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Maximizing shareholder profits can no longer be corporations' main goal, say top U.S. CEOs
A group representing more than 100 of the biggest corporations in the U.S. has released a statement updating its definition of the purpose of American corporations.
JOHANNES EISELE / Contributor
- The new statement says corporations shouldn't only be concerned about maximizing shareholder profits.
- Instead, corporations should focus on all of its stakeholders.
- The idea that corporations need only focus on maximizing shareholder profit took hold in the 1970s and has since remained, more or less, the dominant viewpoint on Wall Street.
Since around the 1980s, most American corporations have agreed their main purpose is to maximize shareholder profits. Now, amid growing concerns about income inequality and Democratic policy proposals that call for restructuring American capitalism, some of the nation's biggest corporations are saying it's time to change the definition of corporate purpose.
The Business Roundtable, a lobbying group of American CEOs, released a statement Monday describing how the corporate world's long-held definition of purpose — often called "shareholder primacy" — "does not accurately describe the ways in which we and our fellow CEOs endeavor every day to create value for all our stakeholders, whose long-term interests are inseparable."
"Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity," the statement reads. "We believe the free-market system is the best means of generating good jobs, a strong and sustainable economy, innovation, a healthy environment and economic opportunity for all."
The Business Roundtable updates its guidelines periodically, but Monday's update is the most explicit to date in rejecting shareholder primacy. The statement — signed by 181 of 192 current members of the Business Roundtable, including CEOS from companies such as Apple, Pfizer, Mastercard, and Ford Motor Company — says members commit to:
- Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.
- Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.
- Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.
- Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.
- Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.
The statement doesn't promise any concrete changes, and it's unclear how corporations might change their practices, if at all. One governance expert said the statement actually decreases these executives' accountability.
"It limits accountability for these people to anyone, because if you have multiple stakes with whom you're accountable, you're always going to get it right on someone," Charles Elson, who directs the John L. Weinberg Center for Corporate Governance at the University of Delaware, told The Washington Post. "You can always make an argument that no matter what you've done, some stake will benefit. If your watch stops, it still gets the time right twice a day."
Still, at the very least, the statement signals a symbolic change in ethos of the American corporate elite.
"It really is quite significant," Peter Cappelli, a professor who studies labor economics at the University of Pennsylvania's Wharton School, told the Post. "It sounds like what they're describing is what was the standard view before the mid-1980s — before the shareholder value idea really started to spread."
'Maximize shareholder profits'
The idea of shareholder primacy can be traced back to the economist Milton Friedman, who wrote a New York Times Magazine article in 1970 deriding the claim that corporations ought to be socially responsible, calling it a "fundamentally subversive doctrine" in a free society, adding, "there is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."
In short, "social responsibilities" are for individuals; corporations need only focus on making as much money as possible without breaking the law.
"That article was very well received in Wall Street," Joseph L. Bower, a professor of business administration at Harvard University, recounted to Forbes. "They loved it. You could see the change in compensation practices. The use of the phrase 'maximize shareholder value' exploded at that time."
Bower once said the idea that corporations need only "maximize shareholder value" is "pernicious nonsense." In a 2017 article for Harvard Business Review, Bower and Lynn S. Paine suggest that Friedman's essential idea "could be damaging to the broader economy," mainly because it gives extreme consideration to shareholders over a short-term timeframe, while ignoring other stakeholders, such as employees or society at large. This results in an "accountability vacuum," they write, because in this governance approach shareholders are effectively treated as owners of the company, when in fact they're not held accountable for any company decisions.
Bower and Paine suggest that a more company-centric governance approach would benefit American corporations' many stakeholders, including but not limited to shareholders. (You can read their detailed piece here.) Meanwhile, some Democratic lawmakers have proposed policy that aims to wrest some amount of corporate power from executives and shareholders and give it to other shareholders.For example, U.S. Sen. Bernie Sanders (D–VT) wants to prohibit corporations from buying back their own stock, which drives up share prices, unless they boost employee pay and benefits. Separately, Sen. Elizabeth Warren's Accountable Capitalism Act aimed to restructure corporate decision-making, in part by mandating that corporations allow 40 percent of board members to be elected by employees, and by limiting the ways in which directors and officers sell company shares.
So much for rest in peace.
- Australian scientists found that bodies kept moving for 17 months after being pronounced dead.
- Researchers used photography capture technology in 30-minute intervals every day to capture the movement.
- This study could help better identify time of death.
We're learning more new things about death everyday. Much has been said and theorized about the great divide between life and the Great Beyond. While everyone and every culture has their own philosophies and unique ideas on the subject, we're beginning to learn a lot of new scientific facts about the deceased corporeal form.
An Australian scientist has found that human bodies move for more than a year after being pronounced dead. These findings could have implications for fields as diverse as pathology to criminology.
