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To date, Bakan is on the right side of history. Unalloyed selfishness has become, to the modern conscience, intolerable. We are redrawing the world: let us redraw our corporate aspirations too. [[Wall Street|Gordon Gekko]] is out. [[Arif Naqvi]] is in.<ref>“Can you see what it is yet?”</ref>
To date, Bakan is on the right side of history. Unalloyed selfishness has become, to the modern conscience, intolerable. We are redrawing the world: let us redraw our corporate aspirations too. [[Wall Street|Gordon Gekko]] is out. [[Arif Naqvi]] is in.<ref>“Can you see what it is yet?”</ref>


And so it has come to pass: “[[stakeholder capitalism]]” has displaced [[shareholder capitalism]]. We ask the corporation to orient itself not just toward its shareholders, but ''all'' its “stakeholders” — its customers, [[creditor]]<nowiki/>s, suppliers, [[employee]]<nowiki/>s, the surrounding community, the [[Environmental, social and corporate governance|environment]], the marginalised multitude that suffers invisibly under the awful [[Externality|externalities]] of its industry ''and'' — last but not least! — its shareholders.  
And so it has come to pass: “[[stakeholder capitalism]]” has displaced [[shareholder capitalism]]. We ask the corporation to orient itself not just toward its shareholders, but ''all'' its “stakeholders” — its customers, [[creditor]]<nowiki/>s, suppliers, [[employee]]<nowiki/>s, the surrounding community, the [[Environmental, social and corporate governance|environment]], the marginalised multitude that suffers invisibly under the awful [[Externality|externalities]] of its industry ''and'' — last but not least! — its shareholders.


Under this new, enlightened purpose a corporation is duty-bound to increase long-term value for all who are impacted by its operation. It must not maximise profit at the expense of the wider world.
Under this new, enlightened purpose a corporation is duty-bound to increase long-term value for all who are impacted by its operation. It must not maximise profit at the expense of the wider world.
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Long ago, our forebears<ref>No, not enlightened, white, male, cis-gendered, colonial oppressors: ancient Babylonians.</ref> figured out how to distil pure, abstract, immaterial ''[[value]]'' from the relativising commodities or perishable [[substrate]]s in which it is usually embedded:<ref>Granted, it is imperfect: until recently much cash did have a substrate (paper send coins), and its value is still coloured by the credit consensus of its issuing bank, which can control its supply and demand, but the substrate issues are largely resolved, and consensus in the bona fides of the [[Federal Reserve]], [[ECB]] and [[Bank of England]] has proven a lot more robust then that of crypto currencies. Don’t @ me, [[bitcoin]] maximalists.</ref> [[cash|''money'']].
Long ago, our forebears<ref>No, not enlightened, white, male, cis-gendered, colonial oppressors: ancient Babylonians.</ref> figured out how to distil pure, abstract, immaterial ''[[value]]'' from the relativising commodities or perishable [[substrate]]s in which it is usually embedded:<ref>Granted, it is imperfect: until recently much cash did have a substrate (paper send coins), and its value is still coloured by the credit consensus of its issuing bank, which can control its supply and demand, but the substrate issues are largely resolved, and consensus in the bona fides of the [[Federal Reserve]], [[ECB]] and [[Bank of England]] has proven a lot more robust then that of crypto currencies. Don’t @ me, [[bitcoin]] maximalists.</ref> [[cash|''money'']].


In discharging their sacred quest, [[Chief executive officer|those stewarding the affairs of corporation]] could not have clearer instructions: should the return they generate, valued in folding green stuff, not pass muster, there will be no excuses. There is no dog who can eat a [[Chief executive officer|chief executive]]’s homework, no looking on the bright side because employee engagement numbers are up, no shelter to be taken in the popularity of the company’s float in the  May Day parade. If the annual return disappoints, executives, ''you get shot''.
[[File:CEO compensation.png|thumb|CEO compensation (in thousands) mapped against worker compensation (in thousands) and performance of the S&P500. For some reason there seems to be an elephant in the room, too.]]In discharging their sacred quest, [[Chief executive officer|those stewarding the affairs of corporation]] could not have clearer instructions: should the return they generate, valued in folding green stuff, not pass muster, there will be no excuses. There is no dog who can eat a [[Chief executive officer|chief executive]]’s homework, no looking on the bright side because employee engagement numbers are up, no shelter to be taken in the popularity of the company’s float in the  May Day parade. If the annual return disappoints, executives, ''you get shot''.


Shareholder return is not a device to systematically gouge  the environment on behalf of an anonymous capitalist class. It is a device to stop executives systematically gouging their shareholders.
Shareholder return is not a device to systematically gouge  the environment on behalf of an anonymous capitalist class. It is a device to stop executives systematically gouging their shareholders.
[[File:CEO compensation.png|thumb|CEO compensation (in thousands) mapped against worker compensation (in thousands) and performance of the S&P500. For some reason there seems to be an elephant in the room, too.]]
Now, before you throw up your hands and cry, “but shareholders do not need protection from their chief executive officers!” I invite you to consider the following chart, taken from data I found at the economic policy institute, which, in mapping CEO compensation against worker compensation and the performance of the S&P500, gives a pretty good picture of how shareholders, workers and executives are doing relative to each other.
==[[Stakeholder capitalism]] means never having to say you’re sorry==
All that clarity of purpose evaporates the moment you expand your list of stakeholders, and corporate objectives, beyond that single monetary goal.


