> specific case law which cemented this fact. Maybe it was Ford himself? The details escape me, but afterwards, companies were forced to prioritize shareholders above all else.

I think there was a thread (don't recall if I saw it on HN or reddit). Someone said Dodge brothers (?) sued Ford (?) because Ford was trying to give it's employee raises (?) or reducing their working hours (?).

They're referring to the Dodge v. Ford Motor Co. lawsuit

https://en.m.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.

Basically Ford wanted to cut shareholders dividends to dramatically increase production and the number of people employed in his plants while at the same time cutting the costs and prices of his cars.

He told his shareholders that the goal was the long term benefit of the company and the value of this strategy to them was not a consideration for the plan.

Shareholders didn't like it and the Dodge brothers, who were among the largest ones, indeed sued him.

The court held that Ford could not lower consumer prices and rise employee salaries. It also upheld the order requiring that directors declare an extra dividend of $19.3 million.

Many people point out at this lawsuit when questions arise as to why corporations squeeze as much value as they can for the shareholders at the expenses of basically everything else.

So Dodge Brothers themselves were shareholders.

So this is more about shareholder rights? They can vote for board members, and then those board members can direct strategy.

It seems like a corporation can do all these things that Ford was planning, it just has to factor in shareholders.

So if shareholders wanted to paint all the plants purple, they have some rights to force that.

Is this correct: It doesn't have to be about profits, it is just about control?

> companies were forced to prioritize shareholders above all else

Publicly traded companies have to state what they prioritize. It's as simple as that. If they don't, they must prioritize profit, but not short-term profit.

That rule is usually blown out of proportion, it just can not explain the modern companies behavior.

(But yeah, they must prioritize shareholders. That means that the shareholders are the ones that decide that stated priority, into whatever they want.)

I think you're talking about fiduciary responsibility. CEOs can be removed if they're shown to be acting against the interests of the shareholders which is why a lot of them look like ass holes.

> This being the case, why not a new type of corporation that was somewhere in the middle? Able to distribute profits (perhaps even with limitations on when they can withhold them, like so many of the big tech companies). Ones where the shareholders still get some (statutorily defined, so that case law can't come in and fuck it up) priority, but that when shareholders are acting only in short term interest, they can be overruled by those in charge of managing it.

There are of course alternate ways of structuring companies that prioritize the needs of groups of people besides shareholders like worker co-ops. The issue with these is that it can be difficult to raise capital to start or grow these businesses because there's less incentives for investors to give you their money.

Existing corporations can already do what you describe.

The fiction that a corporation's fiduciary duty to its shareholders means "profits above all else" didn't become a thing until the 1980s, when Reagan's "greed is good" became the driving mantra of capitalism.

A "B" corporation, for example, is just a C corporation that has voluntarily agreed to a set of governance rules.

I blame Jack Welch more than Reagan for bringing this culture to GE and later spreading it into every single fucking MBA program through his books. Jack Welch was a snake who transformed corporations into these absolute greedy monsters, before him there was at least a sense of social responsibility to workers, and society benefits in general, then shareholders. He completely inverted the relationships to be shareholder-first, propagandising his philosophy to business schools afterwards.

Fuck Jack Welch (and Reagan).

'Profits above all else' came primarily from three sources: 1) The 'Chicago School' emerging from the University of Chicago economics department, most active from the 1950's to the 1970's, and of which Milton Friedman was the exemplar; 2) The 'Powell Memo' that corporate lobbyist and later Supreme Court Justice Lewis F. Powell wrote to the US Chamber of Commerce in 1971; and 3) The efforts of Robert Bork, who was a militant critic of antitrust regulation and believed that mergers and acquisitions were good because they always lowered prices for consumers, and led to the creation of greater shareholder wealth.