Richard Salsman - Why "Stakeholder Capitalism" is Fascistic

June 06, 2022 01:01:57
Richard Salsman - Why "Stakeholder Capitalism" is Fascistic
The Atlas Society on Clubhouse - The Podcast
Richard Salsman - Why "Stakeholder Capitalism" is Fascistic
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Join Atlas Society Senior Scholar and Professor of Political Economy at Duke, Richard Salsman, Ph.D. for a special discussion on Clubhouse about “Stakeholder Capitalism”—what it is and why it is inherently a fascistic system. 

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Episode Transcript

Speaker 0 00:00:00 Hello everyone. Speaker 1 00:00:02 Hey there. Well, I have really been looking forward to this, uh, especially with world economic forum, wrapping up and, uh, increasing calls for stakeholder fascism here in the United States. Um, and also increasing criticism of the agenda by people like Elon Musk. And of course, Peter teal. So, uh, Richard, um, I'm gonna let you set the room and, uh, tell us why stakeholder capitalism is fascistic. Speaker 0 00:00:40 Well, thank you very much. Uh, Jennifer, the, uh, your mention of world economic forum, uh, um, because you mentioned it, I might start with that. It is today possibly the, the biggest proponent of what they call stakeholder capitalism and its leader. Uh, fellow by the name of cloud Schwab has been pushing this for almost 50 years as I think he's in his late eighties or, or so it's still active, but a as far go as 1971, when he started the world economic forum and wrote books on stakeholder capitalism, he's been pushing this model, but I would say that in the last, uh, decade or so, the model, uh, has been almost universally embraced, not only by people like Schwab, but by corporate CEOs and business schools and onward. Now it actually originated in law schools in the late sixties and early seventies. Um, but here's the basic themes I want to suggest. Speaker 0 00:01:42 And, and I'll, I'll talk for about 20 minutes or, or so, and then open it up for questions. The, the traditional capitalist model is private ownership and control of the means of production. Now that's, uh, almost socialist type phrasing, but this is something that the socialist would agree with. It's a definition that they too would agree with. I would go beyond the means of production, obviously the products of production, the personal effects that you also own, but their focus has long been on that. And capitalism can be reasonably described at least from an economic standpoint. And it's also, when you think about it, a legal property, right standpoint, private ownership and control of the means of production. Now, those two aspects are crucial. If you only have, uh, title nominally without control, you don't have capitalism. And, um, if you thought of a matrix, I I've drawn this many times for my students. Speaker 0 00:02:40 I do it in public lectures, but if you just did a simple two by two matrix and on the one, uh, on the horizontal, uh, described ownership and on the vertical described control and then said private or public, the combination that is both private ownership and private control is capitalism. The complete diagonal opposite is socialism. That's public ownership and public control public here really meaning the state. But now there are two hybrid systems where they mix the two and fascism is one of them. The fascist mix is private ownership, but government control you own the title to your things, but the government tells you what to do with them. And since, uh, control disposition of property is a crucial part of ownership. It, it is a obviously a diluted form of it, but it permits the advocates to say, we're not socialists. See, we're not nationalizing anything. Speaker 0 00:03:44 We're not owning anything. We're not seizing anything as the socialists would wish by the way, the opposite hybrid, not so relevant today is feudalism that's, uh, ownership, that's government, but private control the tenant farmer, uh, tenant peasants approach model. Now what's interesting about, and maybe a, a very dishonest about the group currently pushing for stakeholder model is that they are not obviously calling it fascism. Other words you hear sometimes in the literature, in, in universities, at least it's called CISM. Corporatism is the idea that big business is allowed to, uh, own its property, but the government will tell it what to do. So that sounds like fascism, but is particularly a form that says we need big business, precisely because it's easier to control big business. Um, but they're pitching it as a form of capitalism. And this is very insidious. And this is really what I wanna stress today that we should not as capitalists permit. Speaker 0 00:04:50 These met these various adjectives to be thrown around and, um, and, and be pitched as just a form of capitalism. So don't worry about it now. Let, let me just give you a flavor of this. So you don't think I'm just asserting this Schwab himself. Here's an excerpt from a 2019 time magazine essay. What kind of capitalism do we want? That's the title? So you get the, you get the pitch here. Quote, what kind of capitalism do we want? I'm quoting from him. Now that may be the defining question of our era. If we wanna sustain our economic system for future generations, we must answer it correctly. Generally speaking, we have three models to choose from. The first is shareholder capitalism embraced by most Western corporations, which holds that a corporation's primary goal should be to maximize its profits. The second model is state capitalism, which entrust the government was setting the direction of the economy and has risen to prominence in many emerging markets, not least China, but compared to these two options, the third has the most to recommend it. Speaker 0 00:06:00 Stakeholder capitalism is a model I first proposed to have century ago. It positions private corporations as trustees of society. And it's clearly the best response to today's social and environmental challenges. Shareholder capitalism, currently the dominant model first gain ground in the United States in the 1970s and expanded at infants globally in the w following decades, its rise was not without merit, but, and I'm quoting here now, just summarizing. Now he goes on to say, it's unsustainable. It's wrecking the planet. It's causing inequality time to get rid of it. Now, a couple of comments, I would put it this way. Shareholder capitalism is a redundancy. That is what capitalism is. And I would say stakeholder capitalism is a contradiction in terms, um, the, the, the use of the word itself is very clever when you think about it, because the original model, and by the way, it does not go back to the 1970s. Speaker 0 00:07:01 It goes back, uh, as far as the 18 hundreds, I mean the, the, uh, development of capital markets and shares, shares simply mean shares of ownership. When you buy shares in a company, you own it by