April 11, 2023
Dear Friends and Family,
This segment deals with the concept of “Stakeholder Capitalism” which is already in place in many U.S. corporations on a voluntary basis. However, making it mandatory is being considered by the Biden administration. The debate centers on the following:
Klaus Schwab and the World Economic Forum contend that corporations throughout the world (except for China) should be mandated to consider more than profitability for their shareholders. Their responsibilities should be expanded to social aspects (woke ideology), the planet (environment/climate change), communities, governments, trade organizations, unions, and employee composition (diversity and inclusion). Further, that each company should be measured on their performance in meeting these responsibilities via a set of metrics in the areas of environment, social, and governance (referred to as ESG metrics).
Critics maintain that puts too much power in the hands of corporate CEOs and takes power away from the people within the democratic process. Further, many CEOs are not qualified for such responsibilities. Additionally, this would result in poorer, more expensive products as it would not be the output of a free-market system because the ESG metrics demand different results. There is a question in the debate about who establishes and measures the items for measurement and what the metrics would be. Currently it is the World Economic Forum.
The excerpts provide a great deal of information for you to establish a perspective on the issues. In doing so, think about the impact of a fully implemented Stakeholder Capitalism system on democracy as we know it.
Happy Learning,
Harley
Dear Friends and Family,
This segment deals with the concept of “Stakeholder Capitalism” which is already in place in many U.S. corporations on a voluntary basis. However, making it mandatory is being considered by the Biden administration. The debate centers on the following:
Klaus Schwab and the World Economic Forum contend that corporations throughout the world (except for China) should be mandated to consider more than profitability for their shareholders. Their responsibilities should be expanded to social aspects (woke ideology), the planet (environment/climate change), communities, governments, trade organizations, unions, and employee composition (diversity and inclusion). Further, that each company should be measured on their performance in meeting these responsibilities via a set of metrics in the areas of environment, social, and governance (referred to as ESG metrics).
Critics maintain that puts too much power in the hands of corporate CEOs and takes power away from the people within the democratic process. Further, many CEOs are not qualified for such responsibilities. Additionally, this would result in poorer, more expensive products as it would not be the output of a free-market system because the ESG metrics demand different results. There is a question in the debate about who establishes and measures the items for measurement and what the metrics would be. Currently it is the World Economic Forum.
The excerpts provide a great deal of information for you to establish a perspective on the issues. In doing so, think about the impact of a fully implemented Stakeholder Capitalism system on democracy as we know it.
Happy Learning,
Harley
THE GREAT RESET: IS DEMOCRACY (worldwide) IN DANGER?
STAKEHOLDER CAPITALISM – EXCERPTS: SEGMENT 8
SCHWAB: CONCEPT OF STAKEHOLDER CAPITALISM:
+The world currently knows two prevailing and competing economic systems: shareholder capitalism, which is dominant in the U.S. and in many other countries in the West, and state capitalism, which is championed by China and is gaining popularity in many other emerging markets. Both have led to tremendous economic progress over the past few decades. They left us with a world that is more prosperous than ever before. But each has equally brought about major social, economic, and environmental downsides. They led to rising inequalities of income, wealth, and opportunity; increased tensions between the haves and have-nots; and above all, a mass degradation of the environment. Given the shortcomings of both of these systems, we believe we need a better global system: stakeholder capitalism. In this system, the interests of all stakeholders in the economy and society are taken on board, companies optimize for more than just short-term profits, and governments are the guardians of equality of opportunity, a level-playing field in competition, and a fair contribution of distribution to all stakeholders with regards to the sustainability and inclusivity of the system. But how can we achieve this? What does it look like? And where did the current two systems go wrong?
Consider first shareholder capitalism. It is the form of capitalism in which the interests of one stakeholder, the shareholder, dominate over all others. Companies operate with the sole purpose of maximizing profits and returning the highest possible dividends to shareholders. It led to a situation where shareholders became not just preeminent nationally but dominant globally, and many other stakeholders – employees, communities, suppliers, governments, and the environment – lost out as a consequence.
