Capitalism debunked

I remember hearing it repeatedly during business school, the purpose of the corporation is to increase shareholder wealth. This was the doctrine of our world. In every business decision we were to consider whether it increased shareholder wealth. Now the "King of Modern Management," Jack Welch, who is attributed to have started this belief has come out to deny the intelligence of that statement.

“On the face of it, shareholder value is the dumbest idea in the world,” he said. “Shareholder value is a result, not a strategy . . . Your main constituencies are your employees, your customers and your products.”

So all this time companies have been doing business wrong? You would think having the focus on the wrong aspects would lead to a catastrophic event like... what we are currently experiencing. 

This does not mean that shareholder wealth is not important. What it means is that looking at the short-term financial manipulations to cover for the inadequacies of your plans to take care of your employees, who will satisfy your customers with your products is what a company is meant to do. When you succeed at that is when you will increase shareholder wealth through actual sustainable activity.

Write that down.