Stakeholder capitalism: Difference between revisions

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 one constituent stakeholder group with the means, justification and necessary consensus to call the executives out: their shareholders.  

Stakeholder capitalism is a ''swizz''.

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 corporates, 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''.

In all other walks of life, their respective interests, aspirations and priorities might jar, clatter and conflict. If you put them in a room to discuss any topic ''but'' their shareholding, you should not be surprised if a fight breaks out.

But on that one subject, they are totally, magically, necessarily aligned: “whatever else I care about in my life, members of the board, know this: ''I expect you to maximise my return''.”

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'']].

[[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.

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%.  

=====If shareholders want to beautify the inner city, they can do it themselves=====

We assume shareholders are people with disposable income, and they have chosen to this sum into this company for the purpose of generating a return. If they wanted to donate to Oxfam, they could. It is not the company to second guess the moral priorities of its shareholding. As mentioned above, in all respect but the single one of the aspiration for a maximum return, the shareholders interests are  opaque, and certainly conflicting. There will be democrats and republicans, vegans and carnivores, wets and dries on the share register. The executive cannot pander to these conflicting proclivities.

{{sa}}