Shareholders, Shareholders Uber Alles
CEOs bending the knee to Trump is the inevitable result of the Shareholder Primacy mind virus.
On January 7, 2021, as Americans struggled to comprehend the chaotic insurrection launched against the Capitol Building the day before, Facebook suspended the account of Donald Trump. “The shocking events of the last 24 hours clearly demonstrate that President Donald Trump intends to use his remaining time in office to undermine the peaceful and lawful transition of power to his elected successor, Joe Biden,” stated Meta CEO Mark Zuckerberg to justify the banishment of Trump from Facebook. On November 27, 2024, less than four years after Trump’s Facebook suspension, Zuckerberg dined with Trump at his Mar-A-Lago resort. With hand over heart, Zuckerberg stood for a rousing rendition of The Star Spangled Banner performed by none other than the January 6th Choir, a singing group assembled from incarcerated participants in the insurrection at the Capitol Building.
It is unclear whether Zuckerberg knew the recorded national anthem was being performed by insurrectionists who brought about Trump’s Facebook ban. It is unclear whether Zuckerberg would have said a word even if he did know the infamous origins of the group singing the anthem. What is clear is that Zuckerberg has now capitulated to forces he once decried as a threat to the lawful and peaceful transition of power, evidenced by Meta’s $1 million donation to Trump’s inaugural fund. Zuckerberg is not the only billionaire bending the knee to Trump. Jeff Bezos and Amazon have matched Meta’s $1 million pledge to Trump’s fund. Open AI CEO Sam Altman has also pledged a personal contribution of $1 million to Trump’s inauguration. It is not just the tech industry bowing to Trump before his inauguration. Trump’s former enemies in the media are also kissing the ring. Time Magazine has named Trump as Person of the Year. ABC News has decided to pay Trump’s presidential foundation $15 million to settle rather than fight Trump’s shaky defamation claims in court.
These startling acts of submission and capitulation have rightfully rung alarm bells in the minds of historians. In 1933, as Hitler ascended to the position of Chancellor, businessmen from across Germany showered the aspiring Fuhrer with gifts and contributions to the Adolf Hitler Fund of German Trade and Industry. Hitler’s corporate collaborators would be rewarded handsomely for their loyalty. The greatest beneficiaries of the Nazis’ slave labor, confiscated Jewish wealth, and genocidal public works projects were corporations like Krupp (now ThyssenKrupp), Siemens, and IG Farben (former parent company of Bayer, now owned by Monsanto) that still survive to this day. While the activities of these companies would enable the industrial-scale atrocities of the Third Reich their capitulation to Hitler proved to be a savvy move from the perspective of long-term corporate viability.
It remains to be seen how the Democrats’ comparisons of Trump to Hitler will play out in the next four years. But there is now little doubt that the corporate elites of 2020s America will be no less docile than the corporate elites of 1930s Germany when it comes to bowing to fascist power. For the billionaire class, the financial rewards of collaboration with Trump are too tempting to resist. They have to look no further than the windfall that has come to the world’s richest man, Elon Musk, since hitching his Tesla wagon to the MAGA freight train. In the six months since Musk came out as a full-throated Trump supporter, Tesla’s stock price has more than doubled, creating over $700 billion in market capitalization value for himself and fellow shareholders. Considering Musk contributed “only” $277 million to Trump-supporting political action committees, he has reaped a staggering return on investment, benefiting himself and anyone who owns shares of Tesla in their investment portfolio.
To condemn the capitulation of Musk, Zuckerberg, and Bezos as individual moral failings is to profoundly misunderstand the duties our society entrusts to its billionaire CEOs. Nearly everyone in Corporate America lives by the creed of Shareholder Primacy, which dictates that the highest duty of CEOs is to maximize profits and thereby maximize shareholder value. Trump will ascend to power with the House and Senate under GOP control and the Supreme Court eating out of his hand with the docility of the gone-too-soon Peanut the Squirrel. With Trump in the driver’s seat, the CEOs of America’s largest companies know the road to profits depends on cozying up next to a man whose entire moral universe is governed by gestures of personal loyalty and cynically transactional deal-making. Even if Elon Musk hated Trump in the depths of his heart, his coming out as full MAGA proved to be a bonanza for Tesla stockholders. Under the doctrine of Shareholder Primacy, Musk’s collaboration with a potential fascist embodies the actions of a model CEO.
