Building a stakeholder economy
“To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.”
Larry Fink, CEO BlackRock, January 2018
There is a growing consensus that Friedman’s 1970s doctrine that companies should only consider shareholder value, is fundamentally flawed. The British Academy even has a project on the Future of the Corporation based on this premise.
It seems we must abandon the most influential image of the last 250 years – Adam Smith’s ‘invisible hand’ of the market. This is the core idea of economics that if economic agents pursue their self interest, the public interest is served.
But where do we go from here? How can public interest be built into economic organisations? Workers could be on boards to represent their interests, but what about the rest of the community? How can we bake in environmental and social purpose into corporations?
We are looking to develop work in this area starting with a major conference on 20th September.