Dead bodies keep moving
Researcher Alyson Wilson studied and photographed the movements of corpses over a 17 month timeframe. She recently told Agence France Presse about the shocking details of her discovery.
Reportedly, she and her team focused a camera for 17 months at the Australian Facility for Taphonomic Experimental Research (AFTER), taking images of a corpse every 30 minutes during the day. For the entire 17 month duration, the corpse continually moved.
"What we found was that the arms were significantly moving, so that arms that started off down beside the body ended up out to the side of the body," Wilson said.
The researchers mostly expected some kind of movement during the very early stages of decomposition, but Wilson further explained that their continual movement completely surprised the team:
"We think the movements relate to the process of decomposition, as the body mummifies and the ligaments dry out."
During one of the studies, arms that had been next to the body eventually ended up akimbo on their side.
The team's subject was one of the bodies stored at the "body farm," which sits on the outskirts of Sydney. (Wilson took a flight every month to check in on the cadaver.)Her findings were recently published in the journal, Forensic Science International: Synergy.
Implications of the study
The researchers believe that understanding these after death movements and decomposition rate could help better estimate the time of death. Police for example could benefit from this as they'd be able to give a timeframe to missing persons and link that up with an unidentified corpse. According to the team:
"Understanding decomposition rates for a human donor in the Australian environment is important for police, forensic anthropologists, and pathologists for the estimation of PMI to assist with the identification of unknown victims, as well as the investigation of criminal activity."
While scientists haven't found any evidence of necromancy. . . the discovery remains a curious new understanding about what happens with the body after we die.
The distances between the stars are so vast that they can make your brain melt. Take for example the Voyager 1 probe, which has been traveling at 35,000 miles per hour for more than 40 years and was the first human object to cross into interstellar space. That sounds wonderful except, at its current speed, it will still take another 40,000 years to cross the typical distance between stars.
Worse still, if you are thinking about interstellar travel, nature provides a hard limit on acceleration and speed. As Einstein showed, it's impossible to accelerate any massive object beyond the speed of light. Since the galaxy is more than 100,000 light-years across, if you are traveling at less than light speed, then most interstellar distances would take more than a human lifetime to cross. If the known laws of physics hold, then it seems a galaxy-spanning human civilization is impossible.
Unless of course you can build a warp drive.
Ah, the warp drive, that darling of science fiction plot devices. So, what about a warp drive? Is that even a really a thing?
Let's start with the "warping" part of a warp drive. Without doubt, Albert Einstein's theory of general relativity ("GR") represents space and time as a 4-dimensional "fabric" that can be stretched and bent and folded. Gravity waves, representing ripples in the fabric of spacetime, have now been directly observed. So, yes spacetime can be warped. The warping part of a warp drive usually means distorting the shape of spacetime so that two distant locations can be brought close together — and you somehow "jump" between them.
This was a basic idea in science fiction long before Star Trek popularized the name "warp drive." But until 1994, it had remained science fiction, meaning there was no science behind it. That year, Miguel Alcubierre wrote down a solution to the basic equations of GR that represented a region that compressed spacetime ahead of it and expanded spacetime behind to create a kind of traveling warp bubble. This was really good news for warp drive fans.
The problems with a warp drive
There were some problems though. Most important was that this "Alcubierre drive" required lots of "exotic matter" or "negative energy" to work. Unfortunately, there's no such thing. These are things theorists dreamed up to stick into the GR equations in order to do cool things like make stable open wormholes or functioning warp drives.
It's also noteworthy that researchers have raised other concerns about an Alcubierre drive — like how it would violate quantum mechanics or how when you arrived at your destination it would destroy everything in front of the ship in an apocalyptic flash of radiation.
Warp drives: A new hope
Credit: Primada / 420366373 via Adobe Stock
Recently, however, there seemed to be good news on the warp drive front with the publication this April of a new paper by Alexey Bobrick and Gianni Martre entitled "Introducing Physical Warp Drives." The good thing about the Bobrick and Martre paper was it was extremely clear about the meaning of a warp drive.
Understanding the equations of GR means understanding what's on either side of the equals sign. On one side, there is the shape of spacetime, and on the other, there is the configuration of matter-energy. The traditional route with these equations is to start with a configuration of matter-energy and see what shape of spacetime it produces. But you can also go the other way around and assume the shape of spacetime you want (like a warp bubble) and determine what kind of configuration of matter-energy you will need (even if that matter-energy is the dream stuff of negative energy).
Warp drives are simpler and much less mysterious objects than the broader literature has suggested.
