WEF founder Klaus Schwab raises the stakes on resetting capitalism
A new book claiming that ‘stakeholder capitalism’ can create a more inclusive, sustainable and resilient global economy has won praise from government leaders and NGOs – as well as bosses of some of the world’s most influential companies.
Stakeholder Capitalism: A Global Economy that Works for Progress, People and Planet is the latest tome from the founder and executive chair of the World Economic Forum, Klaus Schwab.
It describes stakeholder capitalism as a form of capitalism in which companies not only optimise short-term profits for shareholders, but also seek long-term value creation, by taking into account the needs of all their stakeholders and wider society.
The book was released last week with advance praise from the CEOs of Microsoft, Salesforce, Tata Sons, Grupo Santander and Bank of America.
Marc Bennioff, chair and CEO of Salesforce, called it “an urgent call to action”, while N. Chandrasekaran, executive chair of Tata Sons, said it offered “a blueprint for the future, inviting us to build a more inclusive, prosperous, healthier and greener world by embracing stakeholder capitalism at scale.”
Ana Botín, group executive chair of Banco Santander, said: “For decades, Klaus Schwab has helped to shape the debate on the global economy, and the role of business. Now, as we emerge from the Covid crisis, this incisive and timely book analyses the myriad of challenges we face, and proposes a way forward powered by the power of innovation, fair competition and responsible business. All is not lost, but an urgent reset of capitalism is required. Stakeholder Capitalism is a call to action – and action is needed, now.”
For decades, Klaus Schwab has helped to shape the debate on the global economy, and the role of business - Ana Botín, Banco Santander
In the book, Schwab and co-author Peter Vanham look at the achievements and shortcomings of the global economic system dominant in the past decades: shareholder capitalism in the West, and state capitalism in the East. Both systems enabled unprecedented advances in wealth, measured by GDP and profits, they write, but also led to historical economic inequality and degradation of the environment.
The authors look at solutions to this from around the world, identifying new ways of doing things that provide grounds for hope – including a clearly defined social contract, planning for future generations, and measures of economic success that move beyond the narrow focus on GDP.
Back to the 1950s?
Schwab, a German engineer and economist by training who will be 83 years old this year, founded the WEF in 1971, an organisation most famous for its annual gathering of high-flying leaders and thinkers in Davos, Switzerland.
While critics see the Davos meetings as an elitist forum for the rich and powerful, attendees say it has provided a platform to push through some major global initiatives. In an interview last year with The New York Times, Schwab said elites had “always existed” and that the WEF’s job was to “bring together people of influence, and we hope that they use their influence in a positive way”.
In 1998, Schwab and his wife Hilde created the Schwab Foundation for Social Entrepreneurship, which aims to identify, recognise and disseminate initiatives in social entrepreneurship that have improved people’s lives and have potential to be replicated worldwide.
Schwab is also the author of The Fourth Industrial Revolution and Covid-19: The Great Reset.
This latest book is not Schwab’s first foray into the idea of stakeholder capitalism, which he first wrote about in 1971.
And its roots go even further back, according to Schwab. “In the 1950s and 1960s, it was quite natural for a company and its CEO to consider not just shareholders, but everyone who has a ‘stake’ in the success of a firm.”
Interest in stakeholder capitalism appears to be gaining ground among company bosses. The US Business Roundtable endorsed stakeholder capitalism in 2019, and more than 60 World Economic Forum members signed up at last week’s Davos Agenda meeting for the Stakeholder Capitalism Metrics, which offer a core set of 21 universal, comparable disclosures focused on people, planet, prosperity and principles of governance that are considered most critical for business, society and the planet, and that companies can report on regardless of industry or region.
The Davos Agenda took place online last week, replacing the usual WEF annual gathering in the Swiss mountains, which will take place instead in Singapore in May.
Header image: Professor Klaus Schwab pictured in 2014 (credit WEF, republished under a creative commons license)
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