The raging 2020's

The book explores several interesting concepts, but only one is what I’m interested in the most. The answer to shareholder capitalism ills.

The book started this section by discussing when Amazon announced the $4 billion investment to improve safety of its 600,000 warehouse workers. Share price dropped dramatically. Because of $4 billion investment in the well-being of its worker, $83 billion of shareholder value was lost. Essentially, Amazon was penalised from doing the right things. Something must be seriously wrong with the current capitalist system that punishes what is good for people and society at large.

Stakeholder capitalism is a model of corporate governance that suggests companies should consider the interests of all stakeholders, not just shareholders, when making decisions. These stakeholders include employees, customers, suppliers, local communities, and the environment. Sounds good… but when interests are in conflict, how do you navigate that, interest of which group would carry more weight??

The current system of shareholder capitalism often prioritizes short-term profits over the long-term interests of all stakeholders. For example, companies may cut costs by reducing employee benefits or outsourcing jobs to countries with lower labor standards. This can lead to a decline in wages, working conditions, and environmental protection. In the long term, this can harm the economy and society as a whole.

While the concept of stakeholder capitalism has been around for decades, it has gained renewed attention in recent years as concerns about income inequality, climate change, and other social and environmental issues have grown.

Stakeholder capitalism can be applied to businesses of all sizes and industries. However, it is particularly relevant for large multinational corporations, which have a significant impact on the global economy and society.

There are a number of ways to implement stakeholder capitalism. These include:

Changing corporate governance structures to give stakeholders a greater voice in decision-making, such as codetermination, which requires companies to reserve seats on executive boards for worker representatives. Germany was the first country to develop this system, which has proven effective in creating a more consensual approach to conducting business.

Adopting environmental, social, and governance (ESG) criteria in investment decisions.

Measuring and reporting on a company's social and environmental impact.

Supporting policies that promote stakeholder capitalism, such as tax reforms that prevent corporate tax avoidance and stronger labor laws.

Stakeholder capitalism has the potential to benefit everyone:

Companies can benefit from improved employee morale, customer loyalty, and a stronger reputation.

Employees can benefit from better wages, working conditions, and job security.

Customers can benefit from higher-quality products and services.

Communities can benefit from increased investment and economic development.

The environment can benefit from reduced pollution and resource consumption.

Stakeholder capitalism represents a promising approach to building a more sustainable and equitable future. By considering the needs of all stakeholders, businesses can create value for themselves and society as a whole. As awareness of the limitations of shareholder capitalism continues to grow, we can expect to see more businesses adopting stakeholder-centric practices, leading to a more prosperous and just world.