Edit: This question attracted way more interest than I hoped for! I will need some time to go through the comments in the next days, thanks for your efforts everyone. One thing I could grasp from the answers already - it seems to be complicated. There is no one fits all answer.

Under capitalism, it seems companies always need to grow bigger. Why can’t they just say, okay, we have 100 employees and produce a nice product for a specific market and that’s fine?

Or is this only a US megacorp thing where they need to grow to satisfy their shareholders?

Let’s ignore that most of the times the small companies get bought by the large ones.

  • sexhaver87@sh.itjust.works
    4·
    17 hours ago

    Furthermore the idea that publicly traded companies have some kind of obligation to make as much money as quickly as possible is a reddit-born myth.

    Shareholder primacy wasn’t born on reddit, it was actually Milton Friedman who theorized of it, the Michigan Supreme Court who wrote it into precedence, and now American citizens who have to live under the consequences of publicly traded corporations having a distinct legal obligation (against the belief of some legal academics who argue otherwise, in bad faith nonetheless) to provide a profit for shareholders. This also applies to PE, who take this notion of a, once again, distinct legal obligation to provide profits for shareholders above all else, as what you would call a “Get out of jail free card,” i.e. fraud and thievery is completely fine if you’ve got shareholders to feed.

    But a CEO acting in good faith has no other obligation than to fulfill the tasks asked of them by shareholders.

    Shareholders: “We demand more profits, please start acting in bad faith so I may purchase another boat this afternoon”
    CEO: “ok”

    Alternatively:

    Shareholders: “Profits, please”
    CEO: “no”
    Michigan Supreme Court: “The death sentence is on the table”

    This is how this has played out since 1919, Dodge v. Ford Motor Co. Wax poetic about theory, in reality people are starving over the sheer necessity that the shareholders want another buck.