Welcome to Davos week – where business and government leaders, activists and media created celebrities spray us with guilt ridden appeals to make a positive impact in the world. Well, any reader here at Impact Capitalist already knows that capitalism has the ability to deliver. However, the system’s ability for good and evil depends on how people and businesses act within these systems. What is problematic is not capitalism, but mindsets and behaviors of human actors working together in markets. (Mostly) free markets offer opportunities while corporatism and centralized systems do not.
There has been a lot of talk over the last years about rejecting shareholder concerns and turning to stakeholder capitalism. “Thought leaders” suggest we need humane and honorable capitalism. Some go further and demand social justice in capitalism (which is just hilarious in its ignorance). Unfortunately, there is a growing mass appeal across younger generations to reject the shown to have failed economic system of capitalism and insist for a return to something new socialism*. I enjoy the gallows humor of seeing socialists like Bernie Sanders dismissing certain policies with phrases such as “that plan has been shown to not work” (but never says anything like this about the constantly shown to fail model of socialism itself)**.
So back to shareholder vs stakeholder concerns. It is absolutely in the best interest of shareholders to engage in stakeholder engagement activities. I personally put great emphasis in all my advising and teaching to systems and stakeholder focused mindsets. Maximizing long-term shareholder value is not inconsistent with stakeholder perspectives. Stakeholders have a great impact on your ability to make an impact and profit. Ignoring or working against stakeholder concerns is a definite way of destroying long-term venture operations and sustainability (meaning long-term thriving/survival vs. green efforts).
Taking short cuts to increase the bottom line is not good long-term shareholder value. Treating employees poorly is not maximizing shareholder value. Polluting the environment surely does not add long-term shareholder value. Destroying value is not maximizing shareholder interests. Not only that, but the above examples are also cruel and criminal behavior (which is not to be equated with capitalistic behavior).
What we need is not new models of capitalism. We do not need new labels or enforced limiters on functioning systems. What we need are impact capitalist mindsets. But that does not support activist agendas – and it does not lend itself to fancy mob chants. And it certainly does not fit socialist paradigms.
Here at Impact Capitalist, we do not support these new movements – as we don’t feel that a free market system has let us down. Are there problems and bad actors? ABSOLUTELY. But they are not created by capitalist systems – in fact, bad actors have been and will still be around in ANY economic/political system. The actual culprits are the leaders who do not act in the best interest of long-term shareholder value. With a stakeholder mindset in a capitalist system, there are unlimited opportunities for impact and profit. But it seems easier to create new terms or even tear the system down than to actually teach economic literacy and value-added mindsets. Ironically, their self-interest appeals of doing good for others destroys the very opportunity for business owners to deliver impact (and profit).
* I think I will need to create some trademarked identifier to notify of intense sarcasm
** I saw this comment when he criticized an opponent’s health care plan as not being socialized enough