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Affluent Christian Investor | September 21, 2023

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Shareholder Value Is Not Wealth Creation

New York Stock Exchange
(Photo by Perpetual Tourist) (CC BY) (Resized/Cropped)

While shareholder value is certainly important and a concern, it is not wealth creation; it is capital direction or distribution. Also, capital distribution, the free choices of movement, exchange, and transactions, is significantly different than re-distribution.

Distribution is moral and free; free exchanges between parties and individuals, while re-distribution is most often immoral and oppressive since it typically takes place as a result of powerful entities, usually government, forcing, through theft (although frequently legal theft through taxation laws) or coercion, the movement of capital and wealth to other parties who, otherwise, would not have received it through free-market exchanges and transactions.

While focusing on customer satisfaction is a generator of wealth creation; this is, more, bigger, and better pies, using the pie analogy of economics (see Pies for Everyone). The means of satisfying the customer is productivity of a product or service which creates value for the customer.

Productivity will result in wealth distribution, as opposed to wealth re-distribution, based on Natural Law which supports the willing and free exchange of goods and services between individuals and parties. The drive to satisfy a customer through productivity and free exchange results in the most prosperity of the vast majority of the population. Customer satisfaction, productivity, and free exchange will drive and result in a society’s most advanced and accelerated means of providing, using the pie analogy again, the biggest, best, and most pies for all in society to partake in.

This phenomenon is an extension of Natural Law.[1] Overall, “under capitalism, material success depends on the appreciation of a man’s achievements on the part of the sovereign consumers.”[2]

[1] The ideas of this paragraph arose from comments during the Keynote of Masaaki Imai during his Keynote presentation at the 2013 TWI Summit in Savannah, Georgia.  Masaaki Imai, May 14, 2013, “TWI as the Starting Point of Kaizen-Lean-Green,” TWI Summit, (Savannah, GA: Hyatt Regency Savannah), Slide 2.

[2] Ludwig von Mises, 2008 (originally published originally in 1956), The Anti-Capitalistic Mentality, (Auburn, AL: Ludwig von Mises Institute), p. 31.



Originally published on Townhall Finance.


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