putting money into the company. So that's what shareholder means. It means you own it. You're the owner. That's not something that's just 50 years old. If anything, the last 50 years have been moving toward the idea that your ownership is not, uh, fully under your control. So that's one thing. Now, the other thing he says here, it's the model that says a corporation's primary goal should be to maximize its profit, but actually its goals are whatever these shareholders want it to be. If the shareholders want it to, uh, maximize other things like the share price and things, the point is that's the business of the owners, the shareholders, no one else. Speaker 0 00:07:53 Now what is actually meant by, um, stakeholders. It's a clever phrase because it basically means shareholders. Plus now here's, here's the fill in the blank. Anyone else who might have an interest in the corporation business, uh, other businesses, suppliers, employees, local taxpayers, the government, the planet, the planet as a stakeholder to some in this analysis. Uh, and, and the, and you can see the idea here. It's as if saying, well, we're not like marks going to talk about seizing the means of production, but put it this way. Diluting ownership of the means of production. So simply diluting it and saying, Hey, everyone has a stake in this loosely defined as ha having some kind of effect on them. If, if any effect can be found by these entities on others, they have a stake. They have a say in the matter. Now it's interesting. If you try to go into the literature and find out a little more specificity, which I did, I'm flipping here. Speaker 0 00:08:57 There's a fascinating essay from a business, um, economist, Samantha Miles, Samantha Miles in, in an essay called, uh, stakeholder, is it essentially contested or just confused? She went through the literature, looking for what stakeholder meant, and she gathered up 435 distinct definitions of stakeholder. Now, what does that tell you that there are lots of, by the way, it's coincidentally the number of seats in the house of representatives, but you get the point. The, the issue is, uh, anyone and anybody for any reason, uh, allegedly has a say in how corporations are run now, Milton Friedman for all his inconsistencies in defending free markets and wrote a very famous New York times magazine essay in 1970, questioning the whole social responsibility of business paradigm and stressing that businesses should do the shareholder model and stick to it. So even he was noticing even then in 1970, long time ago, that they were moving away from that, and basically sacrificing where necessary shareholder interests. Speaker 0 00:10:09 I think one of the more interesting developments in the last decade is that, whereas there might be CEO suite resistance to this 50 years ago, even 40 years ago, definitely during the Reagan years, there is almost no resistance to it, whatever. And for those who are, you know, scratching their heads as to how that can be, it's just not true that because you're a capitalist financially, just because you're a CEO, just because you're in quote business, that you're gonna be pro capitalist ideologically. And these people, especially the ones who get into corporate suites are, are usually going to prestigious business schools. They're usually going to Ivy leagues. And so they're going to get the same kind of bad philosophy, the same kind of altruism and collectivism that's taught in the humanities and in the social sciences that definitely creeps into business. And, um, that's, what's been happening over the last decades, the business schools, um, follow following the law schools, all the professions are gonna be affected by philosophy departments and social science departments have adopted this model. Speaker 0 00:11:18 And I would say the other, uh, aspect of this is, is very difficult. If you rise to a position of prominence in a major multinational corporation, you are going to come in contact with the government far more than if you were a small business. So this phenomenon people see of smaller businesses, entrepreneurs who tend to lean more pro capitalists than the corporates. That's one of the reasons, the first reason is they're trained in the same universities that produce altruist collective it's, but then secondly, they, they cannot escape the, um, revolving door. So to speak between government controls and their businesses, the bigger the businesses they are. Now, it's one of the features of Italian and Nazi, uh, fascism that they preferred big business to small business. And I hinted at this before. Why cuz it's easier to control big business. If you had one or two steel makers, uh, one or two munitions makers, you know, a handful only of power makers, things like that. Speaker 0 00:12:20 It's easier to Institute your controls. And so, um, but this is another reason why people are sometimes fooled into thinking, well, this is a form of capitalism cuz they don't seem to be anti-business. They seem to be pro big business. And since big business over the decades has really been demonized the big, bad business. It seems like, well, here's a model that doesn't seem to demonize them. So what's the big deal? Well, the big deal is it's fascism. It's a fascistic form of political economy and it's very dangerous now, by the way, when you look at historical cases of fascism Mo the Hitlers, the drama and the histrionics are so over the top, that's, that's another reason why people might not see what's coming this time because it doesn't have the kind of look and feel of what those crazy regimes had and what they did. Speaker 0 00:13:14 And so this is a control, almost like a self inflicted thing where it may not look authoritarian, but it definitely is. It's just a different form of the, uh, the president Biden, interesting quote, when he was running in 2020, this captures it. And all his team is this way too. Quote it's way past time, we put an end to the era of shareholder capitalism. The idea that the only responsibility a corporation has is with shareholders. That's simply not true. It's an absolute farce. They have a responsibility to their workers, their community, their country. That's not new. That's not a new or radical notion now, unfortunately, yes, it's not a new, uh, notion it's radical, but it's not new. Cuz it's borrowed from the 1930s. We are literally seeing in Davos and w E F and elsewhere, a group of people, a group of very prominent leaders in business, academia and government, uh, advocating this system. Speaker 0 00:14:21 And so it's a revival of the thirties model, um, of fascism. I wanna point out something that I found in the literature, which is very odd and, and paradoxical, but, but revealing at the same time in, uh, the early 1930s, there was a very famous and influential book called the modern corporation and private property. And it was written by a lawyer and an economist. I think they were both from Columbia. Uh, bur