“There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits,” Milton Friedman declared in a highly influential 1970 New York Times article that popularized the Shareholder Primacy doctrine within America’s economic and intellectual elite. Friedman was drawing from a long tradition of 20th-century pro-business ideology, from the 1919 Dodge v. Ford Motor Co. case (in which the Michigan Supreme Court ruled, “A business corporation is organized and carried on primarily for the profit of the stockholders”) to Calvin Coolidge’s pronouncement that “The chief business of the American people is business” to the flood of Free Enterprise propaganda tracts that businessmen unleashed to paint the New Deal as unAmerican socialism. But it was the wit and charm that Friedman brought to his weekly columns and PBS series Free to Choose that would enshrine Shareholder Primacy as the lodestar of corporate governance during the “greed is good” Reagan 80s and the “doing well by doing good” Clinton 90s. Some of the shine was taken off the Shareholder Primacy doctrine by the inequitable economic recoveries from the 2008 Financial Crisis and the 2020 Covid-19 pandemic. But despite corporate lip service to feel-good notions like DEI and “stakeholder capitalism,” to this day we still evaluate the performance of a CEO almost exclusively on quarterly profits and their impact on the company’s share price.
As America prepares for the glorious restoration of Trump, ingratiating yourself to an egomaniacal fascist becomes just what a CEO has to do to maximize profits. The need to kiss up to Trump is especially critical for businesses like Meta, Amazon, Tesla, and OpenAI, which will need federal government support to quench the insatiable thirst for electricity required to run their artificial intelligence data centers. With future profits dependent on AI expansion, these CEOs know there is no way to maximize shareholder value over the next four years without assuming a position of complete submission to Trump. The relentless, amoral logic of Shareholder Primacy pushes these CEOs deeper into a Nuremberg Defense situation. They are only following the orders of the Shareholder Primacy doctrine, just doing their jobs by maximizing profits, even if they have to collaborate with a fascist to fulfill what Milton Friedman regarded as their “one and only one social responsibility.”
As our billionaire class circles their wagons around Trump, it’s important to dig deeper into American history, past Milton Friedman and the Free Enterprise propaganda of the mid-20th century, back to a time when Americans foresaw the dangers latent within the corporate form. Free Enterprise fundamentalism has so indoctrinated us with the idea that corporate freedom and patriotic personal freedom are one and the same that most Americans are completely unaware of the fear corporations struck in the hearts of the people who founded this country, a sense of doom in many ways mirroring our current anxieties about artificial intelligence. Lawrence Friedman’s A History of American Law details the heated debates in the early 1800s over the threat corporations posed to the newborn republic, “The word ‘soulless’ constantly recurs in debates over corporations. Everyone knew that corporations were really run by human beings. Yet the metaphor was not entirely pointless. Corporations did not die, and had no ultimate limit to their size. There were no natural bounds to their life or to their greed. Corporations, it was feared, could concentrate the worst urges of whole groups of men; the economic power of a corporation would not be tempered by the mentality of any one person, or by considerations of family or mortality. People hated and distrusted corporations, the way some fear computers today, which are also soulless, also capable of joining the wit, skill and malevolence of many minds.”
Watching the mind virus of Shareholder Primacy guide our CEOs into capitulation to Trump confirms early Americans’ deepest fears about the moral corruption resulting from a society guided not by individual moral agents but undead, insatiable engines of endless capital accumulation. Americans’ current fears of AI should be channeled toward the very corporations pushing for AI acceleration. Corporations are themselves forms of artificial intelligence, guided by the inevitable, amoral logic of shareholder maximization. Our current fears of AI concentrate on scenarios of perverse instantiation, in which an AI is given a seemingly harmless command yet fulfills the prompt in terrifying ways unforeseen by its programmers. One famous thought experiment, Nick Bostrom’s Paperclip Problem, sketches out a scenario where an AI tasked with maximizing paperclip production destroys civilization and the Earth itself in an endless pursuit to acquire as many resources possible that could be used to make paperclips. Shareholder Primacy has similarly programmed our CEOs and corporations to maximize profits on a short-term quarterly basis, even if it means aligning with leaders like Trump who threaten the rule of law and democratic institutions that make capitalism possible in the first place.
What Milton Friedman and Bostrom’s hypothetical AI Programmer failed to realize is that the unchecked drive to maximize inevitability minimizes aspects of life more precious than profits and paperclips. We may be far away from a dystopian future where the entire face of the earth is strip-mined for steel to maximize paperclip production. But the CEO submission to Trump proves that we are already living in a time when life itself is endangered by the drive to maximize profits. In the aftermath of UnitedHealthcare CEO Brian Thompson’s murder, thousands of Americans came forth with stories of bankruptcy and death brought about by a healthcare industry driven by profit maximization rather than the sanctity of human life. CEOs like Zuckerberg, Bezos, and Musk are bowing to Trump to power their AI growth plans with unchecked fossil fuel extraction and a renewed push to build nuclear reactors, initiatives posing threats almost as dire as a paperclip-driven apocalypse. Their servile submission to Trump adds legitimacy and power to a man who will surely put democracy in peril if he is alive to run in 2028. It is a straight line from Shareholder Primacy to Oligarchic Supremacy. Until we rewire our economy and debug our culture of the malicious malware that is the Shareholder Primacy doctrine, our CEOs will continue to act like soulless automatons serving a profit maximization machine rather than moral agents capable of thinking beyond the current price of their company’s stock.
Very powerful. And disheartening. :(