It was around 1985/6 that I became aware of shareholder capitalism. Up to that time, our company had been a business that designed, produced and sold computers, and was proud of its contribution to the local economy. Then along came these ideas of shareholder value, and suddenly the accounts became oriented to optimising the share price. My area, software, became ‘capitalized’ and included in the sums.
It was not evident to me at the time where this was headed, and indeed in the early years of the Blair government (late 1990s) I remember quite an excitement at the idea of stakeholder capitalism, whereby the purpose of a company was not just to make money but to be concerned with all its stakeholders – customers, suppliers, employees, shareholders and the surrounding society. Unfortunately, this idea gradually seemed to disappear and full-blooded shareholder capitalism resumed – all that mattered was to make money for shareholders.
Since then, the dysfunction of this system has become apparent, in that companies have become global, relocate operations at will, produce obscene inequality, and avoid paying local taxes that enable governments to adequately function in their sphere. And the corporate world does not appear to accept responsibility for addressing the social and climate breakdown they have caused, indeed some actively try to avert action.
Now, the World Economic Forum and the annual Davos gatherings do not have the greatest of reputations, but their founding ethos is undeniably good – seeking to provide a forum where corporations and governments can discuss key issues and the way ahead.
The Davos Manifesto 2020 outlines what I’m sure most of us would like today’s corporations to be like. If only they were, we could all have more confidence that humanity was at last headed in the right direction.
The companion page why we need the Davos manifesto articulates well why such stakeholder capitalism is desirable and why it is better suited to addressing today’s challenges than is either current shareholder capitalism in the West or state capitalism in the East. The thing is, it allows its management to act as moral agents, rather than as self-interested accountants.
It will take a long time to convert all the diehards, but all power to Davos for its annual meeting 21-24 January.
It might help if we each hold them in mind, send positive thoughts, or pray for them!