In recent decades, another form of capitalism emerged as an alternative: state capitalism. In China, the private sector now produces more than 60% of GDP. Despite this, the state is considered the most important stakeholder and retains power over individual shareholders. Theoretically at least, it solves a major shortcoming of shareholder capitalism because there are mechanisms in place to ensure that private and short-term interests do not overtake broader societal interests. This system allowed Singapore, China, Vietnam, and more recently countries such as Ethiopia, to build a strong and growing economy while keeping private corporate interests in check. State capitalism too has its fundamental flaws. Most importantly, given the hegemony of the state, corruption is a constant threat. Favoritism can play a role in distributing contracts, and the application of the law can become arbitrary, given the lack of checks and balances. In both shareholder and state capitalism, the dominance of one stakeholder over the others is the system’s greatest flaw. In shareholder capitalism, shareholders’ aims are often the singular focus; in state capitalism, the government wields too much power.
I therefore advocate for a third system, which can be defined as stakeholder capitalism. This is the kind of capitalism we ought to endorse. But stakeholder capitalism does fundamentally differ from the other forms of capitalism we saw, in a way that overcomes much of their shortcomings. First, all those who have a stake in the economy can influence decision-making, and the metrics optimized for economic activities bake in broader societal interests. Moreover, a system of checks and balances exists, so that no one stakeholder can become or remain overly dominant. Both government and companies, the main players in the health and wealth of societies overall, as well as that of the planet and that of future generations. It makes stakeholder capitalism the preferred economic system and the one we ought to implement going forward.
Of course, we must confront the reality that democracies are fracturing at the base and that the efficacy of and support for our international institutions is weakening. It is thus needed to first strengthen the trust in government from the ground up and only then to strengthen the mandate of decision-makers from top to bottom. It will ensure the checks and balances of the system can function again.
Source: Stakeholder Capitalism by Klaus Schwab (2021)
SCHWAB: STAKEHOLDER CAPITALISM AND ESG:
+Over the past 10 years or so, fundamental changes have taken place that have profoundly altered the environment in which companies operate. They have made stakeholder capitalism and Environmental, Social, and Governance (ESG) considerations increasingly relevant to sustain value creation (ESG can be considered as the yardstick for stakeholder capitalism).
Source: COVID-19: The Great Reset by Klaus Schwab and Thierry Malleret (2020).
+Nowadays, business leaders no longer consider the improvement of stakeholder value as an option. That is the reason why, in the coming years, measuring ESG performance will be the gold-standard of business adherence to stakeholder value. Many businesses do not have an interest in making the world better, and some will be tempted to engage in green- or woke-washing, but they’ll be forced to commit to ESG and, ultimately, all the commitments will be put to the test by government action and societal pressure.
In the not-too-distant future they will have a similar obligation to report on ESG metrics. Several initiatives have been undertaken to determine the best way to achieve this. The “Stakeholder Capitalism Metrics” of the World Economic Forum is a major one. They will converge towards a standardized ESG performance metrics that works across industries and countries and that is supported by global standard-setters. In the end, governments will make the last call for setting the legal obligations, targets and incentives around ESG standards and performance proposed by business. They will also ensure that stakeholder value is compatible with a rigorously defined concept of “societal and planetary value.”
Fostering employee and community goodwill will be key to enhancing a brand’s reputation. More and more, companies will have to prove that they treat their workers well, by welcoming improved labor practices and paying attention to health and safety as well-being in the workplace. Companies will not necessarily adhere to these measures because they are genuinely “good”, but rather because the “price” of not doing so will be too high in terms of the wrath of activists, both activist investors and social activists.
Source: The Great Narrative by Klaus Schwab and Thierry Malleret (2020).
CRITICS: UNDERSTANDING ESG:
Stakeholder capitalism is an economic system in which companies are effectively required to put social justice causes and/or the goals of the elites – which vary wildly depending on the parties involved – before profits, supply and demand, the desires of the customers, and other market forces that normally direct capitalist systems, which have created the most prosperous, healthy, safe societies humankind has ever known.
