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21 Stetson L. Rev. 245 (1991-1992)
The Free Market Promotes Long-Term Efficiency That Benefits All Stakeholders

handle is hein.journals/stet21 and id is 255 raw text is: ESSAY THE FREE MARKET PROMOTES LONG-TERM EFFICIENCY THAT BENEFITS ALL STAKEHOLDERS Walter M. Cabot* INTRODUCTION My views on the nonshareholder constituency statutes are of- fered from a different perspective, that of a practitioner in the capital markets. My role as a fiduciary manager of money, a student of cor- porations, and an observer of the capitalist system has generally, but not always, led me to admire the market process. I'm not an aca- demic, interested in philosophical theory and discussion; and I'm not a lawyer specializing in logical argument and subtleties. I believe in the everyday laws of the marketplace and am vitally interested in the success of corporate America and our financial markets. When allowed to function freely, the stock market contributes to the efficiency of corporate behavior, thereby benefitting shareholders and nonshareholders alike. The investment industry as a whole and corporate America will fare better in world markets as a result of allowing the free market to do its job. My experience as an invest- ment manager has led me to five observations that clearly support this thesis: I. The traditional corporate marketplace functions effec- tively; II. Interfering with this market will harm American competi- tiveness; III. The market operates on a long-term horizon; IV. Share- holder property rights should be preserved to insure the accuracy of * Walter M. Cabot is a graduate of Harvard College and Harvard Business School. For nearly twenty years, he was responsible for managing the Harvard endowment fund, which grew from less than one billion to five billion dollars under his watch. Today, Mr. Cabot serves as a director for numerous companies and charitable entities, and is affiliated with Standish, Ayer & Wood, Inc. in Boston. This essay is derived from Mr. Cabot's remarks at Stetson Uni- versity's Inaugural Corporate Governance Symposium. The author gratefully acknowledges the assistance of Brian Brownsell in preparing this essay for publication.

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