Does Profit-Seeking Rule Out Love? Evidence (or Not) from Economics and Law
Julie A. Nelson
University of Massachusetts at Boston - Department of Economics; Tufts University - Global Development and Environment Institute
September 30, 2010
Washington University Journal of Law and Policy, Vol. 35, pp. 69-107, 2011
GDAE (Global Development and Environment Institute) Working Paper No. 10-06
Many believe that firms are driven to maximize profits, and therefore are not allowed to take actions that would benefit their workers, communities, or the environment if these actions would reduce profits even slightly. This essay shows that this belief is supported neither by sound economic evidence and arguments, nor by United States statutory and case law. The roots of this belief are, instead, to be found in a centuries-old desire of economists to make our discipline look like Newtonian physics. Among scholars of law, both misinformation and the use of University of Chicago-style economics have contributed to the belief's popularity. Among scholars and the public alike, the dualistic "love or money" view is appealing because of its simplicity and congruence with cultural gender norms. Reexamining the evidence, rather than adhering to common ideologies, this essay offers an unconventional analysis of corporate behavior and commodification.
Number of Pages in PDF File: 32
Keywords: profit maximization, shareholder value, shareholder primacy, corporate law, corporations, law, economics, gender, commodification, corporate social responsibility
JEL Classification: A13, D21, D64, K00, L21
Date posted: October 3, 2010 ; Last revised: November 19, 2011
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