This week, the world’s economists and environmentalists began with a set of World Economic Forum meetings to talk about ‘resetting’ the world after the pandemic with a new form of capitalism that’s supposed to place people and planet in the center of the recovery. Usually this meeting takes place in a charming ski village of Davos, this year it’s conducted virtually.
So what’s this new kind of capitalism they’re talking about?
Stakeholder capitalism
The stakeholder concept is actually not new; in the 50’s and 60’s it was quite common that the companies considered not just shareholders but everyone who has a “stake” in the success of a firm, including the community around it. The companies would, for example, have employees on the board which in some countries continues today. Because the goods were mainly sourced and sold locally, there was also the connection with the suppliers and the clients. The companies were tightly embedded in the society and this created a base for the mutual respect between them and local institutions like government, health organizations and schools. This contributed to the welfare state – a model where companies and employees pay a good amount in taxes to fund public education, health care and social security. European Countries use this model to various degrees.
This concept was obviously lowering the company profits and many economists tried to advocate for free markets over government intervention. As a result of that, shareholder capitalism became the standard in the West especially when the companies started to operate on a more global level and their goal became maximizing short-term profits in competitive global markets.
Stakeholder capitalism 2.0
As World Economic Forum explains on their website:
“The most important characteristic of the stakeholder model today is that the stakes of our system are now more clearly global. Economies, societies, and the environment are more closely linked to each other now than 50 years ago. The model we present here is therefore fundamentally global in nature, and the two primary stakeholders are as well.”
What they consider the first important stakeholder is the planet itself. They believe that in order to preserve it for the future generations, every government, company and individual will have to take responsibility for its part in it.
The second stakeholder are the people. Border closures, travel bans and other Covid-19 related measures really showed us how interconnected we became.
To ensure prosperity of both people and planet, WEF draws attention to the following groups and their tasks:
- Governments should focus on creating the greatest possible prosperity for the greatest number of people.
- Civil society (unions, NGOs, schools, universities, action groups, etc.) should exist to advance the interest of its constituents and to give a meaning or purpose to its members.
- Companies should aim to generate an economic surplus, measurable in profits in the short run, and long-term value creation in the long run.
- The international community (organizations like UN, EU, etc.) should preserve peace.
The idea is, that stakeholder capitalism has a system of checks and balances, so that no one can become or remain overly dominant. Both government and companies (the main players in any capitalist system) optimize for a wider objective than just profits: the health and wealth of societies, the planet and of future generations.
Now, all of this sounds very noble but I’m curious to see an update about concrete application of these big ideas – all at the time when even in the businesses that were able to scrape through the plandemics, technology is taking over the automated jobs, pushing hundreds of millions of people to have no work & no purpose... seems like "peace" preservation is coming at all cost.
Source:
https://www.weforum.org/agenda/2021/01/what-is-the-difference-between-stakeholder-capitalism-shareholder-capitalism-and-state-capitalism-davos-agenda-2021
https://www.weforum.org/events/the-davos-agenda-2021/sessions/resetting-corporate-boards
https://www.weforum.org/events/the-davos-agenda-2021/sessions/resetting-corporate-boards