Change of course: towards a new capitalism

In the supplement ‘Dinero’ by La Vanguardia I tried to explain the change of course of capitalism, as a preview of the World Economic Forum in Davos with the theme “Stakeholders for a Cohesive and Sustainable World”.

How to incorporate stakeholders interests in the management of a firm? With an explicit purpose. It’s not about giving a little to each party (no check-list governance!) but of prioritizing the relevant stakeholders, those that are directly linked to the firm’s ‘raison d’être’.

If stake holders are part of purpose its implementation is complex and prone to serious agency problems. It can easily exacerbate rent extraction, pet projects, low monitoring. Boards need to chose few clear metrics and translate into incentives. Still, it might not be enough.

Boards have a daunting task under Stakeholder Capitalism: Implementing longterm incentives, managing environmental impact and most importantly, pushing for innovation. We might need to innovate on its structure and modus operandi. Different committees and focused expertise.

For a cohesive and sustainable capitalism, yes companies may want to self-regulate via purpose and corporate governance… But most importantly we need to up the game on the competition front. Market power affects labor share and inequality. This is first order.

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