means now Berlin means, interestingly, we're saying that capitalism was not sustainable because companies were getting so big that there was a separation of ownership and control. So in other words, they would say something like, well, you might have, at one point had Henry Ford start Ford motor company. And he was both the owner and the operator of the enterprise, right? But the bigger these companies get, like they become general electric or general motors or general food. Speaker 0 00:15:24 The very bigness of these companies, the very fact that they were mass market companies meant that the ownership had to be more diversified. And that's why companies went to stock exchanges and issued shares to the general public to raise money broadly because you know, individuals themselves sole proprietorships couldn't raise the capital necessary to, uh, keep these companies operating. Now the interesting solution they ignored was that, um, legally and otherwise, there were methods of making sure that the managers, although now not the major shareholders would still be motivated to work on behalf of the owners. So either through compensation plans, maybe even stock ownership plans, the idea was to as, as best possible, uh, with the two have this fiduciary relationship where the principal agent relationship worked, the owners were not exploiting the shareholders at any rate. What's interesting about that critique. It was a anti capitalist critique. Speaker 0 00:16:29 It was a critique by Berlin means saying basically capitalism could not make this transition to big business without losing this tie. Well, if you think about what's going on today, the advocacy is to break the tie that the old complaint was that managers aren't working for shareholders. And now the complaint is managers are working for shareholders. So they have completely flipped the script. It's, it's still a critique of the corporation, but it's of a D entirely different, well, I wouldn't say entirely different. It's a different form of fashion, but notice now they want to break ownership and control. They do not want the managers, the CEOs and others to be working only for the owners. And so, um, they're advocating precisely the kind of separation and ownership and control that used to be acclaimed as a great weakness of, of capitalism. Couple of other things, then I'll quit. Speaker 0 00:17:27 Here's another quote, just to give you a flavor from Schwab himself, close Schwab from his book, stakeholder capitalism subtitle, a global economy that works for progress people and the planet January, 2021, quote, the sudden and all encompassing impact of COVID 19 made us understand much more than the gradual effects of climate change or increasing inequality than an economic system. Driven by selfish and short term interest is not sustainable. It is unbalanced fragile and increases the chance of societal environmental and public health disasters. We can't continue with an economic system driven by selfish values, such as short term, profit maximization, the avoidance of tax burdens and regulation or the externalizing of environmental harm. Instead we need a society, an economy, and an international community designed to care for all people and the entire planet from a system of shareholder capitalism, which prevailed in the west in the past 50 years and a system of state capitalism that gained prominence in Asia, we should be, uh, moving toward a system of stakeholder capitalism now and notice by the way, the state capitalism concept, just amazing. Speaker 0 00:18:53 So China onto this model onto this interpretation, China is a form of capitalism. They call it state capitalism. So the, the terminology, the, the abuse of concepts and what concepts really mean are just, um, uh, despicable in my view, but it's a way to blur the distinctions precisely. So that a system of pure private property capitalism isn't allowed, it's really not like not allowed in the debate, so to speak. So couching it this way is very clever, but, uh, no one should fall for this. There really needs to be a pushback. Don't just, as we should not allow the term crony capitalism to survive, we shouldn't be allowing stakeholder capitalism. These are perversions of capitalism, and they're trying to justify them by, um, using these kind of terminology. Um, I think I'll stop there. There's more to say. And maybe there's some questions that we bring out. Speaker 0 00:19:54 Other things I would like to say, but if you're worried for those, for those looking for actual legislation in the United States that might be pertinent to this Elizabeth Warren, the biggest advocate of stakeholder capitalism has proposed legislation called accountable capitalism, very revealing. So the idea, the accountable capitalism act, uh, 2019 is, is just filled with the stakeholder language. And, and, and it's the idea that current capitalism is not accountable. You know, that the shareholders, presumably the shareholders, uh, cannot make the managers accountable. And yet that is not the goal of stakeholder capitalism. They want the managers and executives accountable to politicians and pressure groups and a whole bunch of other groups. So I'll stop there and, uh, take questions or comments. Speaker 2 00:20:50 Thanks, Richard. Um, and, uh, I see a lot of newcomers in the room, which is encouraging. I'd love to get a few more new people introduced to the topic. So, um, please share the conversation, use that share bot button at the bottom, shared on clubhouse, ping some into the room. Um, I would, uh, 30 above there. So, um, David, you, you, Speaker 3 00:21:23 First of all, Richard, you Richard for, um, as an epistemologist, I really appreciate your, um, your and Alice putting this in terms of, you know, invalid concepts and floating concepts and package deals. Um, that's, you know, absolutely right. And it it's very, it's not, I mean, it's almost a, uh, distinctively objective, uh, approach to it, analyzing these questions. So, uh, thanks for that. My question has to do with, uh, John Mackey whole foods and so-called conscious capitalism. Um, you know, Mac's very prominent in libertarian movement and, uh, um, in many ways seems like a friend of, of, uh, our approach. And yet he's what, when he describes conscious capitalism, it sounds a lot like stakeholder stuff. In fact, he, I don't know if he uses the term, but, um, would you, uh, do you have, uh, thoughts on that and, uh, comment about, um, the conscious capitalist movement or, or initiative? Speaker 0 00:22:36 Yes, David, I I'm, I'm familiar with Mac's approach. Um, even the, the terminology itself suggests what the complaint is about, you know, so, so conscious capitalism, sometimes you hear compassionate capitalism, the, the implication is as cloud Schwab put it, this is a selfish system it's, uh, therefore lacking in compassion, lacking in morality lacking in well long term, all the, all the caricatures of what a