Think for a minute about the implications of this idea. A “profit-driven” model for business ensures that companies put the consumer first. Under this system, individuals dictate the products and services that are produced by voting with their dollars. Companies that want to survive listen to the demands of their customers and even try to anticipate them. But in a stakeholder system, individuals are replaced by an elite group of wannabes in the ruling class. They dictate which products and services are produced and who ought to be hired to provide them to customers – not you the individual.
The ESG standards are divided into four “pillars:” Principles of Governance, Planet, People, and Prosperity.
Source: The Great Reset by Glenn Beck (2022)
ESG is far from “inclusive.” Justin Haskins of the Heartland Institute detailed how “investors and financial institutions have repeatedly said in recent months that they will phase out their business relationships with those who don’t support some or all ESG goals. With ESG measures in place, businesses are evaluated based on the racial and gender composition of their staff, the carbon footprint, the size of their buildings, how committed they are to fighting climate change, and a bunch of other social justice concerns. After being evaluated, companies are then given ESG scores that are meant to help investors, regulators, and governments have a better understanding of who the ‘bad’ and ‘good’ companies are,” Haskins wrote.
“The three largest asset managers in this country, State Street, Vanguard, and the king of them all, BlackRock … together manage today over $20 trillion. That’s more than the GDP of the U.S. They are using the private sector to effectuate a left-wing social agenda that they could not directly effectuate through Congress,” said entrepreneur Vivek Ramaswamy. “ESG, DEI (diversity, equity inclusion), CSR (corporate social responsibility); there are three-letter acronyms that are designed to hide the essence of what is going on,” he said.
“That is not the free market in action. It’s even worse than a monopoly or an ideological cartel. They’re working hand in glove with the party in power to be able to do their bidding through the private sector,” Ramaswamy explained. “If you couldn’t get the Green New Deal through Congress, guess what John Kerry is doing. He’s getting every major banking CEO to sign the so-called climate pledge,” he added, calling it a “form of crony capitalism.”
“And here’s the kicker … they apply that to the U.S. companies, but they don’t apply it to the Chinese companies. So, in the U.S. they preach ESG. In China, the supplicate to the CCP,” he said. “It is the defining scam of our time,” he concluded.
“Exxon is rated top ten best in the world for environment, social & governance (ESG) by S&P 500, while Tesla didn’t make the list! ESG is a scam. It has been weaponized by phony social justice warriors,” Elon Musk tweeted.
Source: The Great Reset: Global Elites and the Permanent Lockdown by Marc Morano (2022)
CEO’s Replacing Democracy via ESG?
Speaking as a former CEO myself, I’m deeply concerned that this new model of capitalism demands a dangerous expansion of corporate power that threatens to subvert American democracy. For corporations to advance social causes, they must first define which causes to prioritize and what position to take. Yet that isn’t a business judgment; it’s a moral one. America was founded on the idea that we make our most important value decisions through out democratic process, where each citizen’s voice is weighted equally, rather than a by a small group of elites in private. Debates about our social values belong in the civic sphere, not in the corner offices of corporate America.
I’d love to hear Larry Fink’s favorite stock picks, but as a citizen I don’t particularly care for his views on racial justice or the environmentalism. Democratically elected officeholders and other public leaders, not CEOs and portfolio managers, should lead the debate about what values define America. Business leaders are supposed to decide how much to spend on a manufacturing plant or whether to invest in one piece of technology or another – not whether a minimum wage is more important for society than full employment or whether reducing America’s carbon footprint is more important than the geopolitical consequences doing so. CEOs are no better suited to make these decisions than an average politician is to make the R&D decision of a pharma company.
The rise of Wokenomics consummates Silicon Valley’s coup over our democracy. Censorship becomes rebranded as social responsibility. Yet the stakeholderist cheerleaders miss the bigger point: companies like Facebook and Google have effectively expanded that role to regulating and censoring public opinions in ways that no government actor can. Their exercise of power over the content of public discourse is without precedent in human history. [Commentary: The revelations from Elon Musk’s disclosure of Twitter files involving the U.S. government provides some insight on what close coordination between corporations and the government can lead to].
