The Neoliberal Corporate Purpose of Dodge v. Ford and Shareholder Primacy: A Historical Context 1919–2019


This article provides a historical context of the most iconic case in corporate law, Dodge v. Ford
Motor Co. The case famously asserted that “there should be no confusion” that corporate purpose
is “primarily for the profit of the stockholders.” This statement succinctly encapsulates the
idea of shareholder primacy, the corporate rule requiring managers to prioritize shareholder
profit maximization over other interests. Pointing to Dodge, commentators assert that shareholder
primacy has always been a polestar in modern corporate law. This is mythmaking. A
unique period in history gave rise to Dodge’s political statement. Overt politicism explains why
the case split the panel of judges then, and why Dodge was never influential among courts and
was ignored by academics until the neoliberal turn of the 1980s. For much of the twentieth century,
American capitalism had no use for the idea in Dodge because shareholder primacy conflicted
with the prevailing political order and economic system. Dodge found late influence in
legal academia only when America‘s political order embraced neoliberalism. Its pithy shibboleth
fit the moment when a new intellectual framework was needed for a new economic system
based on the policy preference for capital. Empirical evidence in the form of a citation study
clearly demonstrates Dodge’s irrelevance for much of its life in the twentieth century until neoliberalism
came along.

This historical analysis makes three basic points: (1) shareholder primacy did not exist and could
not have existed in law or academic consensus prior to the advent of neoliberalism in the 1980s
because it conflicted with the prevailing political order and economic system; (2) shareholder
primacy is not a discovery of some natural law of economics after a 250-year search in modern
economics, but is a rule of law of the existing political order and economic system—a rule that,
like other laws, came to be because it served the unique policy needs and preferences and the
societal conditions of the specific time period; (3) because there is no such thing as the end of
history of political order and economic system, and because rules of law are functions of prevailing
policy preferences as they change over time, the decline of neoliberalism calls into question
the future of Dodge and shareholder primacy.


Stanford University Stanford, California
  • Robert J. Rhee, The Neoliberal Corporate Purpose of Dodge v. Ford and Shareholder Primacy: A Historical Context 1919–2019, 28 Stan. J.L. Bus. & Fin. (2023).
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