by csa | 2025-05-20 05:42:14+00:00
This is my last reply in this thread, since all of your questions can be answered with a modicum of research, and you’re splitting hairs over wording where it doesn’t really matter (imho). Your LLM of choice is probably good enough.

> How are any of those examples of "stakeholder capitalism"?

First, you are correct (in another post) that “stakeholder theory” as a titled concept was introduced in the 1980s. I was in university a few years after it was introduced, and there were many discussions had about the role, validity, etc. of stakeholder theory (ST). The case for ST was basically “make a bigger pie”. The case against ST was “grab what you can, because the pie might not last, and it might get bigger anyway”. Imho, they were both kind of right, but I leaned then and still lean now towards the pro-ST stance — I think it’s more sustainable long term.

All that said, the concepts of stakeholder theory existed long before the labeled version was published.

A simple example of stakeholder theory is Henry Ford and some of his concepts towards his workers. There are many, many more.

> I can see they were pro worker and "an attempt to avoid/prevent a worker revolution", but that's not the same as companies caring about all stakeholders because they had some sense of responsibility.

Yep. So there’s an obvious limit to ST — you can care your way out of business if you’re not smart about it.

The type of implementation that seemed acceptable to a wide range of people when I was in school was something along the lines of when offered a choice to squeeze an every possible marginal economic unit from a stakeholder or do something that is demonstrably positive for that stakeholder (group), do the positive thing. Simple examples are things like creating a healthy work environment (workload, management culture, economic stability, etc.), be a positive influence on the local community, etc. These types of values still exist in privately held companies that I am very familiar with (both small and large).

Positive stakeholder engagement has been written about extensively. It’s easy to find.

> Recall the contention is that after Milton Friedman published his paper in 1970,

Now the juicy stuff.

MF and others (iirc, the “Chicago school” as a whole) was the ideological beginnings of a change of attitude — specifically, deregulation, more competition, and shareholder first.

> companies suddenly started becoming greedy and started oppressing consumers/workers or whatever, whereas before it was "stakeholder capitalism" and they weren't doing that.

Hmmm… yes, but the reasons are more complicated than merely greed. Massive deregulation and changes in law (or interpretation thereof) related to fiduciary responsibility in public companies were probably the main drivers.

Financial, communications, and transportation deregulation happened in the 70s and early 80s. The results were very mixed. Some things improved (e.g., flight prices decreased), but some got worse (e.g., less stability in the labor force, oligopolies that still fix prices in things like cable and phone service, etc.).

With Reagan, labor, environmental, and consumer protections were substantially reduced.

Additionally, “trickle down economics” (total BS imho) came into vogue, so tax regulations were changed in ways that were very favorable for capital (as opposed to labor).

Lastly, laws were shaped and interpreted so that the folks who had fiduciary responsibility for public companies were basically systematically sued into taking a shareholder first approach to running their companies. “Stakeholder value” is often very hard to quantify with any level of precision (although it may pass the sniff test), so the shareholders basically said “give me my money or else” and got their way.

As I mentioned before, there are many private companies that still hold stakeholder values dear and make truckloads of money. These companies and these values are not dead, they just don’t exist widely in publicly owned companies any more.

Something I see that’s sad is that PE is buying up these private companies and extracting stakeholder value to line their pockets. Sometimes some streamlining is called for, but sometimes the actions are just anti-human and long-term unsustainable by design.

It’s back to having a smaller percentage of a bigger pie or a larger percentage of a small pie. The MF “shareholder first” folks are choosing the latter.