Stakeholder Capitalism: Corporatism by Another Name

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The, well, woke nature of “woke capitalism” — a phenomenon intertwined with “socially responsible” investment (SRI), with stakeholder capitalism at its base — has obscured that the way in which this combination works owes far more to fascism than to socialism. Nearly 90 years ago, the progressive writer Roger Shaw described the New Deal as “employing Fascist means to gain liberal ends.” Overwrought, perhaps, but not without some truth. He would recognize what is going on now for what it is.

Underpinning the notion of “stakeholder capitalism,” a concept that has taken the C-suites of some of America’s largest companies by storm, is the idea that a company should be run for the benefit of all its “stakeholders,” a conveniently hazy term that can be defined to include (among others) workers, customers, and “the community,” as well as the shareholders who, you know, own the business. It’s a form of expropriation based on the myth that a corporation that puts its shareholders first must necessarily put everyone else last. In reality, an enterprise that, to a greater or lesser extent, fails to consider the needs of various — to use that word — stakeholders in mind, customers, most obviously (but certainly not only) is unlikely to flourish, and nor, therefore, will its owners.

Stakeholder capitalism is not only a threat to private property, but also, by not much of a stretch of the imagination, to individual freedom. To understand why, take a step back.

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ProPublica, Billionaires, and You.

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However much some on the left might like to deny it, there is a legitimate distinction between capital appreciation and income. And however much some of them might understand it, ignoring the validity of that distinction is too good a propaganda opportunity to be passed up.

And so when ProPublica, “an independent, nonprofit newsroom that produces investigative journalism with moral force” “obtained” and then, in an article by Jesse Eisinger, Jeff Ernsthausen, and Paul Kiel, publicized some of the details of “a vast cache of IRS information showing how billionaires like Jeff Bezos, Elon Musk and Warren Buffett pay little in income tax compared to their massive wealth — sometimes, even nothing,” much of the secondhand reporting of their story, not to speak of the ProPublica article itself, followed an all too predictable script.

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Putting the Grift in ESG

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On the whole, I would prefer to live in a society run by cynics rather than saints—cynics tend to be less intrusive. However, when cynics pretend to be saints, they are playing a dangerous game, as many of those on Wall Street now peddling “socially responsible” investment (SRI) may soon discover. To be clear, I have no doubt that some of those pushing for more SRI (or the closely related concept of stakeholder capitalism) are true believers. Others, perhaps the smartest, are jockeying for positions of power — and the perks that come with it — under a corporatist regime (stakeholder capitalism is essentially an expression of corporatism). Still others are simply following the ancient Wall Street practice of repackaging nonsense and selling it at a profit…

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Woke Capitalism — The Next Generation

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The stakeholder capitalism advocated by the Business Roundtable, the World Economic Forum (“Davos”), and other groupings of oligarchs on the make, is, at heart, an expression of corporatism, an ideology based around the idea that society should be run in a way that recognizes the importance of interest groups rather than individuals. Thus, when it comes to determining what a company is for, shareholders are just one group of “stakeholders” who have to compete for management’s attention.

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As GameStop Stalls, Will Regulators Start?

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Bloomberg’s Matt Levine continues to be a tremendous source of insight into the GameStop saga, but one possible response to what has happened, which is set out in one of his must-read articles on this stock’s excellent adventure/bogus journey (take your pick) and buried within the following not-to-be-taken-literally passage, should be treated with caution:

We have discussed before the sort of creaky U.S. rules around who can buy what sorts of risky investments, and I have proposed a simple standard. I call it the “Certificate of Dumb Investment.” Under this standard, anyone can buy diversified low-fee mutual funds to their heart’s content, but to buy dumb stuff—private placements but sure let’s say also volatile meme stocks—you have to go down to the local office of the Securities and Exchange Commission and sign a form saying that you know that what you’re doing is dumb, you know you will probably lose all your money, and you forfeit forever any right to complain. Then you can do whatever dumb thing you want.

Click on the link embedded in Levine’s text to see where he expands (in an article written in 2018) on how his Certificate of Dumb Investment regime would work. Some of this, I reckon (I cannot imagine why) contains just a touch, well, perhaps more than a touch, of hyperbole: “Then you take the form to an SEC employee, who slaps you hard across the face and says ‘really???’ And if you reply ‘yes really’ then she gives you the certificate.”