self-interested person or company would be, um, you know, heartless, callous, cruel, you know, willing to lay off workers, willing to destroy the planet, that kind of thing. So, uh, the good news is people like Mackey glimpse. The capitalism is a good system and they see it under attack and they're defensive. I would put them down as the timid defensive friends of capitalism, but they're being rolled by the critics of capitalism. So I think what we're, what we're missing is a, is a fullthroated, you know, unapologetic, defensive, capitalism, and that's why you're getting all these adjectives. Speaker 0 00:23:58 I, I have a chapter in my latest book on what's called varieties of capitalism that actually comes from the academic literature. So the whole, the whole idea of varieties, uh, with all these, um, adjectives, um, social capitalism, Christian capitalism, um, I've heard all, all of them crony capitalism, but it, it is interesting that it's almost as if and this comes from the Marxist literature. Capitalism is one in a way. It, it has, it, it, oddly enough, they'll say simultaneously it has survived as the lone standing system after the disasters of the last century, and yet they still hate it. They still don't like it. And so they're trying to modify it and change it and adulterate it and dilute it. And <laugh>, you know, it's something like that, David. And, um, and then now they're just, um, quibbling over ways to, um, erod, it is, is the way I would put it. But that method of John, that method of John Mackey usually comes from CEOs who are, you know, if you scratch deep, they, they, they're saying we're, we're regretting that we're losing this system, but what, what kind of defensive mode can I take in the meantime? Speaker 3 00:25:15 Well, I, I know that those of us who have, uh, engaged with Mackey, uh, including our chairman of the board, uh, Jay Lappe, yeah. Point out that, you know, any, anyone running a business, um, uh, be successful, has to, uh, provide a value, some value to his customers. He's gotta have, uh, the best employees you can get, which means screen fairly train them, et cetera. So, I mean, what, but all, all for the, of making the business, uh, of, uh, the most, the most effective value creator, and this doesn't seem to make any debt in the shareholder or conscious capitalist people. Speaker 0 00:26:03 Right. And, and another attitude of this, I remember John saying one time in a debate with an objectiveist. Well, would you say that every entrepreneur in Atlas shrug is a profit maximizer? Do they have any other motive? And, and so suppose the answer to that was, yes, they have many motives. The, the point is this model is trying to throw off private ownership and, and any privately owned company can adopt any, uh, you know, goal it wishes. That's not the issue. So, so, um, it's the critics of capital. It's the critics of this model that are trying to shoehorn the, the, uh, the goal, you know, what are you maximizing profit now, even that profit is considered theft. Profit is considered if it's excessive, but the profit itself is distrusted. So anything saying, well, the purpose of the company is to maximize profits. I, you mean to that, to their ear, that sounds like the purpose of a company is to maximize evil things. Speaker 0 00:27:08 And of course they would wanna <laugh>. I mean, of course they would wanna move away from that to a more balanced quote, unquote balanced, um, approach. Um, so I don't, if that helps or not, but by the way, yeah, I wanted to add that, um, uh, you may, as you learn about this or discuss it, be, be aware that you'll be, uh, accused of, of conspiracy theories. So this is especially the case with the world economic forum and Davos. And I mean, that is an conglomeration of people that are in constant contact and meet, uh, you know, at the Swiss Alps once a year and stuff. And it they're, if you go to their website, they're UN unabashed about saying they want this system. Sometimes they call it the great reset, but, um, just be aware, it's not necessary to say, and it's not true that there's some small, you know, Illuminati, cabal gathering in the Swiss Alps, you know, trying to impose one world government on us. Speaker 0 00:28:11 That's not, that's not what's happening. The, the, the only reason it seems like a conspiracy is that there's almost universal agreement on this fallacy. And, uh, when you, when you see people universally agreeing on some fallacy, including populous, by the way, including people who hate the elites, uh, people who might be populous supporters of Trump say they might be anti w E F they might be anti, uh, Davos. Um, but that it's because they're also suspicious of big corporations. So the, the, the big corporation with the shareholder model is really under attack from almost, or under suspicion from almost every side. Other than I would say our side, I, I know of no other side, other than that has any sense of what the corporate model is and why it's important part of the private. Speaker 2 00:29:14 All right. Okay. Yeah. Uh, Clark, thanks for joining us. Speaker 5 00:29:21 Yes. Thank you, Jack. And thank you, Richard. And actually you're welcome, Richard. I think, yes, you were actually beginning to answer my question, and it seems as if, if, if I've read you correctly or, or listened to you correctly, that the only group that's maybe has some pushback to this, um, you know, this stakeholder idea is, is on the populous, right? You know, the people who, like you're saying, you know, they hate Facebook, they hate Google, you know, they want <laugh>, they wanna, uh, impinge on the first amendment. They hate big pharma. They consider that all, maybe not a conspiracy, but just somehow they're not looking out for the middle American. So, and, and again, you know, it seems as if, from what, uh, you know, I've, I've read from, from some of these folks, you know, their, their solution of course, is, is more government regulation of, you know, of the big globalists than the, you know, and of course Trump would, would, would want to, um, you know, use tariffs and, and all just anything to get at the <laugh> at the big, you know, transnational corporation. So of course, I, I guess that's worse than that's a, that's a worse, uh, cure than what the disease is. I mean, how do we appeal, uh, or, you know, to the, to these folks, if, if we can, uh, I mean, what should our approach be? Because it, it looks kind of GLI a GLI, as you're saying, uh, glum that, that there's just doesn't look like there's many people anywhere on the, on the modern political spectrum in, in the us, or in the west who, who, you know, who agree with us as subjectivist? Speaker 0 00:31:00 Well, I would say the first possibly most important thing is to stress the morality of profit and profit seeking. Now, if you go from that to mom and pop store, to small business, to big business, to multinationals, it's almost invariably true that people will