Does Profit-Seeking Rule Out Love? Evidence (or Not) from Economics and Law

Washington University Journal of Law and Policy, Vol. 35, pp. 69-107, 2011

GDAE (Global Development and Environment Institute) Working Paper No. 10-06

32 Pages Posted: 3 Oct 2010 Last revised: 19 Nov 2011

Julie A. Nelson

University of Massachusetts at Boston - Department of Economics; Tufts University - Global Development and Environment Institute

Date Written: September 30, 2010

Abstract

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.

Keywords: profit maximization, shareholder value, shareholder primacy, corporate law, corporations, law, economics, gender, commodification, corporate social responsibility

JEL Classification: A13, D21, D64, K00, L21

Suggested Citation

Nelson, Julie A., Does Profit-Seeking Rule Out Love? Evidence (or Not) from Economics and Law (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. Available at SSRN: https://ssrn.com/abstract=1685288

Julie A. Nelson (Contact Author)

University of Massachusetts at Boston - Department of Economics ( email )

100 Morrissey Blvd.
Boston, MA 02125
United States

HOME PAGE: http://www.umb.edu/academics/cla/dept/economics/faculty/facultyNelson.html

Tufts University - Global Development and Environment Institute ( email )

MA
United States

HOME PAGE: http://www.ase.tufts.edu/gdae/about_us/researchers.html#nelson

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