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But we live in a post-millennial world. Corporations are venal, selfish things, riven with bias, discrimination; a product of the West’s colonial history of oppression and wanton marginalisation. [[Adam Smith]], though a vigorous opponent of slavery, back in 1763, is in danger of being cancelled.<ref>https://www.nationalreview.com/2021/03/cancel-culture-stalks-adam-smith-an-ardent-foe-of-slavery/</ref> | But we live in a post-millennial world. Corporations are venal, selfish things, riven with bias, discrimination; a product of the West’s colonial history of oppression and wanton marginalisation. [[Adam Smith]], though a vigorous opponent of slavery, back in 1763, is in danger of being cancelled.<ref>https://www.nationalreview.com/2021/03/cancel-culture-stalks-adam-smith-an-ardent-foe-of-slavery/</ref> | ||
In place of shareholder capitalism, we see [[stakeholder capitalism]]. This asks corporations to oriented themselves to serve not just their shareholders, but ''all'' their “stakeholders” their customers, suppliers, employees, shareholders, the community, the environment, and the distantly marginalised who suffer invisibly under the awful externalities of industry while shareholders bask in the fruits of the pursuit of profit. | In place of shareholder capitalism, we see [[stakeholder capitalism]]. This asks corporations to oriented themselves to serve not just their shareholders, but ''all'' their “stakeholders”: their customers, suppliers, employees, shareholders, the community, the environment, and the distantly marginalised who suffer invisibly under the awful externalities of industry while shareholders bask in the fruits of the pursuit of profit. | ||
A corporation is bound to increase long-term value for all, and must not maximise shareholder profits value at the expense of other stakeholders. | A corporation is bound to increase long-term value for all, and must not maximise shareholder profits value at the expense of other stakeholders. | ||
This view seems so modern, compassionate and intuitively right — so ''fit for [[Twitter]]'' — that it is hard to understand how anyone can have thought otherwise. Yet think otherwise they did — consistently, at times, exclusively — from the publication of Smith’s ''Theory of Moral Sentiments'' onward, through the centuries, through the titans of American commerce, the Chicago School, down until the collective failure of nerve we see before us today. | This view seems so modern, compassionate and intuitively right — so ''fit for [[Twitter]]'' — that it is hard to understand how anyone can have thought otherwise. Yet think otherwise they did — consistently, at times, exclusively — from the publication of Smith’s ''Theory of Moral Sentiments'' onward, through the centuries, through the titans of American commerce, the Chicago School, down until the collective failure of nerve we see before us today. [[Environmental, social, and corporate governance]] is the constant refrain; the business roundtable<ref>https://www.businessroundtable.org/business-roundtable-redefines-the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans</ref> has redefined the purpose of a corporation away from the outright pursuit of profit to instead promote “an economy that serves all Americans”. | ||
You might not be surprised to find your correspondent taking a contrarian view. This not an “a[[woke]]ning” so much as ''a kind of national concussion occasioned by a stout blow on the head''. For stakeholder capitalism is to ''codify'' the [[agency problem]]; to beautifully diffuse accountability for anything the corporation does. | |||
Shareholders, as a class, are, in theory, infinitely diverse in every conceivable dimension bar one. They don’t know each other, they don’t have to like each other, or care less about each other. they need have nothing in common beyond their shareholding: they can be young or old, rich or poor, male or female, gay or straight, black or white, or in each of these categories, any gradation in between. In all other walks of life bar this one their respective interests, aspirations and expectations might jar, clatter and undermine each other. | |||
But in that one interest, they are utterly aligned: whatever else I care about in my life, members of the board, know this. ''I expect you to maximise my return''. | |||
In discharging that sacred quest, a corporation’s agents could not have clearer instructions. Should return not pass muster, there are no excuses. There is no dog who can eat a chief executive’s homework, no looking on the bright side because employee engagement numbers are up, of the company had a popular float in the annual May Day parade. If the annual return disappoints, you get shot. | |||
===[[Stakeholder capitalism]] means never having to say you’re sorry=== | |||
All that clarity of purpose evaporates the moment you expand your list of stakeholders beyond that single class. Now a failure to generate a return can be blamed on your success in reducing the number of smokers in the accounts department, or your community outreach team spent all your excess cash on beautifying a local park, or you chose a buildings manager who was twice the going rate but had a better anti-modern slavery policy. | |||
[[Stakeholder capitalism]] means the executive has an excuse. Always. For everything. | |||
===Customers can look after themselves=== | |||
===Employees ''definitely'' can look after themselves=== | |||
===If shareholders really want to beautify the inner city, they can do it themselves=== | |||
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