What Bobrick and Martre did was step back and look at the problem more generally. They showed how all warp drives were composed of three regions: an interior spacetime called the passenger space; a shell of material, with either positive or negative energy, called the warping region; and an outside that, far enough away, looks like normal unwarped spacetime. In this way they could see exactly what was and was not possible for any kind of warp drive. (Watch this lovely explainer by Sabine Hossenfelder for more details). They even showed that you could use good old normal matter to create a warp drive that, while it moved slower than light speed, produced a passenger area where time flowed at a different rate than in the outside spacetime. So even though it was a sub-light speed device, it was still an actual warp drive that could use normal matter.
That was the good news.
The bad news was this clear vision also showed them a real problem with the "drive" part of the Alcubierre drive. First of all, it still needed negative energy to work, so that bummer remains. But worse, Bobrick and Martre reaffirmed a basic understanding of relativity and saw that there was no way to accelerate an Alcubierre drive past light speed. Sure, you could just assume that you started with something moving faster than light, and the Alcubierre drive with its negative energy shell would make sense. But crossing the speed of light barrier was still prohibited.
So, in the end, the Star Trek version of the warp drive is still not a thing. I know this may bum you out if you were hoping to build that version of the Enterprise sometime soon (as I was). But don't be too despondent. The Bobrick and Martre paper really did make headway. As the authors put it in the end:
"One of the main conclusions of our study is that warp drives are simpler and much less mysterious objects than the broader literature has suggested"
That really is progress.
The Black Death wasn't the only plague in the 1300s.
- In a unique study, researchers have determined how many people in medieval England had bunions
- A fashion trend towards pointed toe shoes made the affliction common.
- Even monks got in on the trend, much to their discomfort later in life.
Late Medieval England had its share of problems. The Wars of Roses raged, the Black Death killed off large parts of the population, and passing ruffians could say "Ni" at will to old ladies.
To make matters worse, a first of its kind study published in the International Journal of Paleopathology has demonstrated that much of the population suffered from another plague — a plague of bunions likely caused by a ridiculous medieval fashion trend.
If the shoe fits, it won't cause bunions
The outlines of a leather shoe from the King's Ditch, Cambridge. It is easy to see how these shoes might be constricting. Copyright Cambridge Archaeological Unit.
The bunion, known to medicine as "hallux valgus," is a deformity of the joint connecting the big toe to the rest of the foot. It is painful and can cause other issues including poor balance. The condition is associated with having worn constrictive shoes for a long period of time as well as genetic factors. Today, it is often caused by wearing high heeled shoes.
The medieval English didn't care for high heeled shoes as much as modern fashionistas, but there was a major fashion trend toward shoes with long, pointed toes called "poulaines" or "crakows" for their supposed place of origin, Krakow, Poland.
This trend, already silly-looking to a modern observer, got out of hand in a hurry. According to some records, the points on nobleman's shoes could be so long as to require tying them to the leg with string so the wearer could walk. At one point, King Edward IV had to ban commoners from wearing points longer than two inches. A couple years later, he saw fit to ban the shoes altogether.
But, just knowing that people back in the day made poor fashion choices doesn't prove they suffered for it. That is where digging up old skeletons to look at their feet comes in.
Beauty is pain: the price of high medieval fashion
To learn how bad the bunion epidemic was, the researchers looked to four burial sites in and around Cambridge. One was a rural cemetery where poor peasants were buried. Another was the All Saints by the Castle parish, which had a mixed collection of people that tended toward poverty. The Hospital of St. John's burial ground contained both the poor charges of a charity hospital and wealthy benefactors. Lastly, they considered the cemetery of a local Augustinian friary, home to monks and well-to-do philanthropists.
The team considered 177 adult skeletons that were at least a quarter complete and still had enough of their feet to make studying them possible. The remains were classified by age and sex by observation and DNA testing. Each was examined for evidence of bunions and signs of complications from the condition, such as falling.
Those buried in the monastery's graveyard were the most affected. Nearly half, 43 percent, of the remains found there had bunions. This includes five of the eleven members of the clergy they found. Twenty-three percent of those laid to rest at the Hospital of St. John had bunions, though only 10 percent of those at the All Saints by the Castle parish graveyard did.
The rural cemetery had a much lower rate of instances, only three percent, suggesting that these peasants were able to avoid at least one plague.
Overall, eighteen percent of the individuals examined had bunions, with men more likely to have them than women. Those at cemeteries known for exclusivity were more likely to have them as well, though it is clear that the condition also affected members of other classes. This makes sense, as it is known that these shoes had mass appeal.
The authors note that the rural cemetery having fewer cases is partly because that cemetery "went out of use prior to the wide adoption of pointed shoes, and it is likely that those residing in the parish predominately wore soft leather shoes, or possibly went barefoot."
Those skeletons with evidence of bunions were more likely to have fractures indicative of a fall. This was more common on those estimated or recorded as having lived past age 45.
In our much more enlightened times, 23 percent of the population currently endures having bunions, most of them women, and one of the leading culprits behind this is the high heeled shoe.
Some things never change.