say, well, I get it how my business or my local grocery provides value and makes money. But the bigger the company gets, people seem to think now some kind of fraud or nefarious activities involved. And that's, if you can somehow say to them, listen, just because you're getting bigger, doesn't mean your profit motive or your profits are becoming, uh, adulterated. You're just meeting more CU customers. You have more customers than the small guy has. And so, I mean, that's just a very small thing, but starting with the idea that defend profit as to that it's economically value added, it's not a zero sum game. Speaker 0 00:32:04 It's not stolen. It's value created that alone is a big thing to get across to people. But then also that it's moral that it's the commercial manifestation of rational. Self-interest, that's what the profit motive is. It's the business application of rational legalism. So if they're gonna distrust rational legalism, of course, they're gonna distrust the profit motive, but, but the key is also to really emphasize that bigness is not badness. That's a negative way of putting it, but put it as bigness is a sign of massive mass market success. And, uh, if anything, companies should be extol for doing that. Um, so that's a, I hope that helps, but, but yeah, if you line up the people who are anti corporate, it's obviously Marxists, right? But some conservatives who believe in the antitrust laws, for example, that the, the antitrust laws were advocated by Republicans. The Sherman act Sherman was an Ohio Republican 1890, but the Chicago school for many years, advocated Milton Freeman and Stigler and others advocated antitrust on the grounds that, that capitalism left to its own devices would lead to concentrations of capital and monopoly and blah, blah, blah, blah, blah. Speaker 0 00:33:20 So they have long also contributed to a suspicion of bigness. And then, uh, the most, uh, the biggest movement I would say of the last decade is populism and populism is anti-capitalism people think it's, uh, maybe pro capitalist cuz sometimes they bring in right wing leaders. But the, the, the populist approach, I know we're not here to talk about populism, but it does contribute to this stakeholder approach is highly suspicious of anything, big, highly suspicious of anything established to establishment, highly suspicious of anything, elite, any, and any group educated with credentials and that kind of thing. And that's what successful long-term businesses have. And so if there's gonna be a suspicion against all those great virtues, it's gonna come to red, down to the harm of big corporations as well. So, so the populous themselves will listen to this kind of thing. And on the one hand, they'll say, who are those elites in Davos? You know, who, what do they know, why are they telling us what to do on the other hand, if they hear well, they're trying to control corporations. Their, their model is to tell corporations what to do now. The populist isn't so upset anymore. Now the populist thinks, oh, that, well, that ain't so bad. I want that too. Speaker 2 00:34:40 Thanks Richard, Jerry. Speaker 6 00:34:44 Yeah. I just thought it would be useful to remind us of, uh, uh, how iron Rand would, uh, classify exactly this, uh, type of invalid concept. Right? Uh I'm I I'm, I'm sure most of us know that she would classify it as anti concept, uh, something that is rationally unusable, and now it comes, uh, uh, specifically meant to obliterate, uh, uh, the original, uh, uh, rational concept in this case shareholder. So, uh, just from the epistological perspective, I think it's, uh, it's good to know this and whenever we encounter, we encounter this concept. It's not just, you know, you, you are you're against capitalism. If you use this, uh, if you use this concept, you know, it, it's good to really use this, this term, you know, you are using something that is not a con, this is anti concept. You're destroying our ability to form and use concept. So it's, I think very useful to, to classify it in this way and to use this term anti concept, which, which, uh, stakeholder capitalism or stakeholder exactly is. Thanks. Speaker 0 00:36:06 Yeah. Very good. Thank you. And another approach would be to say to people, why are you using the term stakeholder when we had this term shareholder and you're you yourself are contrasting the two, isn't a stakeholder, a non-owner. They would have to say yes, they would have to say legally, yes, that is not an owner. Then the next question you ask them is why should a, non-owner have any say in the property rights of other people? Now they might say, well, corporations and responsibility and third party externalities, and another approach to this would be to say, imagine if someone said you own your body in mind, technically, but I'm gonna tell you what to do with it. I'm gonna tell you whether they have an abortion or not. I'm gonna tell you whether to take a, uh, vaccine jab or not. I'm gonna tell you whether to work in the cotton fields for me or not. Speaker 0 00:37:01 I'm gonna, uh, tell you whether to you, there can be same sex marriage or not. Now most people on all those examples would recoil in horror. Uh, my body, my choice, right? They would say, well, okay, my business, my choice, very good model my business, my choice. What, what right do you have as a quote unquote stakeholder, which is not a shareholder, you do not own me. You do not own my business. You have no say in the matter that it is that kind of, I think moral, certitude and pushback, uh, that can help here. Um, by the way on terminology, some of, sometimes you'll hear about ESG and ESG is a big part of this stakeholder stuff. ESG stands for environment, social and governance criteria. And the stakeholder collectivists have very cleverly come up with a set of metrics to, uh, measure companies and how woke they are, how much they're attending to stakeholder interests. Speaker 0 00:38:11 And this is very important because not only is it very vicious, it's important, it's, it's going to become important because government policy is leg leveraging off of this. So, so agencies like the securities in exchange commission is working on policies to mandate that companies report their, their ESG, uh, compliance. If you will, to what extent are they complying with serving the environment? To what extent are they complying with serving social issues, not shareholder issues, things like that. So this is how you codify and institutionalize in law, these bad theories, you, you start using metrics and nobody questions, the basic theory. So they're not gonna, you know, object to the metrics. The metrics are just a way of empirically carrying out the theory. Well, if you really believe this stuff, then you'll adopt these measures and then the SCC and these other agencies can come in and, and see if you're following these measures or not. Speaker 0 00:39:13 And maybe it'll determine whether we, you