A very dear friend reminded me of a wise quote from John Wesley – “In essentials unity, in non-essentials liberty, in all things charity.”
These impactful, yet challenging words, bring me to the topic of this edition of Willingdon Views – “Stakeholder Capitalism.” Let me try to explain…
The notion of “Stakeholder Capitalism” is that corporations should consider the interests of groups beyond shareholders, including society as a whole. Naturally, social goals like climate change, as well as race, religion, and sexual orientation have worked their way into the discussion. CEOs of some of the largest companies in the world, like Larry Fink at BlackRock, are promoting Stakeholder Capitalism.
In essentials unity… I can’t think of anyone who dislikes unity. But who gets to determine or define the essentials? Should CEOs drive that? How about politicians? Or, should the people decide? And if so, how would that process work?
People make choices every day about what to purchase, what to invest in, and how to spend their time and energy. By doing these things they are making a statement as to what is essential to them. In other words what they value. These essentials change for numerous reasons, but over time, collectively, a determination of value is made about most things. From a business perspective, over time, companies that provide valuable products and services succeed and those that do not eventually fail. This “survival of the fittest” is one of the laws of free-market capitalism.
As noted economist Milton Friedman espoused, the primary purpose of a corporation is to maximize shareholder value. As Friedman goes on to explain, to maximize shareholder value over the long run, companies will quite naturally have to take into account the interests of various groups, even society as a whole. In this sense, stakeholder capitalism is really nothing new.
Still, it warrants further discussion as to what are the essentials, in our economy and in our country. (I’m guessing loyal readers knew I was going in this direction all along…)
We are an economy and a country of numerous and often competing essentials. To one person, combating climate change might be an essential, but to a West Virginia coal miner, not so much. The same can be said for other controversial issues. My point is this – while all these issues are important, at least to some people, they aren’t essential in the spirit of John Wesley. What is essential is to find unity with people we disagree with. What is essential is to love the unlovable. What is essential is to be respectful and kind and caring even when we prefer not to.
Capitalism can only achieve the maximum benefit to all if it is built upon the foundation of these unifying essentials. Perhaps our focus should be on promoting “Unifying Capitalism”… This might seem like a radical refocus and perhaps it is. Moreover, like morality, it cannot be effectively legislated. However, it can happen gradually, over the long run, driven by charismatic leaders who as the saying goes, know the way, show the way, and go the way. The challenge before us continues to be finding unifying individuals who are willing to lead.
In non-essentials liberty… In my view this statement comes across as a warning. In today’s climate, especially at many universities, are we trying to diminish the liberty of dissent? If we believe and practice the unifying essentials, would we naturally uphold liberty regarding non-essentials? I think this is a discussion worth having.
In all things charity… Being charitable goes way beyond donating our time and money. It includes looking out for the welfare of others and sacrificing for the common good. And like liberty, it should be a natural by-product of a society built upon unifying essentials.
Another dear friend recently sent me a long email outlining how wrong I was about an issue we had been discussing. He was dead right. Not only do I respect his honesty, I told him I need him to continue to let me have it when he thinks I am wrong. To me it was a unifying email. I have a hunch that emails in general cause more disunity than they do unity. What can we do to change that?
There are all kinds of challenges on the horizon, from the Coronavirus, to what is sure to be a nasty and polarized presidential election. Meanwhile, our federal deficit continues to expand unabated. Fear and anxiety remain elevated while confidence in the future is declining.
That is why values and leadership matter, perhaps more today than ever.
“In essentials unity, in non-essentials liberty, in all things charity.”
Michael Kayes, CFA