Daniel J.H. Greenwood

Faith Based Investing: are shares entitled to the residual?

Shareholder dividends are “rents”: they are paid out of a producers surplus that, in a fully competitive market, would not exist. In any market system, no one has a right to rents. Why, then, do shareholders receive dividends? Most likely, share gains have been the result of the usefulness of the share-centered ideologies in justifying a tremendous shift of corporate wealth from employees to an alliance of top managers and shareholders. This alliance now shows signs of breaking down, as the managers learn they no longer need the ideological cover. Standard accounts conceal the struggle over corporate surplus and the weakness of shareholder claims to appropriate it. Recognizing that distribution of corporate surplus is a political struggle is the first step towards a less ideologically blindered discussion of how that struggle ought to be structured.