What was the ruling in Dodge v. Ford Motor Co., and why does it still shape our lives today? This article explores the century-old court case that embedded shareholder supremacy into American corporate law—and how The Labor Party plans to overturn it in favor of workers, communities, and democratic ownership.
A landmark 1919 case that ruled corporations exist to maximize shareholder profits above all else.
Ford wanted to lower prices and raise wages, but his shareholders (the Dodge brothers) wanted higher dividends instead.
The Michigan Supreme Court sided with the Dodge brothers, cementing shareholder primacy in corporate governance.
The decision influenced a century of corporate policy prioritizing profit over people and the planet.
This doctrine enforces the idea that the only corporate goal is profit for shareholders—often leading to exploitation.
It drives wage suppression, union busting, and the offshoring of jobs to cut costs.
Corporations close plants, pollute, or divest without concern for the communities they once served.
Yes—it legally obligates corporations to reject sustainable investments that might hurt short-term profits.
It would give legal voice and power to workers, communities, and the public interest.
Federal legislation could require charters to serve the public and democratize control over corporations.
It supports democratic control, cooperative ownership, and long-term investments in human welfare.
Support Labor Party candidates, demand federal charter reform, and advocate for stakeholder governance.
In 1919, the Michigan Supreme Court issued a decision in Dodge v. Ford Motor Co. that would shape American capitalism for over a century. The court ruled that a corporation's primary obligation is to its shareholders—specifically, to maximize profits. This became the legal basis for shareholder supremacy, a doctrine that remains deeply embedded in corporate law today.
While it was a state-level ruling, not a binding federal precedent, the case is frequently cited in legal and business circles. It validated the belief that profit must trump all other goals, including treating workers fairly, protecting communities, or investing in sustainability.
Henry Ford, then the most famous industrialist in America, believed in paying his workers a good wage and making his cars affordable to everyday people. He proposed using company profits to lower car prices and boost wages. However, minority shareholders John and Horace Dodge (yes, those Dodge brothers) had a different view.
They wanted larger dividends. As shareholders, they argued that profits should be distributed to them, not reinvested in wages or expansion. So they sued Henry Ford to force a dividend payout. This conflict between Ford's inclusive vision and the Dodge brothers' wealth-first approach set the stage for a critical legal battle.
The Michigan Supreme Court sided with the Dodge brothers. It ruled that:
"A business corporation is organized and carried on primarily for the profit of the stockholders."
Ford was ordered to issue dividends and scale back his plans for aggressive reinvestment in workers and production. This ruling not only overruled Ford's plans but also enshrined the principle of shareholder primacy into the DNA of American corporate law.
It wasn't federal law, but it set a legal tone: if you run a corporation, your job is to make money for shareholders, period. Anything else, even if it benefits workers or society, is secondary.
The ruling helped justify and normalize corporate behaviors that focus only on the bottom line:
Corporations used Dodge v. Ford as a legal shield whenever social, environmental, or labor demands threatened their quarterly earnings. This ruling helped give rise to Milton Friedman's 1970 New York Times essay declaring that a corporation's only responsibility is to increase its profits.
Shareholder primacy is the belief—legal, cultural, and operational—that the sole purpose of a corporation is to increase returns for shareholders. It's a narrow definition of success that excludes workers, customers, and communities.
This doctrine creates enormous incentives for exploitation:
Under this system, workers become expendable costs, not stakeholders in success. Communities are collateral damage. The environment is an afterthought.
From a working-class perspective, the damage is personal and profound:
Shareholder primacy treats labor as a liability. It reduces human beings to input costs. And it ensures that any value workers help create flows upward, not outward.
American towns have been devastated by this ruling's legacy. Consider:
Communities that once thrived around good-paying jobs now face poverty, underemployment, and pollution. All because shareholder value—not public value—was prioritized.
Absolutely. Climate action requires long-term investment and cooperation, but shareholder primacy demands short-term returns. This leads to:
Even when executives want to "do the right thing," the law and shareholder pressure often prevent it.
The alternative is stakeholder governance, where corporations are legally accountable to all their stakeholders:
This model aligns business goals with democratic values. It doesn't ban profit—it just distributes power and obligation more fairly. In stakeholder models:
Congress can act to redefine federal corporate charters. This includes:
Just like antitrust laws broke up monopolies, this new structure could restore balance in the economy by shifting power back to people.
The Labor Party (www.votelabor.org) is committed to ending the exploitation of working people and reclaiming economic power for the many, not the few. Overturning Dodge v. Ford is central to this mission. By doing so, we can:
This isn’t just legal reform. It’s a moral shift away from corporate greed and toward economic justice.
Change won’t come from courts alone. It must come from organized political power:
Together, we can build an economy where corporations serve people—not the other way around.
Join the fight to overturn Dodge v. Ford. Visit www.votelabor.org to learn more, get involved, and support candidates committed to ending corporate greed and building an economy that works for everyone.
Harvard Law School – Forum on Corporate Governance
https://corpgov.law.harvard.edu
Brookings Institution – “Milton Friedman’s Shareholder Doctrine is Dead”
https://www.brookings.edu/articles/milton-friedmans-shareholder-doctrine-is-dead/
LegalEagle – Dodge v. Ford Explained (YouTube)
https://www.youtube.com/watch?v=llMysMdRwlo
Next System Project – “Time to Overturn Dodge v. Ford”
https://thenextsystem.org/learn/stories/time-overturn-dodge-v-ford
American Sustainable Business Council – Corporate Governance Reform
https://www.asbcouncil.org
