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Abstract

This Article addresses the questions of whether and how shareholders matter for social welfare, finding that different and contrasting answers have prevailed during different periods of recent history. Observers in the mid-twentieth century believed that the socioeconomic characteristics of real-world shareholders were highly pertinent to social welfare inquiries. But those observers went on to conclude that there followed no justification for catering to shareholder interest, for shareholders occupied elite social strata. The answer changed during the twentieth century’s closing decades, when observers came to accord the shareholder interest a key structural role in the enhancement of economic efficiency even as they also deemed irrelevant the characteristics of the human holders of shares. Under this view, the shareholder interest, as the residual claim on corporate wealth, is directly aligned with society’s interest in maximizing corporate—and therefore societal—wealth, and so the shareholder interest qualifies for political solicitude. In recent years, the quest for political solicitude has made the jump from theory to practice: a “shareholder class” is said to have risen in our political economy as an offshoot of the growth of stock ownership among the middle class. Thus, real-world shareholders again are seen to bear on social welfare.