In other words, stakeholder capitalism inevitably creates a tyranny of minorities, and especially highly ideological minorities (because a shared ideology reduces the cost of organizing). Minority stakeholders will succeed in expropriating majority ones.
Minority tyranny is the big problem with democratic politics. Extending it to vast swathes of economic life is a nightmare.
So what is stakeholder capitalism, when you get down to it? A world of Sorcerer’s Apprentice executives (the Knowledge Problem) with bad incentives (the agency problem).
Other than that, it’s great!
When stating the bleedin’ obvious needs to be done.
problem is, I think our friend is preaching to the already converted. There are too many middle class bred university educated managers who do not understand how real people think and produce cock-ups of the Oxfam and Bud Lite variety.
It’s precisely to avoid this sort of problem that we invented democracy. But if the shareholders don’t bother to vote, the ratbag minority will seize power.
Interesting piece.But heavens! His writing style. Those interminable sentences with umpteen sub-clauses. You have reread them to unpack them.
Not sure he wholly gets it though. Sure, libertarianism is a crock. You only have to visit Samisdata. Nice theory, takes you nowhere. But liberalism? Functioning capitalism is essentially despotic. The guy from Blackrockis entirely correct. To get what you want, you have to force people. They’ll be seeking to maximise what they perceive as their personal advantage, not yours. It works best when you give someone the power to get done what they want to get done. Then markets sort out whether what’s been achieved can be sold at a profit. It may not be touchy-feely nice, but it’s the only thing that actually works. The modern world was not built by nice people.
@Boganboy Not all shareholders get a vote. A high number of shareholders own their shares via pooled funds (plus pensions), the fund management company/ies votes on their behalf.
What proportion this is I don’t know but I would guess it is very high.
Not sure what the answer is, but if I were to get the voting forms for every company I have a stake in I could potentially have hundreds of votes a year. Most folk like to just invest the money in a fund and forget about it, and not acquire a part-time job voting so there is little interest in how their votes are cast.
A high number of shareholders own their shares via pooled funds (plus pensions), the fund management company/ies votes on their behalf.
Oh you’ve hit on the problem. And it always has been there. But fund managers used to be hard hearted bastards who looked after the interests of primarily fund managers. And a by-product of this was most of the time they supported what was good for their funds. But now fund managing has been infiltrated by the woke. Why? Credentialism. Was a time the only credentials one needed to rise to the top was the ability to make money. Most of them didn’t have any other credentials. Now, the only route into the industry is via the universities. So they’re thoroughly corrupted before they start.
As I’ve suggested in the past. One starts by carpet bombing Oxford & work from there.
@BiS: some of his problem lies in some unhelpful American punctuation habits. Compare
The recent controversies embroiling many corporations, notably Target, Disney, and Imbev (the owner of Anheuser-Busch) has brought the issue of stakeholder “capitalism”* to the center of American political discourse. These controversies demonstrate clearly why corporations and their executives should not indulge their own preferences or preferences of “stakeholders” other than shareholders, but should instead limit their efforts to what is already a very demanding task–maximizing shareholder value.
with
The recent controversies embroiling many corporations, notably Target, Disney, and Imbev (the owner of Anheuser-Busch), has brought the issue of stakeholder “capitalism”* to the center of American political discourse. These controversies demonstrate clearly why corporations and their executives should not indulge their own preferences, or preferences of “stakeholders” other than shareholders, but should instead limit their efforts to what is already a very demanding task – maximizing shareholder value.
The changes are tiny but seem to me to lessen the need to read any sentence twice.
BiS, in denigrating Samisdata I think you ignore the deadly threat of fiat money, the Frankfurt school, Herbert Marcuse and the Cantillon effect.
After my brief morning constitutional it occurred to me an improvement in the law here, not a total fix but at least something.
That is to introduce a Fiduciary duty law here (they have one in the US) your job as a director of the company is to make money for shareholders, fuck up badly and get sued. It won’t stop the likes of Target and Imbev happening once but the subsequent class actions against the board of directors will be noticed and inform other company’s decisions.
That used to be what the law was, common law duty. They changed it – 2006 maybe? – so that stakeholder capitalism is possible….
They also changed the meaning of “stakeholder”. A stakeholder is a person trusted to hold the stakes, trusted because they have *NO* interest in the proceedings. They’ve changed it to be a person who is fully invested in the proceedings. Complete back to front.
The author has his own view of “stakeholder capitalism” which differs from most other views that have been presented to me. In the majority of the latter “stakeholder capitalism” ranks customers and employees alongside shareholders and takes no responsibility for the wider public for whom it cannot be held responsible.
The greed and power of effective minority lobby groups has been a problem for thousands of years … “panem et circenses” and their attack on the visibly rich (such as Disney) is nothing new and is not dependent upon the fashionable concept of “stakeholder capitalism”.
in denigrating Samisdata I think you ignore the deadly threat of fiat money, the Frankfurt school, Herbert Marcuse and the Cantillon effect.
But endless discussions about how many C18th philosophers can dance on the head of a pin are not going to change things, Rhoda. As Steve so often reminds us LIONS. Talking rarely changes anything. Force does.