What Kind of Capitalism Do We Want?
Though the concept of "stakeholder capitalism" has been around for a half-century, it has only recently begun to gain traction against the prevailing shareholder-primacy model of profit maximization. Now, advocates of a more socially conscious economic system must take steps to ensure that their vision takes hold for the long term.
GENEVA – What kind of capitalism do we want? That may be the defining question of our era. If we want to sustain our economic system for future generations, we must answer it correctly.
Generally speaking, we have three models to choose from. The first is “shareholder capitalism,” embraced by most Western corporations, which holds that a corporation’s primary goal should be to maximize its profits. The second model is “state capitalism,” which entrusts the government with setting the direction of the economy, and has risen to prominence in many emerging markets, not least China.
But, compared to these two options, the third has the most to recommend it. “Stakeholder capitalism,” a model I first proposed a half-century ago, positions private corporations as trustees of society, and is clearly the best response to today’s social and environmental challenges.