When did capitalism fail?
Such an economy: Shareholder capitalism has failed
A surprising report came this summer from the Business Roundtable (BRT), one of the most potent interest groups in the American economy. The members of the BRT, all CEOs of the world's largest corporations, published a sensational document on the goal of entrepreneurial activity with the following core message: It is not enough to only serve the interests of the shareholders, i.e. the owners of capital, but companies have values for all stakeholders that range from customers to employees, business partners and local communities. The 181 signatures on this document include Jeffrey Bezos of Amazon, Tim Cook of Apple, and Darren Woods of Exxon Mobile.
Such a testimonial surprises in several ways. Isn't it precisely these companies that have managed to reduce their taxes to symbolic payments, sell products that cannot be repaired and pay employees in the sales chains particularly poorly? Haven't some of these ventures recently actively supported climate change deniers?
Perhaps, however, a different perspective is more productive. Even these prominent lobbyists can no longer overlook the fact that many dogmas for economic activity that were previously considered inviolable have become fragile. This also applies to the postulated primacy of shareholders over stakeholders, a fundamental opinion in the mantra of the dominant global economic model. The fact that this shareholder capitalism fails due to many current challenges can no longer be negated even on the CEO floors of big business.
The conflicts over inequality in prosperity and income and overuse of raw materials, especially fossil fuels, have become too strong. These controversies draw attention to the fact that a sole focus on shareholders leads to collective myopia: it dominates the next quarterly result to please financial investors; costs are suppressed so as not to lose customers.
Why this reversal of thrust from a shareholder to a stakeholder economy, announced by such a prominent platform, deserves so much attention can be seen in the consequences of such a declaration. If such declarations should not remain just rhetoric, then in most companies an exit program from the previous business model has to be started. It will be some time before the cumbersome tankers of big business change course, and some will fail.
A completely new type of cooperation with financial investors will be necessary, based on mutual trust in long-term goals rather than short-term comparisons of returns on capital. But then customers will also be required to consider not only the price, but also the entire history of a product when making their purchase decisions. All of this may seem hopeless at the moment, but it at least deserves our attention.
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