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In The Shareholder Value Myth,1 law professor Lynn Stout pitches her
tent firmly in the camp of the nascent and prematurely moribund Occupy
Wall Street movement. And if contradictions abounded among Occupy Wall
Street folks, they similarly flourish in this slim text. This book
simultaneously argues that the idea of shareholder primacy is—in addition to
being a myth—(a) “the dumbest idea in the world”;2 (b) “an ideology, not a
legal requirement or a practical necessity”;3 and (c) bad law.4 My responses
to these observations are: (a) shareholder primacy is not an idea at all;
(b) shareholder primacy is an ideology, but like certain other ideologies, such
as the ones about the Constitution being sacred or the one about God not
being dead, it is quite useful in a wide variety of situations and contexts; and
(c) shareholder primacy is not bad law because it is not law at all—at least
not in the cartoonish version often presented—and nobody thinks that it is.
There is of course a difference between ideology and law, and the fact that
shareholder primacy is an ideology does not mean that it is irrelevant to law;
and it does not even necessarily mean that there is anything wrong with it.
Christianity, Judaism, capitalism, and vegetarianism are ideologies rather
than laws. But a lot of people find them convincing and even inspirational
all the same.
Date of Authorship for this Version