know, permit mergers and acquisitions or permit you to have business freedom or not. The, the other approach, which is very, uh, clever and, and insidious is, um, the stakeholder activists are approach have already, I mean, it's been going on for years, the top CPA firms, the top accounting firms and pushing and pressuring them to adopt these E C AESG standards as well. And in terms of doing the audit of the corporation. So the CPA firms now are all universally on board with this approach and they're, they themselves are pressuring companies to report, uh, their performance along these lines. Uh, a third source of pressure comes from investment firms. So the biggest investment firms, uh, in the country today are probably, uh, Blackstone state street Vanguard. These are, these are in themselves, successful companies, who've accumulated people's savings and invested 'em in the stock market and the bond market and other things. Speaker 0 00:40:22 But because of that, they have enormous leverage over corporate governance. They, they themselves hold the shares on your behalf. You almost never vote for major corporate issues, but they do that, that model should be broken probably and, and amended, but that's happening as well. So the, the leaders, uh, Larry think is a famous leader at Blackstone. I, I, I think it's black rock, I'm sorry, not Blackstone, black rock financial, and so same kind of thing. You get a CEO of a major investment firm that believes this stuff he's going to, it's going to trickle down and affect all the CEOs whose companies he invests in. So it's coming this pressure to do this is coming from every angle, government, business legal, uh, otherwise. Speaker 2 00:41:14 Thanks. And, um, I just also pinned the link to, uh, morals and markets. It's a seminar that professor Salzman conducts monthly on behalf of the out society, it's for young people. So, um, please share it with, uh, the students in your life. Um, and if you'd like to audit it, you're welcome. Just we ask that you do so without, uh, with your camera off, Matt. Speaker 7 00:41:42 Yeah. I just, uh, wanted to ask, uh, I've read Richard, uh, rice as book on, he called it super capitalism and I didn't think it was either, but I was hoping just to get comment on that if you've read it. Speaker 0 00:42:00 Yes. I think you mean Robert Rice from, um, Berkeley. Yeah. I mean, he has been a long time advocate of, uh, this approach. Um, he was at Harvard for many years and now he is at Berkeley. I think he was a labor secretary under Clinton. Yeah. It's the same thing. It's using the word capitalism to push something that's really anti capitalist. And, uh, you know, for him, super capitalism is a capitalism run by government where corporations are told what to do by government. So rice just follows in this. I mean, he has various minor variations on the theme, but he was a big advocate during the, uh, eighties of what's, what was called industrial policy. So that was much more government central planning and, uh, early, early versions of rice, he actually won government to nationalize certain things. So he's, uh, he straddles both fences, he's part nationalized things, that's socialism, but he's also basically of the, uh, the fascistic version of telling businesses what to do. Speaker 2 00:42:59 All right. We're coming up on about 15 minutes left. Uh, so let's, uh, definitely wanna try to get to everybody up on stage. Um, so we'll try to keep these, uh, a quick Lawrence. Speaker 8 00:43:14 Hi, Richard, great topic. Um, my question was looking at history. I kind of see similarities in sort of idea of control of some larger entity trying to, uh, instill sort of economic order and sort of similarities for what I kind of see them talking about a Dallas or whatnot is I wanted to see if you would agree, disagree, your thoughts on the relationship to the, um, I believe it was the European economic community was what it was called that was like in the eighties or nineties, which acted as a sort of economic, super national entity, trying to organize how markets operated in Europe. I just wanna see if perhaps this is something we're seeing now just on a global scale. Speaker 0 00:44:00 Well, I wouldn't say no. I would not say it's the same thing. Those efforts, the European community, the European economic union were attempts to lower, uh, trade barriers and labor law barriers and harmonized tax systems and things like that. Even the development of the Euro, the currency replacing 10 or 12 other currencies at the end of 99 was an attempt to what, what, what I interpreted as a move toward more capitalism. So that's not, what's going on here, here, here, you global entities, the world bank, the UN and others, um, trying to dictate to companies what to do and, and somewhat on the pretext. Well, since they're cross border, since they're multinational, we need huge, you know, NGOs and, and government entities to control them. But no, that earlier attempt in the seventies really, really post world war II to free up Europe was a good trend, but it pretty much ended 20 years ago. Speaker 0 00:44:59 The trend now. Okay, you're welcome. Before I forget, I wanted to just on a positive note for those who wanna study this further, there are really two very good defenses of the corporation. The most famous by an objectiveist named Robert Hessen, H E S S E N in 1979 at the Hoover institution. He wrote a book called in defense of the corporation, really a fast, uh, fabulous book and not easy to find, but, um, in defense of the corporation by hesen H E S S E N and more recently in 2013, there is a book I found that does critique the stakeholder model by a guy named Samuel men, cell M a N S E L L. It's called capitalism corporations and the social contract, a critique of stakeholder theory. I've read the book and it has some weaknesses in it, but it's a rare case of someone standing up and saying, the stakeholder model is bad. Don't go there Speaker 2 00:45:58 All. We'll the Speaker 9 00:46:03 Hi. Thank you, Jennifer. Uh, Richard, um, Anne Ryan Anne ran, sorry. The four, she talked about four main pillars of, uh, of her philosophy, objective reality, absolute reason. And then the two I wanted to focus on individualism and Lez fair capitalism. She went on to say that the only action which a government can take to protect free capitalism is Les fair. But as we all know in EZ fair, monopolies can occur. And yes, if she's advocating individualism, by all means an entrepreneur individualism would love to have a monopoly, but for society's benefit, as we know it, stifles competition, uh, innovation and is not for the greater good of society. So is she in favor of monopolies? Is she implying that monopolies are okay. Thank you. Speaker 0 00:46:56 Uh, thank you, Sam. Good question. Um, yes. And in, in our, in this view, monopolies are perfectly fine. If, if by mono we mean one supplier of some good, um, yes, as long as they don't coerce anybody, as