Source: Woke, Inc.: Inside Corporate America’s Social Justice Scam by Vivek Ramaswamy (2021)
That does not look like a corporate activity. It is nearer to a progressive government in partnership with business. It certainly has nothing to do with the free market with businesses competing with each other for customers. The corporations themselves – the great benefactors – have no ideology other than their rapacious predatory instincts. It is definitely not the smarts of the “elite” who will give us progress. Elites have dominated the world since the dawn of civilization in the form of brutal leaders who, over the centuries morphed into princes, kings, dictators, and presidents for life. Due to the lack of freedom, human progress was slow, if at all, during most of human history. Unfortunately, globalist corporations have become predators who, like the Chinese Communist Party, stifle or exploit “freedom” rather than defend and promote it.
Source: COVID-19 and the Global Predators by Peter Breggin MD and Ginger Ross Breggin (2021)
The unabbreviated version of the above can be found in the pdf document below.
STAKEHOLDER CAPITALISM – EXCERPTS: SEGMENT 8
SCHWAB: CONCEPT OF STAKEHOLDER CAPITALISM:
+The world currently knows two prevailing and competing economic systems: shareholder capitalism, which is dominant in the U.S. and in many other countries in the West, and state capitalism, which is championed by China and is gaining popularity in many other emerging markets. Both have led to tremendous economic progress over the past few decades. They left us with a world that is more prosperous than ever before. But each has equally brought about major social, economic, and environmental downsides. They led to rising inequalities of income, wealth, and opportunity; increased tensions between the haves and have-nots; and above all, a mass degradation of the environment. Given the shortcomings of both of these systems, we believe we need a better global system: stakeholder capitalism. In this system, the interests of all stakeholders in the economy and society are taken on board, companies optimize for more than just short-term profits, and governments are the guardians of equality of opportunity, a level-playing field in competition, and a fair contribution of distribution to all stakeholders with regards to the sustainability and inclusivity of the system. But how can we achieve this? What does it look like? And where did the current two systems go wrong?
Consider first shareholder capitalism. It is the form of capitalism in which the interests of one stakeholder, the shareholder, dominate over all others. Companies operate with the sole purpose of maximizing profits and returning the highest possible dividends to shareholders. It led to a situation where shareholders became not just preeminent nationally but dominant globally, and many other stakeholders – employees, communities, suppliers, governments, and the environment – lost out as a consequence.
In recent decades, another form of capitalism emerged as an alternative: state capitalism. In China, the private sector now produces more than 60% of GDP. Despite this, the state is considered the most important stakeholder and retains power over individual shareholders. Theoretically at least, it solves a major shortcoming of shareholder capitalism because there are mechanisms in place to ensure that private and short-term interests do not overtake broader societal interests. This system allowed Singapore, China, Vietnam, and more recently countries such as Ethiopia, to build a strong and growing economy while keeping private corporate interests in check. State capitalism too has its fundamental flaws. Most importantly, given the hegemony of the state, corruption is a constant threat. Favoritism can play a role in distributing contracts, and the application of the law can become arbitrary, given the lack of checks and balances. In both shareholder and state capitalism, the dominance of one stakeholder over the others is the system’s greatest flaw. In shareholder capitalism, shareholders’ aims are often the singular focus; in state capitalism, the government wields too much power.
I therefore advocate for a third system, which can be defined as stakeholder capitalism. This is the kind of capitalism we ought to endorse. But stakeholder capitalism does fundamentally differ from the other forms of capitalism we saw, in a way that overcomes much of their shortcomings. First, all those who have a stake in the economy can influence decision-making, and the metrics optimized for economic activities bake in broader societal interests. Moreover, a system of checks and balances exists, so that no one stakeholder can become or remain overly dominant. Both government and companies, the main players in the health and wealth of societies overall, as well as that of the planet and that of future generations. It makes stakeholder capitalism the preferred economic system and the one we ought to implement going forward.