You have multiple goals, multiple stakeholders, and their interests — which are indeterminate, by the way — profoundly conflict. How do you arbitrate between the interests of creditors and the local community? Between the environment and customers? How do you even know what the customer’s interests — beyond access to as much of your soda pop as it can get, as cheap as it can buy it — ''are''?<ref>There is a hand-wavy argument that executives should have in mind the “best interests of the community” and not anyone’s selfish needs and wants. This is so preposterous as to be quite unneeding of rebuttal, but for what it’s worth it is hard to see how a moral agenda determined by the executive agent class — mainly white, aging, cis-gendered, post colonial men — improves on none at all.</ref>
Now, before you throw up your hands and cry, “but surely, shareholders do not need protection from their chief executive officers!” I invite you to consider the chart to the right, taken from data I found at the Economic Policy Institute, which, in mapping CEO compensation against worker compensation and the performance of the S&P500 since 1965, gives a pretty good picture of how shareholders, workers and executives are doing relative to each other. It’s hard to see, but worker compensation has  improved, by 50%, from $41,900 in 1965 to $56,200 in 2018 — an annualised rate of 2.5% — while  those rapacious shareholders gained 445% an an annualised rate of 8.5%.  


Which goal has priority? Now a failure to generate a decent cash return can be blamed on — well, ''anything'' — 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.
But Chief Executiving is the line of work to be in, folks: after a blip in 2000, their compensation settled back a bit after the financial crisis, and is now at a more sombre 1,859%, an annualised growth of ''thirty five percent''.
 
So before we cast the poor shareholders’ interests to the wind, ask this: if we switch to stakeholder capitalism, ''[[Cui bono|who benefits]] the most''?
===[[Stakeholder capitalism]] means never having to say you’re sorry===
Recall that when shareholders hold the whip hand, an executive’s objective is simple. ''Make money''. All that clarity of purpose evaporates the moment you expand your objectives beyond that single monetary goal.
 
Multiple stakeholders means multiple interests, and those interests — which are indeterminate, by the way — ''necessarily'' conflict. How to arbitrate between ''creditors'' and ''the local community''? Between ''the environment'' and ''customers''?
 
How do you even know what your stakeholders’ interests — beyond having as much of your soda pop as you can make, as cheap as you can sell it — ''are''?<ref>There is a hand-wavy argument that executives should have in mind the “best interests of the community” and not anyone’s selfish needs and wants. This is so preposterous as to be quite unneeding of rebuttal, but for what it’s worth it is hard to see how a moral agenda determined by the executive agent class — mainly white, aging, cis-gendered, post colonial men — improves on none at all.</ref>
 
Which interests have priority? Now a failure to generate a decent cash return can be blamed on — well, ''anything'' — 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''.
 
===== Are corporations well placed to look after stakeholder interests? =====


[[Stakeholder capitalism]] means the executive has an excuse. Always. For everything.
=====Customers can look after themselves=====
=====Customers can look after themselves=====
Yes, customers are your stakeholders, and they have an interest how you conduct your business, but — at least in a healthy marketplace — they have a means of controlling that a lot more direct, regular and effective than do shareholders: they can buy something else. You can only maximise shareholder return ''by persuading lots of customers to buy your stuff''.  
Yes, customers are your stakeholders, and they have an interest how you conduct your business, but — at least in a healthy marketplace — they have a means of controlling that a lot more direct, regular and effective than do shareholders: they can buy something else. You can only maximise shareholder return ''by persuading lots of customers to buy your stuff''.  


===== Shareholders can’t  look after themselves =====
=====Shareholders can’t  look after themselves=====
Shareholders are a bit like voters in a representative democracy: their control over the enterprise is a lot less exacting that we like to think. One’s main weapon is the power of sale; beyond that, there’s the AGM, and unless you’re an institutional money manager, don’t expect anyone in the C suite to be massively bothered how you vote.
Shareholders are a bit like voters in a representative democracy: their control over the enterprise is a lot less exacting that we like to think. One’s main weapon is the power of sale; beyond that, there’s the AGM, and unless you’re an institutional money manager, don’t expect anyone in the C suite to be massively bothered how you vote.


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{{sa}}
{{sa}}
*[[Stakeholder]]
*[[Stakeholder]]
*[[Equities]]  
*[[Equities]]
*[[Equity Derivatives]]
*[[Equity Derivatives]]
*[[Equity Derivatives Anatomy]]
*[[Equity Derivatives Anatomy]]
*[[Stock Lending]]
*[[Stock Lending]]
{{Ref}}
{{Ref}}
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