What brand of capitalist are you?

(After reading an article by Michael Lind - and borrowing a few of his words -  I was moved to answer the question myself.)

The choice is between "stakeholder capitalism" and "shareholder capitalism." 

According to the theory of stakeholder capitalism, corporations are and should be quasi-public entities with responsibilities to the nation-state and to the communities in which they are embedded. The corporation should make a profit and provide a fair return to investors. At the same time, workers who contribute their labor to the company have a legitimate interest in it as well - just as investors who provide capital. Managers serve the company and the community, not merely the investors.

In the theory of "shareholder capitalism," the corporation exists solely for the purpose of the investors, whom the managers serve as agents. In shareholder capitalism, short-term profits are the only goal, and if that means laying off workers instead of retraining them or reassigning them, breaking up the company and selling the assets to enrich private equity partners and shareholders, so be it.  My last "boss" did just that - followed by an incredible act of audacity by writing a book celebrating his "success" in selling his business with a Chapter titled, "Firing Your First Employee."

The stakeholder conception of the firm is still the norm in Europe and East Asia, as it was in mid-20th century America. But beginning in the 1970s, the shareholder conception of capitalism prevailed in the United States.  In the arena of big business, it is now the norm.

Nominated as secretary of Defense by President Eisenhower in 1953, former General Motors CEO Charles "Engine Charlie" Wilson, a symbol of old-fashioned stakeholder capitalism, told the Senate that "I thought what was good for the country was good for General Motors and vice versa."

From the different perspective of stakeholder capitalism, the emphasis on short-term profits for investors at the expense of all other considerations, including the well-being of employees and local communities, has been a tragic mistake.


To me, this is less of an economic or political debate than a critical human consideration. Small, medium and large communities (towns, states & countries) share the single most important element with small, medium & large companies – people.  And - their hopes, dreams, and fears.

There is no value in assigning blame, be it our highway system that extended our business reach beyond the accountability (and possible guilt) of face-to-face transactions, planes that sped up every facet of the business cycle beyond the scope of thoughtful consideration, or the internet highway that has reduced the entire earth to billions of transactions just one button or 4 nano-seconds away.  But somewhere along the way, technology has enabled our economic reach to greatly exceed our empathetic grasp.

Up until our recent history (40-years or so) - it was less common to see such a great divide between the interest of business and the interest of people due the human pressures of proximity.  Modern technology and transportation have conspired to reduce that natural throttle through the conscience numbing effect of distance and time.  (Just as military advancements now allow someone 20,000 miles away from someone else to push a button in a morally sterile environment and cause unspeakable pain/suffering/death - absent many of the sights/sounds that were required years ago.)

As the former Chairman of my local Town Council, the CEO of a number of businesses and the father to three wonderful kids facing an uncertain and scary economic landscape in their lifetimes – I am concerned that many business leaders and politicians have drifted too far away from any meaningful connection to the humanities of day-to-day life.  In too many cases, numerical values have replaced human values as our primary societal currency.

The answer to the question, "what brand of capitalist are you?" has only one ethical answer; one with humanity.