The Case for Shareholder Capitalism

Unlock the power of shareholder capitalism—a system that transcends zero‐sum games and Wall Street stereotypes. In its essence, shareholder capitalism enables mutually beneficial trade, a concept ingrained in human history for over 300,000 years. This approach fosters specialization, fuels innovation, and propels economic growth.

In this engaging new book, David McLean explains how embracing shareholder capitalism doesn’t negate the significance of other institutions; rather, it allows businesses to excel in providing the goods, services, and jobs that make society better off. Shareholder capitalism isn’t about disregarding stakeholders; it thrives on mutually beneficial partnerships. Managers are entrusted to maximize shareholder value, focusing on companies’ long‐term success, which drives overall prosperity. Profits, the ultimate measure of value, steer businesses toward creating goods and services that benefit society.

While shareholder capitalism is the overarching theme in Finance 101 courses, it is increasingly criticized, especially with the popularization of concepts like ESG investing and stakeholder capitalism. McLean argues that corporate social responsibility, while well‐intentioned, shouldn’t replace the democratic process in policymaking, and can lead to unintended consequences. Our journey through capitalism, beginning around 1800, has brought unprecedented prosperity, and it’s essential to safeguard this system for the betterment of society, with democracy and free trade as our guiding beacons.

“Shareholder capitalism is accused of being the cause of all the world’s problems. This eye‐opening book highlights that shareholder capitalism involves mutually beneficial trade, pursuing bold innovations that address society’s challenges, and creating long‐term value for stakeholders. It’s based on sound economic principles, not ideology, yet is highly readable and brimming with real‐world examples. Read it; it will change the way you think.”

—Alex Edmans, author of Grow the Pie: How Great Companies Deliver Both Purpose and Profit and professor of finance at the London Business School

“This book is a must‐read for anyone who wants to understand what shareholder capitalism is and what it is not. David McLean offers a full‐throated defense of shareholder capitalism by drawing on historical insights from notable economists such as Adam Smith, Joseph Schumpeter, Milton Friedman, and Thomas Sowell and linking them to current real‐world examples. This highly readable book compares and contrasts the shareholder capitalism approach to the stakeholder capitalism approach to dispel common misinformation, misconceptions, and fallacies about both.”

—Michael Piwowar, former commissioner of the U.S. Securities and Exchange Commission

“Few ideas are more salient than the shareholder wealth maximization principle for continued growth and the survival of humanity. David McLean not only blunts the serious assaults leveled against it but presents the shareholder wealth maximization principle in a lucid, accessible narrative that is sprinkled with historical anecdotes. The book has the potential to set straight those who have misguided concerns about the shareholder model and arm the believers with cogent arguments extolling the virtues of maximizing shareholder wealth.”

—S. P. Kothari, Gordon Y. Billard Professor of Accounting and Finance, MIT Sloan School of Management

The Case for Shareholder Capitalism

How the Pursuit of Profit Benefits All

Praise for the book