74. Is Stakeholder Capitalism Even Possible?

What this episode covers

I‘ve talked about stakeholder capitalism before, but not everyone agrees that it‘s even possible, let alone whether or not it makes sense. SCRIPT: I’ve already talked a few times about stakeholder capitalism, and offered my general view that considering the interests of a broad group of stakeholders is probably going to lead to better results for shareholders, which is a good thing. A lot of people think that focusing on shareholders alone is a better approach and that’s fine, but I suspect most of the time our differences are reconcilable. One sticky factor might be the word “capitalism.” In other words, what if “stakeholder capitalism” means we have to make as much money as possible for all stakeholders? From shareholders to customers to regulators to next door neighbours? I can understand why that would sound absurd to just about anyone: you just can’t worry about putting cash in the pockets of everyone who’s affected by the actions of your company. And if we just think of “stakeholder capitalism” through a legal lens, then in the United States – but not Canada or Britain, or many other jurisdictions – boards are REQUIRED by law to prioritize shareholders. But to me “stakeholder capitalism” is much more nuanced than just the law and profit. What I think it means is a corporation in a capitalist economy has an obligation to take into consideration the interests of a broad and diverse range of internal and external stakeholders in pursuit of its purpose. If raising prices is good for shareholders but bad for low income customers, that should matter to you! The fact that it matters doesn’t mean you won’t raise your prices, but it *should* mean that you have a deeper conversation about how you affect the world.