Of course, we must confront the reality that democracies are fracturing at the base and that the efficacy of and support for our international institutions is weakening. It is thus needed to first strengthen the trust in government from the ground up and only then to strengthen the mandate of decision-makers from top to bottom. It will ensure the checks and balances of the system can function again.
Source: Stakeholder Capitalism by Klaus Schwab (2021)
SCHWAB: STAKEHOLDER CAPITALISM AND ESG:
+Over the past 10 years or so, fundamental changes have taken place that have profoundly altered the environment in which companies operate. They have made stakeholder capitalism and Environmental, Social, and Governance (ESG) considerations increasingly relevant to sustain value creation (ESG can be considered as the yardstick for stakeholder capitalism).
Source: COVID-19: The Great Reset by Klaus Schwab and Thierry Malleret (2020).
+Nowadays, business leaders no longer consider the improvement of stakeholder value as an option. That is the reason why, in the coming years, measuring ESG performance will be the gold-standard of business adherence to stakeholder value. Many businesses do not have an interest in making the world better, and some will be tempted to engage in green- or woke-washing, but they’ll be forced to commit to ESG and, ultimately, all the commitments will be put to the test by government action and societal pressure.
In the not-too-distant future they will have a similar obligation to report on ESG metrics. Several initiatives have been undertaken to determine the best way to achieve this. The “Stakeholder Capitalism Metrics” of the World Economic Forum is a major one. They will converge towards a standardized ESG performance metrics that works across industries and countries and that is supported by global standard-setters. In the end, governments will make the last call for setting the legal obligations, targets and incentives around ESG standards and performance proposed by business. They will also ensure that stakeholder value is compatible with a rigorously defined concept of “societal and planetary value.”
Fostering employee and community goodwill will be key to enhancing a brand’s reputation. More and more, companies will have to prove that they treat their workers well, by welcoming improved labor practices and paying attention to health and safety as well-being in the workplace. Companies will not necessarily adhere to these measures because they are genuinely “good”, but rather because the “price” of not doing so will be too high in terms of the wrath of activists, both activist investors and social activists.
Source: The Great Narrative by Klaus Schwab and Thierry Malleret (2020).
CRITICS: UNDERSTANDING ESG:
Stakeholder capitalism is an economic system in which companies are effectively required to put social justice causes and/or the goals of the elites – which vary wildly depending on the parties involved – before profits, supply and demand, the desires of the customers, and other market forces that normally direct capitalist systems, which have created the most prosperous, healthy, safe societies humankind has ever known.
Think for a minute about the implications of this idea. A “profit-driven” model for business ensures that companies put the consumer first. Under this system, individuals dictate the products and services that are produced by voting with their dollars. Companies that want to survive listen to the demands of their customers and even try to anticipate them. But in a stakeholder system, individuals are replaced by an elite group of wannabes in the ruling class. They dictate which products and services are produced and who ought to be hired to provide them to customers – not you the individual.
The ESG standards are divided into four “pillars:” Principles of Governance, Planet, People, and Prosperity.
- In the Principles of Governance pillar, the World Economic Forum (WEF) suggests that companies be scored based on the “membership of under-represented social groups” serving in a company’s governing body, as well as those leaders “competencies relating to economic, environmental and social topics.”
- In the Planet pillar, companies are evaluated based on their greenhouse gas emissions and their compliance with the Paris Climate Accords.
- The People pillar is full of woke ideology, including an ESG measure for the “percentage of employees per employee category, by age group, gender and other indicators of diversity (e.g., ethnicity) as well as pro-labor union measures such as the “percentage of active workforce covered under collective bargaining agreements.
Source: The Great Reset by Glenn Beck (2022)
ESG is far from “inclusive.” Justin Haskins of the Heartland Institute detailed how “investors and financial institutions have repeatedly said in recent months that they will phase out their business relationships with those who don’t support some or all ESG goals. With ESG measures in place, businesses are evaluated based on the racial and gender composition of their staff, the carbon footprint, the size of their buildings, how committed they are to fighting climate change, and a bunch of other social justice concerns. After being evaluated, companies are then given ESG scores that are meant to help investors, regulators, and governments have a better understanding of who the ‘bad’ and ‘good’ companies are,” Haskins wrote.
