The investor-lead search for infinite eventually turns companies against their customers
There’s a story that Boeing engineers used to tell about the company’s transformation that captures something essential about what we’ve lost. For decades, Boeing was run by engineers who cared obsessively about building the best aircraft possible. The company’s headquarters sat next to its main production facility in Seattle, where executives could walk onto the factory floor and watch planes being assembled. Decision-makers understood the product intimately because they lived with it daily.
Then came the merger with McDonnell Douglas in 1997, and everything changed. The new leadership moved headquarters to Chicago, far from any production facilities. Financial metrics replaced engineering excellence as the primary measure of success. The company that had built the legendary 747 began prioritizing stock buybacks over research and development. Cost-cutting became the driving obsession, leading to the outsourcing of critical components and the rush to market of the 737 MAX—a plane that killed 346 people in two crashes caused by flawed software that pilots weren’t even told existed.
This wasn’t a story of moral decay or management failure, though those played roles. It was the predictable result of a corporate structure that legally mandates endless growth and shareholder primacy above all other considerations. Boeing’s transformation illustrates something profound about how organizational structure shapes behavior—and how the growth imperative that we take for granted is both historically anomalous and deeply destructive.
For most of human history, successful enterprises were designed for continuity rather than expansion. Family businesses, guild workshops, partnerships—they could reach their optimal size and stay there for generations, focused on quality, reputation, and serving their communities. A master craftsman’s workshop might employ the same number of people for centuries, passing skills and standards from generation to generation. Success meant maintaining excellence and stability, not constantly seeking new markets to conquer.
The medieval guilds of Europe exemplified this approach. A baker’s guild or weaver’s guild would regulate quality, train apprentices, and ensure fair pricing within their community. These organizations had no shareholders demanding quarterly growth. They existed to serve a function—providing good bread or fine cloth—and they could fulfill that function indefinitely at roughly the same scale. Success was measured by the quality of the product, the prosperity of the members, and the organization’s ability to persist across generations.
Even early American businesses often followed this model. Family-owned banks served their local communities for decades without needing to expand beyond their region. Craftsmen and manufacturers took pride in their reputation for quality rather than their ability to capture market share. The idea that a business must either grow or die would have seemed strange to most pre-industrial entrepreneurs.
The corporate revolution changed everything by creating a legal structure that separates ownership from operation while mandating perpetual growth. When shareholders invest in a corporation, they expect returns that compound over time. This creates what economists politely call “growth imperatives” but what might be more accurately described as institutional cancer—healthy cells know when to stop dividing, but cancer cells must always multiply.
Consider what this mandate produces in practice. When a company saturates its initial market, it faces several unappealing choices: it can degrade quality to reduce costs and increase margins; it can create artificial demand through marketing manipulation; it can diversify into businesses it doesn’t understand; or it can financialize its operations, making money through clever accounting rather than better products. Boeing tried all of these approaches, with predictable results.
The company that once focused solely on building exceptional aircraft began acquiring defense contractors, expanding into space systems, and entering markets it had no expertise in. Meanwhile, financial engineering replaced actual engineering as the path to growth. Stock buybacks consumed resources that might have gone to research and development. Outsourcing critical components to the lowest bidders replaced the integrated manufacturing that had made Boeing planes legendarily reliable.
This pattern repeats across industries and decades. General Electric under Jack Welch became a poster child for endless diversification, transforming from an industrial company into a sprawling conglomerate that owned everything from light bulbs to television networks to financial services. The pursuit of growth led GE into businesses it never should have entered, creating the complexity and risk that eventually nearly destroyed the company.
The pharmaceutical industry offers another instructive example. Companies that once focused on discovering life-saving drugs now spend more on stock buybacks than on research and development. The growth imperative drives them to acquire smaller innovative firms rather than cultivate innovation internally, to extend patents on existing drugs rather than develop new ones, and to focus on profitable chronic conditions rather than diseases that might actually be cured.
The human costs of this system extend far beyond corporate balance sheets. Communities that depended on stable local employers watch their plants close as companies chase cheaper labor overseas. Workers lose not just jobs but careers, as employers view them as costs to be minimized rather than assets to be developed. The institutional knowledge that took decades to build gets dismantled in pursuit of quarterly earnings targets.
Perhaps most perniciously, the growth imperative creates the concentration of wealth and power that corrupts democratic institutions. When companies must expand constantly to satisfy shareholders, successful ones become enormous, accumulating influence that extends far beyond their original markets. A family bakery serves its neighborhood; a multinational food corporation shapes agricultural policy, influences trade agreements, and lobbies for regulations that favor scale over quality.
This concentration isn’t an accident—it’s the inevitable result of a system that rewards growth above all other values. As companies expand, they accumulate resources that allow them to expand further, creating the kind of winner-take-all dynamics that undermine both markets and democracy. The largest corporations use their size to influence regulations, crush competitors, and extract favorable treatment from governments, creating a feedback loop that makes them larger still.
The alternative isn’t socialism or central planning—it’s organizational structures that can reach optimal size and remain there. Foundations, benefit corporations, and cooperatives can all generate surplus, but they’re legally required to reinvest it in their mission rather than extract it for external shareholders. This breaks the growth imperative that drives so much antisocial behavior.
A hospital organized as a benefit corporation could focus on providing excellent patient care rather than expanding into new markets or financial services. A manufacturing cooperative could prioritize product quality and worker welfare rather than pursuing economies of scale that might compromise both. A research foundation could concentrate on breakthrough discoveries rather than diversifying into profitable but peripheral activities.
Such organizations can still compete and innovate—indeed, freed from the quarterly earnings pressure that plagues public corporations, they might innovate more effectively. They simply don’t face the legal mandate to prioritize shareholder returns over all other considerations. This allows them to optimize for different metrics: quality, sustainability, worker satisfaction, community benefit, or simply the intrinsic value of the work they do.
The policy implications are profound. Rather than hoping that corporations will somehow balance shareholder demands with social responsibility, we could create incentive structures that favor mission-driven organizations. Tax advantages, preferential lending, and regulatory benefits could flow to enterprises structured around purpose rather than profit extraction. Government contracts could prioritize organizations whose legal structure aligns with public benefit.
This isn’t anti-business policy—it’s pro-business policy that recognizes different business structures serve different purposes. Just as we don’t expect nonprofit hospitals to maximize shareholder returns, we shouldn’t expect organizations providing essential services to prioritize growth over function.
The growth imperative that seems so natural to us is actually a recent historical aberration that has created enormous problems we’ve learned to accept as inevitable. Boeing’s engineers understood something important when they focused on building great planes rather than maximizing quarterly earnings. Their approach produced both better aircraft and a more sustainable business—until the corporate structure mandated a different set of priorities.
We don’t need to choose between prosperity and stability, between innovation and sustainability. We need to choose organizational structures that align with our actual goals rather than legal frameworks that mandate endless expansion regardless of the human cost. The master craftsmen who operated successful businesses for centuries weren’t primitive—they understood something about sustainable enterprise that we’ve forgotten in our obsession with growth.
The question isn’t whether businesses should be profitable—of course they should be. The question is what they should do with those profits, and whether the pursuit of ever-increasing returns justifies the social costs that pursuit inevitably creates. History suggests there might be better ways to organize the work of the world.
