The journalist Hedrick Smith has written a book, Who Stole the American Dream? Smith recently spoke to a group in my hometown in a lecture series.

In the 1970’s, Smith said, corporate America began shifting from the stakeholder model to the shareholder model.

Shareholders invest financially in a company. Financial gain is their foremost goal.

Stakeholders may also be shareholders, but stakeholders are interested in the products of the company beyond financial gain. Examples are workers who depend on the company for jobs or customers who depend on the products. They want the company to succeed over the long term.

In contrast, shareholders who are not stakeholders are interested in how much income they can make, not in the product itself. They may move investments to other companies if they do not experience short term gain. They are not invested in the company itself, only in the income from the company.

Investors fund many of our businesses, but investment is only a part of our system. If workers make money, they can buy things. If workers lose jobs, they obviously buy less, encouraging the economy to go into a recession. That’s not only bad for workers, it’s bad for businesses as well.

In other words, the stakeholders—the workers and consumers—are as important to a healthy capitalist system as are the shareholders, the investors.