A couple of weeks ago I published an article in the Neue Zürcher Zeitung, in which I have defended stakeholder value capitalism vis à vis the “great reset” envisioned by the World Economic Forum’s Klaus Schwab. The title of the piece is: “A better capitalism is a worse capitalism”.
My main point is that the many narratives used to refashion capitalism according to some criteria of alleged “sustainability” are actually going in the direction of making businesses less accountable. My article is now available in English too thanks to the Austrian Institute, a remarkable think tank led by Martin Rhonheimer. A Professor of Ethics and Political Philosophy at the Pontifical University of the Holy Cross, Rome, Fr. Martin is a true scholar and a committed champion of economic freedom as a necessary component of human liberty and I am very glad he wanted to translate my piece and put it on the Austrian Institute’s website.
In the piece, I was specifically referring to a Time magazine article by Schwab (I’ve linked it in the post) where he claimed that for “the past 30 to 50 years”—and it would be interesting to know whether it is actually thirty or fifty years—“the neoliberal ideology has increasingly prevailed in large parts of the world.”
Klaus Schwab responded immediately with a counter-piece, which the NZZ published on line here. The title says that “CSR is in the best interest of businesses”. I was impressed that Schwab claims he battled for thirty years with Milton Friedman on corporate social responsibility, but acknowledges that Friedman won the debate. That is, in a sense, true: the jargon of CSR is all over the corporate world. But typically advocates of CSR and shareholder capitalism present it as a ought and not an is, a vision for the future. Schwab considers it pretty much a thing of the present. I consider this an admission potentially conducive to a healthier debate. In the real world of 2020, it is libertarians à la Friedman, who want a pristine separation between business and politics, that are in fact insisting on how the capitalist system *should* be and should fashion themselves as proponents of radical reform, not the other way around.
READER COMMENTS
Thomas Hutcheson
Feb 2 2021 at 6:06am
The whole thing seems to make mountain of a molehill. Strip away the rhetoric, and CSR looks mainly like an exhortation to managers to consider all the effects of their actions on the bottom line over the long term.
The one substantive part of the debate is what is a firm’s CSR in the use of its political power, contributions and lobbying? To be stark, should a corporation seek a legal monopoly that would raise the market value of its current shareholders’ investment, seek to reduce taxation of its shareholders’ personal incomes, a decrease in corporate taxation that applies only its line of business, to oppose Pigou taxation of an externality its activities create?
Knut P. Heen
Feb 3 2021 at 2:32pm
The entire concept is based on a fallacy. Suppose the CEO of Microsoft spend money on philanthropy. Would that not reduce the amount of money Bill Gates and other shareholders can spend on their philanthropy?
The question is not philanthropy vs. no philanthropy. The question is who is better suited to do it. The CEO or the shareholders.
It is very similar to the argument that says Gates should pay more taxes such that Trump can waste it. The argument isn’t as funny now with the new president.
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