With depressing regularity life in today’s post-rational America imitates Ayn Rand’s dystopian novel Atlas Shrugged.
For those unfamiliar with Rand’s objectivist masterpiece or who last read it in a literature class many years ago, the novel describes a future in which the country’s greatest thinkers, creators and producers go on strike against an increasingly collectivist society bent on outlawing profit and wealth creation.
The latest example of Ms. Rand’s prescience is the announcement that the heads of nearly 200 U.S. companies have announced they are committing to a move away from the idea that the main purpose of a company is to maximize shareholder value.
According to a report by Ciara Linnane, corporate news editor for MarketWatch.com, the Business Roundtable, a group of chief executives that was formed to promote pro-business interests, said it is shifting its statement of the purpose of a corporation to include all of its stakeholders, including employees, suppliers and broader society.
“While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all our stakeholders,” the CEOs wrote in a joint statement.
The group is now “committing to delivering value to customers, investing in employees in ways that go beyond financial compensation to include training and education to ensure their skills are kept up to date, and embracing diversity and inclusion, dignity and respect,” reported Ms. Linnane.
The announcement comes at a time when business leaders and others have started questioning the role the companies they run play in the broader economy reports Ms. Linnane.
JPMorgan’s Jamie Dimon, who now heads up The Business Roundtable, has long argued for an end to what Ms. Linnane calls the “divisive politics” that are failing to address a range of issues (and progressive goals) from income inequality to racial and gender issues, stagnant wages, lack of equal opportunity, immigration and health care.
The fiduciary obligation to maximize shareholder value has been a fundamental tenet of American corporate and securities law for going on 85 years. It is also a fundamental premise undergirding the system of trust that enables the world financial markets that power modern wealth creation – after all, who would invest in a company that might waste one’s investment on purposes other than wealth creation?
Ayn Rand foresaw the destruction that would be wrought by abandoning wealth creation as the sole purpose of corporate governance in several characters in Atlas Shrugged, notably in the characters of Gerald and Ivy Starnes, the two surviving children of Jed Starnes, the founder of the fictional Twentieth Century Motor Company, who upon their father’s death instituted a communistic payment-and-benefits program that drives the company into bankruptcy.
Horace Bussby Mowen, president of the Amalgamated Switch and Signal Company, Inc. also comes to mind. In the novel he is a businessman who sees nothing wrong with the moral code that is destroying society and would never dream of saying he is in business for any reason other than the good of society.
As odious and as destructive as those characters are in Ms. Rand’s framing of the novel, it is also fair to say that much of the drama of the novel comes from the failings of one of the “good guy” characters – Hank Reardon. For most of the book Rearden uncritically accepts the looters' code — and the moral premise that an individual has the unchosen obligation to serve others.
Rearden’s willingness to accept the twisted moral code of those who oppose and hate wealth creation as the supreme goal of business helps prop up the corrupt system that is destroying civilization. Thus, the most important task of John Galt, and the other striking thinkers, creators and producers, is to convince Rearden and the last few non-striking producers to join the strike and stop propping up the corrupt system.
There is really only one answer to JP Morgan’s Jamie Dimon and the rest of The Business Roundtable “leaders” who have announced that they are expropriating their shareholders’ assets in the pursuit, not of profit and wealth creation, but to address imaginary social justice goals: Shareholders should go on strike, take their money to Galt’s Gulch and refuse to invest in companies that spend their money on anything other than wealth creation.
This article originally appeared on Conservative HQ and is reprinted with permission from the author.