National Review Online, January 28, 2022

Monday, the Financial Times ran an article by Paul Polman, the former CEO of Unilever (a company that, as he mentions, was recently in the news over its pursuit of objectives seemingly unconnected to its bottom line). A forceful, if unpersuasive, argument for stakeholder capitalism, it is an interesting and unintentionally revealing read. Above all, it demonstrates how, whatever BlackRock’s Larry Fink may claim, stakeholder capitalism is intrinsically political. Indeed, as it is an expression of corporatism, that is — or ought to be — a statement of the obvious. Corporatism, regardless of the form it takes, is an ideology revolving around an idea of how society should be organized. That is the very essence of politics.

Polman begins with a description of the horrors of yesteryear.

Expectations of business leaders have changed dramatically. When I was a young executive, the chief executive was expected to deliver increased profits, happy shareholders and more jobs.

But now, we live in an (allegedly) more enlightened era:

Today, staff and customers believe you should embody the company’s values and speak out on big, touchstone issues, from race to fake news and climate change.

I am sure they think of little else.

But what matters (or should matter) above all is what shareholders think. Not to quibble, but it is their company. That said, if those shareholders want their company to flourish (spoiler: they will), that, by definition, is going to involve attracting customers and (to generalize) retaining a contented, and, in some instances, even enthusiastic workforce. Contrary to the usual caricature, advocates of shareholder primacy recognize that companies operate in the real world, not in a ceteris paribus economic simulation. And in the real world, ignoring certain “stakeholders” (although I wouldn’t use that term, not least because of the connotation of ownership attendant to it) could prove very costly indeed. However, if a company’s fundamental purpose is to be redirected — even if only in part — away from the generation of shareholder return and toward the promotion of causes favored by the CEO and his or her colleagues in the C-suite, that is a type of expropriation. No amount of talk about the greater good can alter that inconvenient truth.

Polman:

Economically, evidence is stacking up to show the financial benefits to companies that consistently apply their principles and actively work to solve societal problems.

If those “principles” are grounded in an obligation to reward shareholders for their investment, that would make sense, but for some mysterious reason I suspect that Polman is referring to something else.

As for companies working “to solve societal problems,” private enterprise has already made a considerable contribution, whether directly or indirectly, to doing just that over the last couple of centuries. And it continues to do so. But, more often than not, this contribution has been inspired by dreams of profit, rather than some supposedly higher “purpose.”

“The whole aim of practical politics,” wrote H. L. Mencken, “is to keep the populace alarmed (and hence clamorous to be led to safety) by an endless series of hobgoblins, most of them imaginary.” That is a trick that has not escaped the would-be saviors gathering in the C-suite. And so Polman tries to justify some (corporate) executives becoming “societal leaders” with some choice hobgoblins of his own (ranging from “gender and wealth divides pulling our societies apart at the seams” to “populism” to democracies “faltering,” apparently, “amid a tide of misinformation”) drawn from the tatty playbook of the Left. Inevitably, he enlists the climate change/crisis/emergency too, by touching on the need to reduce greenhouse gases urgently. Under the circumstances, the assumption by these executives of a wider leadership role is a “responsibility bestowed upon them by the times,” if not, I note, the voters.

Polman grumbles about criticism coming from “the political realm.” Too bad. If his “morally conscious business elite” — a phrase he uses without, it would seem, a shred of embarrassment, self-awareness, or irony — chooses to intervene in political matters, typically with the help of “their” companies’ conscripted clout, it is hardly surprising that politicians who entered politics the old-fashioned way — by being elected — are pushing back.

That this includes questioning the right of “corporate leaders” to throw their weight behind a political agenda that has little or nothing to do with the commercial interests of the companies that they run is not “anti-democratic,” but the opposite. For those running a firm to try to make themselves heard (one way or another, whether by lobbying, speaking out, or, yes, political donations) on issues affecting their company’s prospects ought, in a democracy, to be uncontroversial. The proviso that such activities must be intended to benefit that business limits how extensive that participation in the democratic process can be.

But when CEOs deploy their companies’ power and money for sociopolitical ends unconnected, on any reasonable reading, to the economic objectives of those businesses, that is not only something they shouldn’t be doing — if shareholder capitalism is to mean anything — but it is also a threat to the democratic order. And to point that out is not an attempt to “silence” CEOs, but merely to remind them that the megaphone that they have been lent should be used solely to advance or defend the interests of the shareholders who have paid for it. If, instead, those CEOs wish to take a public position on political topics unrelated to the businesses they are managing, they should do so on their own dime and their own time, whether as activists or by running for office.

Corporatism can, as I have argued on other occasions, be benign — for example, it played an important role in the successful establishment of post-war West Germany. But running through corporatism, sometimes muted and sometimes not, are ideas critical of both free-market capitalism and of the societal divisions that a democratic system can sharpen as well as tame, ideas that, in the latter case, go some way to explaining corporatism’s darker past. It was an integral part of pre-war and mid-century fascist theory, if by no means always its practice. Polman is, of course, no fascist (far from it), but alongside his skepticism of shareholder capitalism, it is impossible to miss a certain impatience with how, to repeat his adjective, our purportedly “faltering” democracies are working: “We live in a historic moment of multiple and converging global challenges and our governments and multilateral institutions are hamstrung.”

From its histrionic beginnings to the giveaway adjective at its conclusion, that sentence is a classic of its genre. The moment is “historic.” There are “multiple and converging global challenges.” Then, as so often in such calls for action, there is the frustration that “we” are not rising to the occasion. Our “multilateral institutions,” no guardians of democratic practice incidentally, are “hamstrung,” as are governments. If by “hamstrung” Polman means that they cannot get the approval for the sort of policies that he would like to see, maybe that’s a reflection of the fact that, in a number of democracies at least, voters either don’t agree with them or would prefer to proceed more slowly. To maintain that businesses led, apparently, by would-be philosopher-kings have “an outsize role and an outsize responsibility” to step in is a proposition resting on dubious foundations. It is also an invitation to even more of the populism that Polman so detests.