long as they don't mandate that anybody buy the product, as long as they didn't get that position by any government, government favors franchises, monopolies, government, itself, issues, monopoly licenses, and things like that, as you know, and, and so the most famous case probably OAA, uh, which, uh, at one point I had think had 95% of the aluminum market and, uh, was exploiting no one and was bringing price down and stuff. So, so some of the great capitalists, uh, quote unquote monopolies, uh, were, were producing in great abundance and bringing prices down and were still profitable. So, um, economies of scale and all that. So what she, what she and pro capitalist should definitely be against is government monopolies, uh, granted by government and the most famous ones of course are schools. Speaker 0 00:47:55 I mean, the public schools today, uh, the federal reserve is a monopoly of money. There's a lot of monopolies, very abusive, long term abusive Del deleterious monopolies that the government still maintains that they, uh, that should be gotten rid of it. It might interest you, Sam. I, I think sometimes individualism, which I think is a yes, a key pillar of capitalism. Sometimes people think of that as ATIC that people, you know, not joining together in groups and stuff. But if you think about it, the corporation itself is a collective, but in the good sense of a group that gets together for a particular mission, you know, to produce a product and make money. And so individualism is not at all incompatible with collective action, if you wanna call it that the key is the individual under capitalism is not subordinated to the group. They choose to participate in a group. Speaker 0 00:48:48 They can leave a group if they don't wanna work with that group anymore. But, but, but I bring this up only because one of the most important groups we have out there are businesses. And if these entities are going to be taken over by fascists, so that's something we really have to worry about and, and trouble ourselves with less fair. I'm gonna do a separate, uh, future, uh, clubhouse on less fair, because I actually have a different take on less fair than Rand and most the objectives, if less fair, literally means no connection between government and the economy. I think that's platonic and impossible. I don't think that's actually the objectives position or I Rand's position, but it can be interpreted and misinterpreted it that way. And I think it's a, I think it's a hurdle to getting people to embrace capitalism, because as I said before, if you use all these adjectives, like state capitalism or crony capitalism or stakeholder capitalism, which to me are all invalid concepts, as they'll say, so what kind of capitalism do you want? And objectives are prone to saying just to distinguish themselves, they're prone to saying less fair capitalism, but, but less, a fair means hands off, don't touch literally various interpretations of it. And that's not really what we have here. We have a, an objective argument that says the government should provide mechanisms to protect individual rights, but that includes police courts, military, and the funding necessary for that. It's I contend that it's impossible to have those things without touching the economy. So then I'll leave that to a later. Speaker 2 00:50:30 Yeah, let's we Speaker 0 00:50:30 Can Speaker 2 00:50:32 Three speakers, um, here, bill, uh, you look like you're unmuted, but you may having, um, a frequent issue that we sometimes get on this platform, uh, where you, you don't have full connection. So if you can't unmute try, um, signing out, signing back in, uh, otherwise we'll go to Eric, welcome to clubhouse and welcome to the room. Speaker 10 00:51:00 Uh, thank you, Jennifer. Um, Richard, I liked your kind of, uh, I guess your plane of ownership versus control, um, um, and, uh, how you kind of categorize those things, help me kind of visualize, uh, shareholders versus stakeholders. Um, and I was, I was wondering, um, what, what your thought is on the kind of, um, Elon Musk, Twitter thing, where, where would, where would Elon Musk and Twitter fall on, uh, this kind of this plane of, of, um, control versus ownership, uh, before the purchase and after the purchase and, uh, it, and, um, yeah, thanks. Speaker 0 00:51:35 That's a good question. I mean, I, it's still a, uh, private company. I mean, it's publicly traded, but, but, uh, Twitter's, uh, privately owned company, the stakeholder model would say that the stakeholder model would say something like, well, if Elon Musk buys it, he can't just serve Elon Musk. He can't just serve the shareholder. He has to serve a broader audience. What broader audience well fill in, as they say, fill in the blank, um, that, uh, ministry of truth, uh, agency that they tried to create a couple weeks ago, uh, you know, they'd have a stay in the matter and we'll tell you what to put on Twitter or not. So, but, um, it, it, it fits my model so far as this is still a semi capitalist country. Um, and that Musk owning Twitter would be the sole shareholder. There wouldn't be a diversified shareholder base in that regard. Speaker 0 00:52:25 So, uh, basically thinking of taking it, what they call taking it private. So it's a, it's a unique circumstance, but I, the question for me would be whether Elon really runs it, first of all, if they allow him to own it, I don't know if the government will allow him to go through with this owner, this, this, uh, purchase offer. Uh, I doubt that myself, or if they do, whether they'll run him into the ground on Tesla, SpaceX and other things, they really do not want the government really does not want him to take over Twitter. So it's gonna be a test of, of this model, but, um, this let's just be clear that the stakeholder model does not like the idea of, of this guy owning this entity and being the sole determinant of what its policy should be. Speaker 2 00:53:12 Bill. Speaker 0 00:53:15 Thank you. Speaker 11 00:53:18 Hi, Richard, can you, this is bill. Can you, uh, please talk about a little bit about the business round table. Yeah. And their two 19 statement? Um, yes, my, my basic, my basic question is why would so many CEOs be so fond of stakeholder capitalism? Speaker 0 00:53:35 Yeah. Good question, bill, for those who don't know the business round table in 2019 issue to statement saying we are no longer, uh, supporting shareholder, the shareholder model, and they basically endorsed the stakeholder model. Now, the reason that was important is that the business round table for many, many decades has been around for a long time, was a, basically a special interest group for big companies, CEOs of huge companies. So I think all I could say, really bill is they have finally, they finally caved in and it as to the, uh, you know, suppose mystery of why big business executives will go this way. I go back to my earlier point that they have received the same kind of education or