“Woke’ Capitalism
We’ve encountered new definitions for a number of things lately.
For starters, the Biden “infrastructure” bill proposes that word now includes humans and their need for government services and assistance.
If you’ve heard of Bernie Sanders, you’ve heard of Democratic Socialism. Simply put, it’s socialism with a supposedly more acceptable title. I mean, who’s opposed to ‘democracy.’
There’s another new definition that being proposed, namely for capitalism. For all time the word has meant an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state. For corporations, the phrase used is shareholder capitalism. The new definition and meaning uses the phrase “stakeholder capitalism.”
This ‘new’ capitalism is being taught in our ‘woke’ universities as the new economics. Once you read the rest of this you will realize it’s another wolf in sheep’s clothing. It’s not capitalism at all. It proposes corporations act as extensions of ‘socialistic’ government.
Stakeholder Capitalism says a corporation needs to focus on meeting the needs of all its stakeholders: customers, employees, partners, the community, and society as a whole. This Kool-Aid is being bought by some corporate executives, especially the social media moguls. Note the public, negative reaction and action by MLB, Delta Airlines and Coca Cola execs when Georgia passed its recent elections bill. Many more have HR departments “training’ employees in the Diversity, Equity, and Inclusion program whereby all white employees must admit to being racist.
When one understands the gist of ‘stakeholder capitalism’ it’s easy for me to see how many representatives in Congress – epitomized by AOC with a degree in economics – think that it just makes sense that corporations are not about making a profit but need to be about all the ‘political’ things going on, including ‘social justice.’ They expect corporate execs to buy the whole enchilada and run their corporations as ‘woke’ entities.
There’s a couple of things basically wrong with ‘stakeholder’ capitalism.
First, your company needs to be big to even think about it.
Second, it ignores the fact that if you don’t make a profit you’re not going to be around that long.
All employers are people who care about others, about politics, about what’s happening in society. But that can’t be how or why a private corporation – or any business – operates.
All corporations want happy, well-paid, productive employees. But what employees think beyond the company and do on their own time is not the company’s business – and should not be.
Stakeholder capitalism expects a company to act like it has been ‘nationalized’ by the government without technically being taken over by the government. That way proponents think they can get away with socialism while calling it capitalism.
Stakeholder capitalism wants corporations to be “woke” just like the proponents of it. It includes identity politics, a plethora of victims, and government as the solution to all problems. It would make business just an extension of government.
It was a bright person who first remarked “If it ain’t broke, don’t fix it.”
Sure, capitalism is not perfect. Unchecked, capitalism can become monopolistic and predatory. It’s why in the US we have something called the Sherman Antitrust Act, aimed at breaking any non-competitive hold a company or an individual may hold over a market of goods and services. But capitalism works! Socialism doesn’t.
Having said that, maybe those executives buying into stakeholder capitalism are working for corporations that are too big, need a reality check and need to be broken up.
Stakeholder capitalism, like socialism, was born in academe. Shareholder capitalism was not. Capitalism was born when some entrepreneur and risk taker determined there was a demand/market for something, put the capital together to start an enterprise and successfully sold a product for a profit and stayed in operation.
Those corporations that have attempted to balance their operations between “stakeholders” have found themselves without a clear priority for anything or anyone. There’s even a phrase to describe it: ‘garbage can organizations.’
Yet our big corporations are being pressured to focus on things other than profit. For example, Since 2015, Democratic senators, including Minority Leader Chuck Schumer and Senator Tammy Baldwin, have been pushing the Securities & Exchange Commission to do something about corporations focused on profit. In 2019, some Republican senators chimed in faulting CEOs for ‘focusing too much on the next quarter and not enough on the next generation.’
Let’s get real. That S corporation down the street with mom and pop running the local diner are not thinking about stakeholder capitalism. They are trying to satisfy customers by providing good food. If they have employees, the owners want them happy and to help make customers happy and satisfied. They may be most interested in their local neighborhood and community and even support community activities, but that’s not why they’re up and at work a 4 AM.
If stakeholder capitalism doesn’t work for that diner, it doesn’t work for AT&T either.
Jack Welch did not lead GE to be the behemoth it became (since losing it) by focusing on anything but making money. In doing so he first satisfied shareholders. It also resulted in well paid employees that added positives for the local and national economies.
One of my economics heroes, Milton Friedman, described business executives who pursued a goal other than making money as “unwitting puppets of the intellectual forces that have been undermining the basis of a free society…”
Let’s expect businesses to do its capitalistic job – make money. Period.
People who have never run a business have no worthy insight into telling those who take the risks and provide the capital to run businesses how to think and how best to do it.
No one can successfully serve two (or more) masters.
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Have a great and prosperous week.
Hug somebody.
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