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But we live in a post-millennial world. Given their founding ethos, it is hard to deny that [[corporation]]s are venal, selfish things, riven with [[unconscious bias|biases]], whose unseemly stampede for profit demonstrates an abject want of care for unseen victims. As long ago as 2003 it was Joel Bakan’s thrust in ''The Corporation:''<ref>[https://www.amazon.com/Corporation-Pathological-Pursuit-Profit-Power/dp/0743247469 ''The Corporation: The Pathological Pursuit of Profit and Power'']</ref> a legal personality whose soul motive is the short-term enrichment of its shareholders has the character traits to earn a clinical diagnosis as a ''psychopath''. | But we live in a post-millennial world. Given their founding ethos, it is hard to deny that [[corporation]]s are venal, selfish things, riven with [[unconscious bias|biases]], whose unseemly stampede for profit demonstrates an abject want of care for unseen victims. As long ago as 2003 it was Joel Bakan’s thrust in ''The Corporation:''<ref>[https://www.amazon.com/Corporation-Pathological-Pursuit-Profit-Power/dp/0743247469 ''The Corporation: The Pathological Pursuit of Profit and Power'']</ref> a legal personality whose soul motive is the short-term enrichment of its shareholders has the character traits to earn a clinical diagnosis as a ''psychopath''. | ||
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. | 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. {{plainlink|https://en.wikipedia.org/wiki/Arif_Naqvi|Arif Naqvi}} is in.<ref>Until his arrest.</ref> | ||
And so it has come to pass: “[[stakeholder capitalism]]” has displaced [[shareholder capitalism]]. We ask | And so it has come to pass: “[[stakeholder capitalism]]” has displaced [[shareholder capitalism]]. We, the planet, ask our corporations to orient themselves not just toward their shareholders, but ''all'' their “stakeholders” — 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 industry ''and'' — last but not least! — their shareholders. | ||
Under this new, enlightened purpose | Under this new, enlightened purpose every corporation is duty-bound to increase long-term value for all who are impacted by its operation. ''It must not profit at the expense of the wider world''. | ||
This view seems so modern, compassionate and intuitively right — so ''fit for [[Twitter]]'' — that it is hard to see how anyone can have thought otherwise. Yet think otherwise they did — | This view seems so modern, so compassionate and so intuitively ''right'' — so ''fit for [[Twitter]]'' — that it is hard to see how anyone can ever have thought otherwise. Yet, think otherwise they did — consistently — from the publication of Smith’s ''The Theory of Moral Sentiments'' onward, down the centuries, through the titans of American commerce, Chicago economics and Hollywood villainy: right down until the collective failure of nerve we face today. | ||
However obvious | However obvious our enlightened new direction seems, it is still a striking reversal; one that has passed with barely a shot fired. Even that trade union for unreconciled boomer gammons, the {{plainlink|https://www.businessroundtable.org/business-roundtable-redefines-the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans|Business Roundtable}} has joined in: last year, it “redefined the purpose of a corporation” away from the outright pursuit of profit to instead promote “an economy that serves all Americans”. “It affirms the essential role corporations can play in improving our society,” said Alex Gorsky, Chairman and CEO of Johnson & Johnson and Chair of the Roundtable’s Corporate Governance Committee,<ref>Now I don’t want to intrude here, but is being Chairman ''and'' CEO really the best example for the chair of a corporate governance committee to set? [https://hbr.org/2020/03/why-the-ceo-shouldnt-also-be-the-board-chair Here] is the Harvard Business Review on the subject.</ref> “when [[CEO]]s are truly committed to meeting the needs of all stakeholders.” | ||
We find ourselves taking a | We are not sure who asked the Business Roundtable, but in any case we find ourselves taking a different view. This not an “a[[woke]]ning” so much as ''a collective concussion of the sort occasioned by a stout blow on the head''. These people are either outrageously talking their own book, or we have all gone mad. | ||
Skeptics of the mass delusion conspiracy theories can relax: it is almost certainly the former. For “stakeholder capitalism” ''codifies'' the [[agency problem]]. It diffuses the executive’s accountability for anything the corporation does, putting the executive beyond the reproach of the constituent group with the means, justification and necessary consensus to stop them: the shareholders. | |||
Skeptics of the mass delusion conspiracy theories can relax: | |||
=== About those shareholders=== | === About those shareholders=== | ||
Under Bakan’s theory, it is not the shareholders who are the psychopaths,<ref>Shareholders ''who themselves are corporations'' probably count as psychopaths, come to think of it, but the point remains valid. Shareholders are not necessarily corporate, and at some point all shareholdings must (right? ''Right''?) resolve back to some living, breathing individual.</ref> but the corporation as a distinct [[legal personality]] itself. Its shareholders are only its motivation for its pathology. Shareholders, as a class, have no such common characteristics. Indeed, shareholders are [[diverse]] in every conceivable dimension ''bar one''. They can be young or old, rich or poor, left or right, tall or short, male or female, gay or straight, black or white or, in each case, any gradation in between.They don’t have to ''know'' each other, ''like'' each other or ''care less'' about each other. They almost certainly won’t. The class of a company’s shareholders need have — no, no: ''will'' have — nothing whatever in common ''beyond their shareholding''. | Under Bakan’s theory, it is not the shareholders who are the psychopaths,<ref>Shareholders ''who themselves are corporations'' probably count as psychopaths, come to think of it, but the point remains valid. Shareholders are not necessarily corporate, and at some point all shareholdings must (right? ''Right''?) resolve back to some living, breathing individual.</ref> but the corporation as a distinct [[legal personality]] itself. Its shareholders are only its motivation for its pathology. Shareholders, as a class, have no such common characteristics. Indeed, shareholders are [[diverse]] in every conceivable dimension ''bar one''. They can be young or old, rich or poor, left or right, tall or short, male or female, gay or straight, black or white or, in each case, any gradation in between.They don’t have to ''know'' each other, ''like'' each other or ''care less'' about each other. They almost certainly won’t. The class of a company’s shareholders need have — no, no: ''will'' have — nothing whatever in common ''beyond their shareholding''. | ||