call it miseducation a as everyone else in the universities, cuz they're usually MBAs. They're usually, um, coming out of the Ivy league schools. Speaker 0 00:54:30 And for, I know this is in hard to believe for the general public, but those business schools for decades have been teaching, uh, critiques of the shareholder model and have been endorsing more and more the stakeholder model. And I think, and, and so they're just prepped for that to be that way. Now the, the, the out, the outside pressures that come from things like, you know, woke waves like we've seen in the last three to five years or COVID things or the financial crisis. I mean, if you think of what's happened in the last 20 years, you've got nine 11, you have the financial crisis of oh eight, you've got COVID. So, so crises are moments when the status love to grab power and make, uh, the Altran of quiver and be fearful. So I, I took the business round table decision in 2019 as a kind of cowardly act and an appeasement by these big executives, but it's not like there were holdouts who believed in capitalism and the way we did by, by the time 2019 rolled around the business round table, folks were, um, brainwashed with the same kind of fallacy. Speaker 11 00:55:42 It's interesting as part of their statement, the following we believe the free market system is the best means of generating good jobs. In other words, at the same they're claiming that they, they believe in the free market system. They also, anyway, thank you, Richard. All. That's a really, Speaker 0 00:56:00 It's a good point. We've just Speaker 2 00:56:01 Had a few more minutes. Um, I'd like to, uh, turn to my creative partner. Patrick also wanna give a shout out to, uh, some of the other members of our faculty, professor Jason Hill and professor Steven Hicks in the room. Appreciate your guys, uh, joining Patrick. Speaker 12 00:56:23 Hey, uh, thanks, Richard. Uh, great, great talk, uh, education for me. Uh, I wanted to, I wanted to see if you could talk a little bit about the motivations, uh, particularly behind us having, uh, this, you know, like a stakeholder system from the populous side, uh, from my standpoint, um, I, I think it's, you know, whenever you engage in a fullthroated defense of capitalism, uh, the it's almost as though the we're talking, uh, about two different things, um, because the stakeholder people tend to be concerned about things like fraud and, uh, although maybe they call it something else. I'm not talking about those who are concerned about, you know, like wokeness, but let's say, you know, fraud or getting or special relationships with the government, which enable them to grow or have this success. So then there's sort of a suspicion because so many of them are ensconced with the government that help them get to that, that size. Uh, is, is there kind of a place to, uh, you know, to sort of emphasize a CR that like, that's the problem, you know, that, that is the problem not so, and the corporations can't really, uh, do anything about that. They could not take the money or what, but, but then they're, they're going to, um, yeah, that make sense. Speaker 0 00:57:44 It does Patrick and, and I think you're onto something there. The, the way I would interpret what's going on is, um, uh, these are fascism, particularly the stakeholder model is a hybrid political economic system. Where did it come from a hybrid ethic? People don't totally believe in egoism. They also believe in altruism and a hybrid. You know, they're not total individualists, they are also collectivists. So, so it, from an objective standpoint, just philosophically the hierarchical structure, it's not a mystery why you would get a mixed political economic system because it came from a mixed, ethical, you know, and deeper system, same thing on faith and reason that mixes in people's minds. But I think you're right. Once you get the mixed economy, people cannot easily disentangle whether a big company made it quote on its own or not. I think that's a big problem, Patrick. Speaker 0 00:58:39 I think you're absolutely right. And they see corruption and they see lobbying and they see, you know, favoritism and it, and, and the, um, turn style of back and forth between wall street, they see bailouts and all this cause I see campaign finance. And so it's, it's really disheartening because you now have to say to people, well, it's a mixed system, but what's really hurting us is the mixture that's poisonous called sadism. And the good element capitalism, uh, is not to be blamed. And it's very difficult to get across to people because there are others out there wanting to blur the distinctions. That's what the whole terminology as stakeholder crony capitalism, they, you don't have people out there like us trying to disentangle the good and bad elements and get conceptual clarity. So that is, that makes it harder for populace. I, I sympathize with populace who say I'm sick of a whole bunch of them. Speaker 0 00:59:37 If this is what our elites have brought us, you know, so much for elites. Um, but if you go the other route of, you know, just popular resentment, popular uprising, the common man, there's a, there's a kind of an ignorance level there that's, you know, hard to believe that that would get us out of this. What we need is better elites. We need better intellectuals. We need better business leaders. We need more pro capitalist, uh, leaders in effect. Um, so I, so I, I tend to resist populism. I, and, and defend as Jason Hill has recently meritocracy leadism, but from the standpoint of we need the best and the brightest, and that's what capitalism gives us. We, we need the best and the brightest, the best, uh, virtuously, the brightest epistemologically and then, and then we'll be, then we'll be safe and, and happier. Thanks. Thanks pat. Speaker 2 01:00:31 This is, this was an amazing room, amazing discussion. Thank you so much. Uh, professor Salzman, thanks also to our founder, David Kelly, uh, to my co-host Scott. Um, and, uh, I mentioned Patrick over if, uh, you'd like to check out some of the videos that we've produced together, please go to the ATLA society website, uh, under the now playing section, you'll see our vast library of draw my life, uh, videos now being translated into, um, dozens of foreign languages. So, um, so thank you everyone. I've put a pin to where you can sign up to get updates, uh, because we keep the content coming fast and furious next week. Uh, we've got a couple of clubhouses. Rob TRUS is religion necessary for free society. Um, and then, uh, as well, we have another one with, um, with Jason, uh, I Rand and civil disobedience. Um, I'm also gonna be interviewing live webinar next week with, uh, Ray Ferguson on her book, black liberation through the marketplace. So thanks everybody. And, uh, look forward to seeing you next week. Speaker 0 01:01:54 Thank you all. Thank you very much.

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