Stakeholder capitalism is under attack from both the right and the left

January 18, 2022, 10:28 AM UTC

Good morning.

Richard Edelman’s annual Trust survey is out this morning, timed for a Davos meeting that has gone virtual because of Omicron. The survey of 36,000 people in 27 countries shows that business is again the most trusted institution around the world, while government and media have entered what Edelman calls “a distrust spiral,” pursuing “exaggeration and division to gain clicks and votes.” The survey also shows that, by large margins, respondents in the 27 countries want business to play a larger role on climate change, economic inequality, workforce reskilling and addressing racial injustice. You can see the full results here. Bottom line, says Edelman: “Societal leadership is now a core function of business.”

Not everyone is down with that trend. Coming from the right, British fund manager Terry Smith launched an attack on Unilever last week for its role in leading the business pivot toward social goals. “A company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot,” Smith said. 

And from the left, Peter Goodman of the New York Times has a new book out today blaming so-called Davos Man for a host of economic ills. I read Goodman’s book over the weekend. It focuses on a handful of billionaires—Marc Benioff, Jeff Bezos, Jamie Dimon, Steve Schwartzman, Larry Fink—whose biggest crime seems to be their participation in a tax system that legally allows wealth to accumulate tax-free. But in Goodman’s narrative, they represent a much broader governing elite that he attacks, in Elizabeth Warren style, for five decades of misguided economic policy. “We are living in a world designed by Davos man to direct ever greater fortune toward Davos man,” he writes. Stakeholder capitalism, in his view, is merely “a means of preempting government regulation.” 

Goodman’s solution: wealth taxes; universal basic income; increased regulation; and a somewhat vague preference for cooperatives over corporations. “Reclaiming power from Davos man requires no insurrection or revolution of ideas,” he writes at the end of his polemic. “It demands thoughtful use of a tool that has been there all along: democracy.” 

Goodman takes a swipe at me midway through the book, quoting disapprovingly the article I wrote after the Business Roundtable’s turn toward stakeholder capitalism in the summer of 2019. “Something fundamental and profound has changed in the way (these CEOs) approach their jobs,” I said at the time. Events over the last two and a half years have only reinforced my view. A growing number of the world’s leading businesses have demonstrably stepped up action on climate, racial and social injustice, and workforce opportunity. Under pressure from employees, customers and investors—and in reaction to failed governments—leading CEOs are changing the way they lead. Their actions are not a panacea. They may not go far enough or fast enough. And they are certainly not a substitute for competent government. But the change is real, it’s in the right direction, and it’s worth encouraging.

More news below. 

Alan Murray


Fink defense

Continuing the above theme, Larry Fink has hit back against suggestions that stakeholder capitalism is "woke," arguing in his annual letter to CEOs that the concept "is not a social or ideological agenda." The BlackRock CEO wrote: "We focus on sustainability not because we’re environmentalists, but because we are capitalists and fiduciaries to our clients." Fortune

Planes vs 5G 

The U.S. aviation sector is again threatening to ground masses of planes over the interference their altimeters will allegedly suffer when Verizon and AT&T turn on new parts of their 5G networks (explainer here, in which you will learn why this feared outcome is unlikely to appear.) These networks were supposed to go live on Dec. 5, but the wireless firms agreed to a one-month delay, then another two-week pause, which ends tomorrow. Fortune

Activision Blizzard

Activision Blizzard CEO Bobby Kotick said he'd walk if he couldn't fix the game-maker's internal culture, and here we go: more than three dozen employees have reportedly been fired or pushed out in recent months, and 44 disciplined, over sexual-harassment allegations or other misconduct. Wall Street Journal

Fourth Pfizer

Yet another strike against the idea of the general populace getting a fourth Pfizer COVID vaccine dose: it doesn't actually stop infection with the Omicron variant, according to preliminary data coming from Israel, where second boosters are already being rolled out to elderly and vulnerable people. Fortune


Italy vs Big Tech

CNBC has an interesting piece on how Italy's competition authority has become a serious Big Tech antagonist, hammering the likes of Amazon, Apple and Google with big fines. "The sanctions vary greatly in their size but carry a similar message: National regulators will take action in their home markets," the piece notes. CNBC

Apple payments

The Dutch competition authority is reviewing Apple's proposal for letting app developers offer non-Apple payment options. It's a global issue, but this particular case involves payment policies within dating apps. Mobile World Live

Metaverse patents

New patents granted to Meta suggest how the Facebook parent wants to cash in on its metaverse push: virtual stores, targeted advertising, and sponsored content, with the user seeing what the system deems appropriate to their facial expressions and gaze targeting. Financial Times

Fauci warnings

Is Omicron a bridge out of the pandemic, as so many have now suggested? Let's wait and see, Anthony Fauci told virtual Davos. The top U.S. government advisor also said it was important to fight the overall pandemic rather than individual strains: "We don’t want to get into a whack-a-mole for every variant, where you have to make a booster against a particular variant. You'll be chasing it forever." Fortune

This edition of CEO Daily was edited by David Meyer.

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