The “Shareholder” economy versus the “Stakeholder” economy…

Many people mistakenly believe that only a “capitalist” (shareholder) economic system allows for the maximum level of personal individual freedom. They also now mistakenly believe that the only choice is between the private ownership (shareholder) of the means of production of goods and services or that of the government now owning the means of production as was practiced in the USSR. (supposedly in the name of the people) Also some believe that once the government starts providing “welfare” in the form of services (and goods through public assistance) that economic freedom is diminished and those who are “productive” are excessively burdened by taxes to pay for the welfare of those who are not (workers). Question any of today’s Republicans, Tea Party member, or many libertarians and you will see in fact that the great majority of them will agree with what I’ve just written. That the capitalist (shareholder) economy is superior to any other…

There is, however a superior form of economic organization that historically has done far better. That survives economic downturns much better, that resolves the growing “gulf” between the increasingly wealthy shareholder class and the increasing poverty of those who do the actual work. One reason for this is that the shareholding class’ major concern is “Return On Investment”. Seeking the highest ROI is the major reason that the share holding class has created the sort of society in which we find ourselves today. If nothing else counts but the highest possible ROI, then the ruling shareholder class through their control over elective governments will do what is necessary to produce the maximum ROI’s.*

* Return on investment in the form of interest, dividends, or increasing value.

The economic interests of the shareholding class is opposite that of the “worker class” (stakeholders). Improvements in the quality of life for the stakeholders means a lower ROI for the shareholder class. Free trade as practiced today among economic unequals means that obtaining maximum production at the lowest possible cost while beneficial to the consumer, is even more so to the shareholders. However, most consumers are of the stakeholder class, not the shareholder class. What “savings” they receive through being able to purchase consumer goods at lower cost hardly make up for their loss of income caused by free trade with countries with much lower costs of production. The decline in unionization also means less income and job security. So while the shareholders have in fact gained better returns on investment via “Right To Work” legislation, their gains have been actually in truth at the cost of lower incomes and job security for the stakeholders…

The book “Capital and The Debt Trap” goes into detail about “stakeholder controlled enterprises” and is well worth seeking out through your public library system. The fact that “stakeholder controlled enterprises” actually did do much better than “share holder controlled enterprises” leaves little doubt as to the superior of the stakeholder controlled enterprise as compared to the shareholder controlled enterprise as a basis for an “free enterprise” economic system. Perhaps for the major reason that the stakeholder has a vested interest in the enterprise where he or she works while the shareholder can easily sell their investment on the stock market and seek out other investments that might provide a better rate of return on the investment. Especially since the shareholder’s interest in any form of enterprise is mainly one of obtaining the best possible return.

This also appears to have been one of the driving forces that was behind the “sub prime mortgage” crisis of recent times. “Profit at all costs” created the system of “fraud” that underlaid the securitization of mortgages that were known to be likely to soon default. The idea was to make a quick profit and then bail out just before everything collapsed. The fact that these actions were (at least in the moral sense) “criminal” meant next to nothing to those seeking the maximum profit. Nor did the government even attempt to prosecute those responsible. Some relatively meaningless fines were handed down, but as these fines were “tax deductible”, they amounted to a “slap on the wrist” if even that! It appears likely that if organized crime could offer stock on the stock market, that there would be ample numbers of investors who would buy in, despite the actual nature of the “business” involved! Just as German corporations (and some American owned) provided the necessary means to the Nazis to kill millions of innocent people. Our own “military-industrial complex” is also in the business of “killing people” when it comes down to it. Profiting off the misery of others has been going on for a long time, unfortunately…

There is an unfortunate worship of “profit about all” that infects our modern capitalist society. An idea of “business before people” that has grown with time. Aided no doubt by the power of massive corporations to propagandize the voters into believing that there is “no alternative” but to accept the nature of share holder controlled business as the only “way” to organize an economy. Unfortunately too many “libertarians” have accepted this idea as being right and proper. That in a libertarian society it is “sink or swim”. No doubt a part of this is due to the thinking and writings of Ayn Rand, who virtually worshipped a sort of self centered individualism over everything else. The fact that no society has ever been successfully organized on those principles in all of human history going back to the hunter-gatherer cultures of the Stone Age is the best refutation of such ideas. Nor can we ever have any effective political role to play when we simply repeat these kind of ideas. For libertarianism to be accepted by a majority of the people, it must offer the hope of a better life than that offered by conservatives or liberals. To do this, we have to offer “more” than they can offer. Less government, work for everyone, greater freedom.



About muskegonlibertarian

77 year old retired owner of a security guard agency. Member of the Libertarian Party.
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One Response to The “Shareholder” economy versus the “Stakeholder” economy…

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