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Stakeholder capitalism: Difference between revisions
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===Are corporations best-placed to look after everyone else’s interests?=== | ===Are corporations best-placed to look after everyone else’s interests?=== | ||
Yes, customers are your stakeholders, and they have an interest how you conduct your business, but — at least in a healthy marketplace — they | Yes, customers are your stakeholders, and they have an interest how you conduct your business, but — at least in a healthy marketplace — they can control that a lot more directly, regularly and effectively than can shareholders: ''they can buy something else''. You can only maximise shareholder return ''by persuading lots of customers to buy your stuff''. | ||
By contrast, shareholders are a bit like voters in a representative democracy: their main weapon is | As a ''vox pop'' in Bakan’s film puts it: “If you don’t like Pepsi-Cola, Bank of America, well, if you don't like what they do, don’t use ’em. That’s the way I see the people’s power is.” | ||
By contrast, shareholders are a bit like voters in a representative democracy: their main weapon is their power to sell their stock; 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. | |||
Employees — especially those in the executive suite — have all the power they need to influence the company. They are there, every day, making every decision. | Employees — especially those in the executive suite — have all the power they need to influence the company. They are there, every day, making every decision. | ||
[[File:Water Scarcity.jpg|300px|thumb|right|Well, if it were up to me I’d spend more time managing the risk in my loan book tbh.]] | [[File:Water Scarcity.jpg|300px|thumb|right|Well, if it were up to me I’d spend more time managing the risk in my loan book tbh.]] | ||
Of course the disenfranchised minorities at the margins of our community need a voice. As we argue [[Critical theory|elsewhere]], an optimal society is pluralistic, tolerant, defends those at the margins and, [[all other things being equal]], prefers their interests when they conflict with | Of course the disenfranchised minorities at the margins of our community need a voice. As we argue [[Critical theory|elsewhere]], an optimal society is pluralistic, tolerant, defends those at the margins and, [[all other things being equal]], prefers their interests when they conflict with a majority that is perfectly able to look after itself. But the question is not ''whether'' to protect their interests, but ''how''. There are plenty of better ways than through stakeholder capitalism: representative democracy, for a start. | ||
But even so, shareholders are not monolithic investing homunculi: they are ordinary people with disposable income. If they want to beautify the inner city, save polar bears or fight water scarcity, they can do that directly. That is a far better way to allocate capital. It puts control in the investors’ hands, where it should be. Investors | But even so, shareholders are not monolithic investing homunculi: they are ordinary people with disposable income. If they want to beautify the inner city, save polar bears or fight water scarcity, they can do that directly. That is a far better way to allocate capital. It puts control in the investors’ hands, where it should be. Investors do not need to channel their charitable activity through the medium of their equity portfolio. And why would they? | ||
do not need to channel their charitable activity through the medium of their equity portfolio. | |||
We cannot fathom the moral agenda — if there is one<ref>And honestly, is there likely to be a moral dimension to investing in a ''bank'' stock?</ref> — behind an investor’s decision to invest in a bank stock. Who knows if they care about water scarcity, or polar bears? But if the alternatives are “assume they are basically after a capital return” or “let the chief executive decide what the moral priorities of her shareholders are”, then it is not a difficult choice. | We cannot fathom the moral agenda — if there is one<ref>And honestly, is there likely to be a moral dimension to investing in a ''bank'' stock?</ref> — behind an investor’s decision to invest in a bank stock. Who knows if they care about water scarcity, or polar bears? But if the alternatives are “assume they are basically after a capital return” or “let the chief executive decide what the moral priorities of her shareholders are”, then it is not a difficult choice. | ||