The word "Capitalism" was hi-jacked long ago, and more recently the word "Stakeholder." (The proper word for much of what is decried as capitalism is “financialism,” but that is a separate topic.)
Before the World Economic Forum (WEF) and its allies began their abuse of the expression “Stakeholder Capitalism,” it had a defensible meaning. It contrasted with “Shareholder Capitalism,” which is the principle that corporate policy should be directed to benefit shareholders. Understandably, prioritising shareholders came in for much criticism since this came at the expense of others who had a vested interest in the running of an enterprise. Those others would be long-term employees, suppliers and the local community. These were called stakeholders. Hence a moral principle was instated, or upheld, that corporate policy should accommodate those with vested interests.
The trick that the WEF & Co. played was to expand the meaning of “stakeholder” from those with vested interests to anyone remotely or supposedly affected, indeed to anyone in the world and even in the world to come, i.e. future generations.
This was done by insinuation, and not by open debate. Many years ago this author attempted to engage those in the so-called “business ethics” movement in open debate on this and related topics, only to be met with arrogance, censorship and eventually expulsion. See www.contra-dnwe.de for extensive documentation.
There are a number of things which can be said here.
One is the nature of “shareholder” capitalism. Decades ago the idea (the ideology) took hold that shareholder value should be maximised.
This is nonsense. Leaving aside the obscure nature of “value,” questions can be asked about when and how it might be maximised, and whether it could ever be known to have been maximised. Effective management for the long term would involve motivating employees etc. to perform well and conscientiously. This can only be achieved if they have a vested interest. Designing their work to be reasonably satisfying and, for example, free of stress and haste, and paying them slightly above the going rate, will come at the expense of immediate shareholder dividends. As for the longer term, this cannot be known with any certainty, only on the basis of probabilities.
If, of course, only the short term is considered, then these factors may fall by the wayside.
Otherwise, the task of management becomes a balancing of interests.
The situation is further complicated if one considers the agency-principal dilemma. Management, equipped with power in the form of inside knowledge, may diverge from the instructions of the principals, i.e. the shareholders. And the shareholders may well differ among themselves.
Against this background, the easy contrast of shareholder against stakeholder capitalism becomes unhelpful – a matter of rhetoric rather than substance.
All of this said, there seems to be an argument in favour of expanding the horizons of a stakeholder capitalism focussed on the situation of the vested interests.
Why, it might be asked, should vested interests be afforded priority?
This is a big question, which is mirrored in many walks of life. One sees it, for example, when the shrinkage or increase in pay rates or else in prices comes under scrutiny. There is a presumption of no change, i.e. that any unfavourable change must be unfair, immoral, for whoever it affects. One sees it also in the outrage felt that people should be expelled, or overrun and outnumbered, by newcomers to their ancestral homeland. In the background here is the idea of property, property rights being claims that stem from habit and therefore the more distant past.
Experience, or history, teach that efforts to impose an ideal or theoretical justice end in disaster. They short-circuit.
Any conflict between shareholder and stakeholder interests is likely only one of timing. At any rate, these buzz words fail to capture the nuances of what is involved. What does count is the devotion, or not, of the decision-makers to a holistic balance. The decision-makers are then moral, or immoral, players. Stewards of good character, or bad.
The principle that the principal is the shareholder, rather than motley stakeholders, provides a practical focus and indeed aligns with the axiom of proprietorial privilege. (There is seldom a single shareholder.) It provides one focus, itself already complex enough, rather than many, which quickly become unmanageable.
In a well-ordered society, it is not the remit of a business leader to engage in political action by, for example, seeking to redress injustices or imbalances which are the preserve of political action.
Exceptions may apply. One might have the spare personnel and material to erect, free of charge, a much-needed playground, even tho erecting playgrounds is the task of local government and not part of one’s business. This would compensate for a breakdown in local government. In the medium term, tho, it is the failure of local government which needs to be exposed and addressed. Anything else would be mission creep.
Insofar as companies have duties beyond servicing their shareholders in accordance with market principles, it is to refrain from usurping political functions. It is the task of any of their employees who are suitably endowed to become politically active privately. This assumes that they have the spare time and resources to do so. A company which imposes excessive hours or leaves its staff with too little disposable income should not try to compensate for these shortcomings by deploying staff on projects for the supposedly public good.