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Beyond Germany, during the early years of the 20th century, many theorists and corporate executives embraced stakeholderism.

In the 1930s, Robert E. Wood, the CEO of Sears, listed four parties to any business in order of their importance: “customers, employees, community, and stockholders.” In a famous 1932 Harvard Law Review paper — “For whom are corporate managers trustees?” — Merrick Dodd proposed broadening managerial responsibility beyond shareholders. Dodd’s views failed to catch on.


The current effort to “put an end to the era of shareholder capitalism,” as Biden said, aims to undo the free-market foundations of shareholder capitalism.

Klaus Schwab spells it out in recent declarations in which he cravenly uses the COVID-19 pandemic as a justification for an attack on “neoliberalism” — and on Milton Friedman. “We must move on from neoliberalism in the post-COVID era,” says Schwab. We need to abandon the “sacred cows,” such as “free-market fundamentalism,” that have eroded worker rights and the environment, spawned inequality, and fostered the development of giant corporate monopolies. We need to reconsider our commitment to “capitalism,” writes Schwab, and redefine the role of corporations.

We must move on from neoliberalism in the post-COVID era

Klaus Schwab

Schwab misrepresents Friedman by implying that the Nobel economist held a narrow, mean-spirited view of corporate purpose. The “business of business is business,” he quotes Friedman. In fact, Friedman defended the responsibility of corporate managers to protect the interests of customers and employees, within the laws and customs of society. He warned against managers who engaged in activities that ran counter to the interests of customers and employees. “How much cost,” asked Friedman, is a corporate executive “justified in imposing on his stockholders, customers and employees for this social purpose?”

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