“The three largest asset managers in this country, State Street, Vanguard, and the king of them all, BlackRock … together manage today over $20 trillion. That’s more than the GDP of the U.S. They are using the private sector to effectuate a left-wing social agenda that they could not directly effectuate through Congress,” said entrepreneur Vivek Ramaswamy. “ESG, DEI (diversity, equity inclusion), CSR (corporate social responsibility); there are three-letter acronyms that are designed to hide the essence of what is going on,” he said.
“That is not the free market in action. It’s even worse than a monopoly or an ideological cartel. They’re working hand in glove with the party in power to be able to do their bidding through the private sector,” Ramaswamy explained. “If you couldn’t get the Green New Deal through Congress, guess what John Kerry is doing. He’s getting every major banking CEO to sign the so-called climate pledge,” he added, calling it a “form of crony capitalism.”
“And here’s the kicker … they apply that to the U.S. companies, but they don’t apply it to the Chinese companies. So, in the U.S. they preach ESG. In China, the supplicate to the CCP,” he said. “It is the defining scam of our time,” he concluded.
“Exxon is rated top ten best in the world for environment, social & governance (ESG) by S&P 500, while Tesla didn’t make the list! ESG is a scam. It has been weaponized by phony social justice warriors,” Elon Musk tweeted.
Source: The Great Reset: Global Elites and the Permanent Lockdown by Marc Morano (2022)
CEO’s Replacing Democracy via ESG?
Speaking as a former CEO myself, I’m deeply concerned that this new model of capitalism demands a dangerous expansion of corporate power that threatens to subvert American democracy. For corporations to advance social causes, they must first define which causes to prioritize and what position to take. Yet that isn’t a business judgment; it’s a moral one. America was founded on the idea that we make our most important value decisions through out democratic process, where each citizen’s voice is weighted equally, rather than a by a small group of elites in private. Debates about our social values belong in the civic sphere, not in the corner offices of corporate America.
I’d love to hear Larry Fink’s favorite stock picks, but as a citizen I don’t particularly care for his views on racial justice or the environmentalism. Democratically elected officeholders and other public leaders, not CEOs and portfolio managers, should lead the debate about what values define America. Business leaders are supposed to decide how much to spend on a manufacturing plant or whether to invest in one piece of technology or another – not whether a minimum wage is more important for society than full employment or whether reducing America’s carbon footprint is more important than the geopolitical consequences doing so. CEOs are no better suited to make these decisions than an average politician is to make the R&D decision of a pharma company.
The rise of Wokenomics consummates Silicon Valley’s coup over our democracy. Censorship becomes rebranded as social responsibility. Yet the stakeholderist cheerleaders miss the bigger point: companies like Facebook and Google have effectively expanded that role to regulating and censoring public opinions in ways that no government actor can. Their exercise of power over the content of public discourse is without precedent in human history. [Commentary: The revelations from Elon Musk’s disclosure of Twitter files involving the U.S. government provides some insight on what close coordination between corporations and the government can lead to].
Source: Woke, Inc.: Inside Corporate America’s Social Justice Scam by Vivek Ramaswamy (2021)
That does not look like a corporate activity. It is nearer to a progressive government in partnership with business. It certainly has nothing to do with the free market with businesses competing with each other for customers. The corporations themselves – the great benefactors – have no ideology other than their rapacious predatory instincts. It is definitely not the smarts of the “elite” who will give us progress. Elites have dominated the world since the dawn of civilization in the form of brutal leaders who, over the centuries morphed into princes, kings, dictators, and presidents for life. Due to the lack of freedom, human progress was slow, if at all, during most of human history. Unfortunately, globalist corporations have become predators who, like the Chinese Communist Party, stifle or exploit “freedom” rather than defend and promote it.
Source: COVID-19 and the Global Predators by Peter Breggin MD and Ginger Ross Breggin (2021)
The unabbreviated version of the above can be found in the pdf document below.
| democracy_8l_stakeholder_capitalism_--_segment_8.pdf |