Stakeholder Capitalism: Progressive Dream or Nightmare?
Joseph Stiglitz’s proposes transforming America’s “liberal capitalism” into “progressive capitalism” by encouraging socially responsible corporations to include progressive stakeholders in corporate decision-making. He suggests that the time may be ripe because the Business Roundtable recently endorsed efforts to make American corporations more socially responsible. He predicts that if the Business Roundtable is sincere, progressive socially responsible, stakeholder and shareholder joint sovereign corporations will create a more dynamic economy, with greater shared prosperity and uplift the majority again to a middle-class life. However, Stiglitz fails to probe the contradictions and moral hazards inherent in stakeholder-shareholder co-sovereignty that could transform his dream into a nightmare. This essay elaborates and critically evaluates Stiglitz’s concept in the contemporary American political context. It shows that while progressive capitalism founded on stakeholder-shareholder co-sovereignty could have merit, corporations should reject it until Stiglitz explains how corporate boards of directors can safely test the waters.
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