be absurd to hold managers to the "make as much money as possible" standard in a competitive market, because in that market, there will always be a company that comes in second. If "as much money as possible" is the standard and you're Chairman of the Board of the number two company, with $10b in profit, while the number one pulled in $11b, "as much money as possible" demands that you fire the C-suite immediately, since they objectively could have done 10% better.

So the real standard isn't "make as much money as possible," it's "try to make as much money as possible." And here again, there's no objective way to evaluate managerial performance. Target made a lot of money by selling Pride merch…until they didn't. Do we fire the Target C-suite because they failed to anticipate that 2024 would mark America's transition into the chuddocene, an era in which selling Pride tchotchkes makes you cucked and soy and, you know, gay?

Whether it's "make as much money as possible" or "try to make as much money as possible*," shareholder supremacy can only be evaluated with the aid of a crystal ball…or a time machine.

Which raises a question: what made this nonsensical shareholder supremacy standard so damned attractive to corporate leaders?

Well, what if the ambiguity of shareholder supremacy was a feature and not a bug? What if the function of shareholder supremacy was to absolve the cruelest people for indulging their most sociopathic instincts? What if this "bright line test" was actually a universal excuse, an all-purpose accountability sink that could be used to justify any cruelty or cowardice? "Why didn't I fire my college buddy when I found out that he was sexually abusing his colleagues? Well, he was the best salesman on the team, and I have an obligation to my shareholders. Sorry, my hands were tied."

In other words: Don't get mad at me.

Get mad at Milton Friedman.

Hey look at this (permalink)

Object permanence (permalink)

#20yrsago Microsoft gets Linux geeks evicted from convention center https://web.archive.org/web/20010619154332/http://www.newsforge.com/article.pl?sid=01/06/01/1540231

#20yrsago Stanford prof sues James Joyce estate for right to study Joyce https://web.archive.org/web/20060615203517/http://news.yahoo.com/s/ap/20060613/ap_on_en_ot/james_joyce_lawsuit

#20yrsago Inside China’s iPod sweat-shops https://web.archive.org/web/20060616173514/http://www.macworld.co.uk/news/index.cfm?RSS&NewsID=14915

#15yrsago Terry Pratchett initiates assisted suicide process https://web.archive.org/web/20110614215922/https://www.telegraph.co.uk/health/8571142/Sir-Terry-Pratchett-begins-process-that-could-lead-to-assisted-suicide.html

#15yrsago Lego-making machine made of Lego https://www.eurobricks.com/forum/forums/topic/56346-review-moulding-machine-4000001-lego-insider-tour-exclusive/

#10yrsago It’s getting harder and harder to use gag clauses to silence laid off workers in America https://web.archive.org/web/20160611202305/https://www.nytimes.com/2016/06/12/us/laid-off-americans-required-to-zip-lips-on-way-out-grow-bolder.html

#5yrsago The ACCESS Act https://pluralistic.net/2021/06/12/access-act/#interop

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