Sublime Myths: An Essay in Honor of the Shareholder Value Myth and the Tooth Fairy

Abstract

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.