Cory Doctorow discusses the theory of “shareholder supremacy,”, which has ruled economics, business and politics for more than 50 years, and which is now being walked back even by conservatives. One of the theory’s fatal flaws is that “it’s impossible to know if the rule has been broken,” says Cory.

The shareholder supremacy rule is an unfalsifiable proposition. A CEO can cut wages and lay off workers and claim that it’s good for profits because the retained earnings can be paid as a dividend. A CEO can raise wages and hire more people and claim it’s good for profits because it will stop important employees from defecting and attract the talent needed to win market share and spin up new products.

A CEO can spend less on marketing and claim it’s a cost-savings. A CEO can spend more on marketing and claim it’s an investment. A CEO can eliminate products and call it a savings. A CEO can add products and claim they’re expansions into new segments. A CEO can settle a lawsuit and claim they’re saving money on court fees. A CEO can fight a lawsuit through to the final appeal and claim that they’re doing it to scare vexatious litigants away by demonstrating their mettle.

CEOs can use cheaper, inferior materials and claim it’s a savings. They can use premium materials and claim it’s a competitive advantage that will produce new profits. Everything a company does can be colorably claimed as an attempt to save or make money, from sponsoring the local little league softball team to treating effluent to handing ownership of corporate landholdings to perpetual trusts that designate them as wildlife sanctuaries.

Bribes, campaign contributions, onshoring, offshoring, criminal conspiracies and conference sponsorships – there’s a business case for all of these being in line with shareholder supremacy.

Also:

Boeing management earned bonuses by engaging in corporate autophagia, devouring the company from within.