In the most basic sense, the relationship between a corporation and its shareholders is for each to profit from the activities of the other. This mutually beneficial relationship is essential to the modern market economy, and creates enormous wealth for those who have the means to participate in it.
in the corporate world, the past half century has largely belonged to shareholders. the late milton friedman famously wrote in a 1970 article that companies should focus on maximizing profits and "make as much money as possible while conforming to the basic rules of society."
his argument was hugely influential and has shaped finance and western policy making ever since. most ceo's of public companies are focused on maximizing shareholder value, because they're afraid they will be fired if they don't and they believe they will get rich if they do.
but in its current form, a focus on shareholder value maximization at the expense of everything else is an exceedingly dangerous idea, not just to our society but also to the health of business itself. taken literally, a single-minded focus on profit maximization would seem to require that firms not only drive down wages but also attempt to fix political processes in their own favor. this can't be right. but in fact, it is how business operates.
there are a number of ways in which big businesses focus of shareholder profits have had a huge negative impact on society as a whole. for example,
companies evaluate the potential financial risk of getting caught against the cost savings of dumping toxic waste into the river. if the numbers are right, it may make financial sense to dump.
companies chose to spend money on lobbyists to convince politicians to relax environmental or labor regulations rather than paying their employees a living wage or properly disposing of pollutants. heck, the company can even fund its own study to show that dumping pollutants in a river isn't that harmful. there are plenty of scientists around who can massage the evidence in such a way,..., for the right price. [monsanto, a st. louis-based agriculture corporation, ghostwrote scientific reports that led the environmental protection agency to conclude that a chemical in its weed killer, roundup, did not cause cancer.]
the result of focus on shareholder profits has lead to the many social problems, environmental problems and economic inequality we see today. the social inequality is exponentially greater in developing countries where it is much easier to exploit workers, ignore environmental impact and bribe local officials to generate maximum profits for shareholders.