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Counting the Shareholder Out: When the Ruling Class Changes the Rules

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It comes as no surprise that Bloomberg News, which includes a section called Bloomberg Green, also features another called Good Business — a venue dedicated to “sustainable finance and leadership for a changing world.” His presidential campaign aside, Mike Bloomberg tends to get what he pays for.

It’s also not a surprise that Bloomberg journalist, Saijel Kishan, has written a piece for Good Business headlined “How Wrong Was Milton Friedman? Harvard Team Quantifies the Ways.” In this context, the target of the Harvard correction squad is, above all, Friedman’s 1970 article for The New York Times Magazine on shareholder primacy, the one in which, Kishan relates:

Friedman . . . declared that a corporation choosing social responsibility over maximizing profits was practicing socialism — a “fundamentally subversive doctrine,” he called it in 1970. In a free society, Friedman said, “there is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

Kishan gives herself only a few lines to describe that piece, which may explain why it is unclear whether Friedman was labeling socialism or a “corporation choosing social responsibility” as “fundamentally subversive.” Friedman had no fondness for socialism (#understatement), but in this case, he was referring to “social responsibility,” a notion he thought had implications far beyond the corporate sphere, none of them good.

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The Great Reset: If Only It Were Just a Conspiracy

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Writing for The Spectator US, Ben Sixsmith gets to grips with “the Great Reset” now being proposed by the World Economic Forum (“Davos”).

And yes, despite a name that sounds as if it were conjured up in some of conspiracism’s danker fever swamps, the Great Reset really exists:

“The World Economic Forum, which organizes the annual conference Davos, has launched an initiative called, yes, ‘the Great Reset’. It has its own website.”

Indeed it does.

But, after noting the involvement of “partners” such as Apple, Microsoft, Facebook, IBM, IKEA, Lockheed Martin, Ericsson and Deloitte, Sixsmith doubts whether the Great Reset can be seen, as some like to suggest (even allowing for a bit of hype) as “socialist Left Marxist” or a “global communist takeover plan.”

Fair enough, not least because the Great Reset is, in essence, corporatist, not communist. The participation of companies of the type that Sixsmith mentions is, in reality, the participation of certain members of their senior management, using shareholder funds for purposes that have nothing to do with the bottom line and everything to do with the wielding of power within a system akin to a concert, with the state — if not necessarily the government — acting as the conductor.

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A Useful Pandemic: Davos Launches New ‘Reset,’ this Time on the Back of COVID

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COVID-19 is a bad disease that has been used to breathe new life into bad ideas. And so it comes as no surprise that the World Economic Forum (“Davos”) is deploying the pandemic as an argument for what it labels, with characteristic modesty, “The Great Reset” initiative:

There is an urgent need for global stakeholders to cooperate in simultaneously managing the direct consequences of the COVID-19 crisis. To improve the state of the world, the World Economic Forum is starting The Great Reset initiative.

Even if we pass over the presumption of the reset’s name, this is a small classic of the prose of soft authoritarianism. There is an “urgent need” that must be met. There is to be cooperation and management, the world is to be “improved,” and all of this is to be put in place by “global stakeholders,” — a conveniently vague phrase, with more than a suggestion of democracy bypassed about it.

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Lockdown Lunacies

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COVID-19 is again advancing in Europe, “despite” (I will get to those scare quotes later) earlier lockdowns.

CNBC (from Monday):

European countries are likely to impose more restrictions on public life in the coming days as the number of daily coronavirus infections rises rapidly, analysts said.

France reported 10,569 new cases Sunday (down from more than 13,000 new cases reported the day before), Reuters reported, while the U.K. reported almost 4,000 new cases on Sunday. Italy saw close to 1,000 new infections and Germany reported 1,345 new cases Sunday, and a further 922 cases Monday. Spain has yet to post its weekend case tallies, but reported almost 4,700 new cases Friday.

On Monday, German Health Minister Jens Spahn said rising coronavirus infection numbers in countries like France, Austria and the Netherlands were “worrying” and that Germany would sooner or later import cases from there, Reuters reported. He added that countries like Spain had infection dynamics “that are likely out of control.”

“Despite” because the initial lockdowns were never going to suppress the virus, not in the longer term.

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Markets: Remember, Remember the Third of November

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Writing in the Financial Times on September 1, Robin Wrigglesworth reported that markets are signaling unease about what may lie ahead in the first week of November. It is not so much the election that’s causing agita as the fear that Election Night might not resolve the result. Investors do not appreciate uncertainty, and if everything is still unresolved by, say, late the next day, the only certainty will be uncertainty.

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