Georgetown University Professor David McLean discussed the main principles of his book, The Case for Shareholder Capitalism: How the Pursuit of Profit Benefits All, in a recent webinar hosted by the Georgetown Psaros Center for Financial Markets and Policy. McLean discussed the history of capitalism and its role in today’s economic discourse. Moderated by Mike Piwowar (MBA’94), Executive Vice President at the Milken Institute Finance, the session presented shareholder capitalism as a means of growth, specialization, and innovation.
The heart of McLean’s argument is that the primary goal of any business, whether it is a multinational corporation or a sole proprietorship, is to create wealth for its shareholders. This perspective offers a framework for understanding how businesses operate and why profit matters. McLean offered a historical backdrop, tracing capitalism back to voluntary exchange. He contrasted this organic evolution with the top-down design of communism, which he associated with economic stagnation and political repression.
The webinar also highlighted a concept McLean called “creative destruction,” a force that allows new ideas to flourish by replacing outdated ones. He emphasized that the relentless pursuit of profit is what fuels breakthroughs in technology, goods, and services. “Once you’re a mature economy that has all the most modern technology,” he noted, “unless you start having new technological innovation, you won’t continue to grow.”
Patents and protections, he added, play a crucial role in maintaining this cycle, allowing innovators to capitalize on their ideas and reinvest in future growth. When asked by a virtual audience member if shareholder capitalism promotes short-termism, McLean argued the opposite, “Shareholder value is inherently a long-term concept. The rule of thumb is anytime you have an investment where you think the future benefits outweigh the current cost, you should make that investment.” He pointed out that reinvestment decisions should be guided by expected returns, not public relations optics, ensuring businesses remain focused and sustainable.
Amid recent critiques of capitalism, McLean expressed cautious optimism. He acknowledged capitalism’s flaws but maintained that its core principles, efficiency, adaptability, and opportunity, make it uniquely suited to tackle modern challenges. “Business and capitalism can create good things for society,” he said, adding that earned assets can be used to promote socially responsible causes.