To summarize, Mackey and Strong argued that capitalism has a bad reputation and is depicted as based on selfishness and greed. They suggested a new three-part narrative to communicate the benefits of capitalism: 1) that enterprises have a deeper purpose than profits; 2) that they should be managed not only to maximize shareholder wealth but the wealth of all stakeholders; and 3) that company leadership should not seek primarily their only own selfish interest.
I argued that while it’s common sense for businesses to seek relationships with customers, worker, and suppliers that benefit all, stakeholder theory holds many dangers.
*First is the problem of orienting one’s self first to what others might want rather than one’s own needs and goals. This sounds like a Peter Keating trying to get inside the heads of others all the time rather than figuring out what he wants and going for it.
*Second, Mackey and Strong both emphasized that the best entrepreneurs go into business with a vision beyond just making money (implying making money at any costs). See, for example, a Steve Jobs or Bill Gates. But entrepreneurs with vision often have to act contrary to the interests of would-be stakeholders. As Howard Roark said, “I don’t build in order to have clients. I have clients in order to build.” He wouldn't build colonial mansions, customers and stakeholders be damned.
*Third, in a competitive market or in tough economic times, entrepreneurs must often disappoint some stakeholders—dumping costly suppliers and contracting with others, perhaps overseas suppliers—in order to keep customers. Whole Foods has a market niche for folks who can pay more for organic food. But Walmart couldn’t keep its customers, who more often seek good return for their money, by operating that way.
*And fourth, stakeholder rhetoric can undermine the premises of private property rights; it implies that because the interests of all stakeholders are connected, all stakeholders should have a say in how businesses are run, enforced by government and overriding property rights. This outcome is not what Mackey and Strong advocate. But ideas have a logic of their own and this outcome is what the substitution of the notion of stakeholders for property rights holders implies.
By the way, a note on the debate: They were changing the format around right up to the moment we went on stage so I had to rearrange my remarks quickly. They might have flowed better with the original format.
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