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Comment by soVeryTired | Hacker News Reader

I think one interesting way of looking at a company is as a power struggle between

  - the owners
  - the employees
  - the managers
  - the clients
  - (and sometimes) the government / general public

Companies can benefit all of these parties, but a good system should have forces in place to prevent any of them from getting the upper hand. Some of those forces include competition, unionisation, labour mobility, fiduciary duty to shareholders, and the existence of boards of directors.

The view that a company's sole duty is to provide value to shareholders (i.e. to grow) is blinkered and damaging. I'm tempted to heap blame for that way of thinking on the economics establishment and on anti-comunist sentiment from the 20th century but that's probably naive.

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I'm definitely with you on the last bit. As are plenty of others. Jack Welch famously called it the "dumbest idea in the world" and it has been widely panned: https://www.google.com/search?q=dumbest+idea+in+the+world+sh...

If I squint at it from the right angle, it's not terrible, in that in theory many of the other kinds of value should roll up to long-term company value. E.g., healthy employee relationships are a real asset. Being a good community member should pay off in the long term. Etc, etc.

But in reality, when you crossbreed this with the "efficient markets hypothesis" [1] and managerialism [2], it becomes dangerous. Mix in a live stock ticker plus ways for executives to cash out and a declining CEO tenure and you get an excuse for doing anything that boosts the share price long enough to unload the shares on a sucker. Or, at lower levels, anything that boosts a metric that drives stock price gains.

So instead of building long-term value, the "maximize shareholder value" mantra ends up doing the opposite. E.g., cutting long-term R&D spending to fund stock buy-backs. Laying off long-term employees in favor of an outsourcing deal that cuts short-term costs while raising them down the road.

[1] https://en.wikipedia.org/wiki/Efficient-market_hypothesis

[2] https://en.wikipedia.org/wiki/Managerialism

Sure there's the ongoing struggle. But the basic fact will always stay that the point of founding and putting in the effort to establish a commercial company in the first place is to "provide value to the shareholders" (i.e. the owner/founder). If not for that, why anyone go through that hassle?

All that Silicon-Valley-esque "We founded the company because we wanted to make the world a better place" is only when the company is also making money for the stakeholders. Once you take out that point, there goes you company. It is now officially a charitable organization (which, BTW also provides value to the "stakeholders", but that discussion is for a different time)

There's a big difference between "provide a decent living for the founders of the company" and "provide ever-increasing profits to the already-wealthy shareholders", and I believe that difference is at the heart of the article's point.

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