This second Preventable Surprises Master Class invited reflections on “Stakeholder Capitalism’s Next Frontier: Pro- or Anti-Monopoly?” – a new report co-authored by Economic Liberties’ Denise Hearn and Balanced Economy Project’s Michelle Meagher.
You can watch a replay of the Master Class, or simply look at the excellent slides. A recent Financial Times Column, “The failures of stakeholder capitalism” provides additional context.
From Alphabet to Bank of America, firms often championed by the stakeholder capitalism movement are also among the worst antitrust offenders. Google is currently being sued by dozens of state attorneys general for violating its dominant position in search, and it has previously paid record state antitrust fines for violating children’s privacy laws. Bank of America is being sued under antitrust law for bid rigging the credit default swap market, and the company (along with WellsFargo and JPMorgan Chase) settled an ATM charge price-fixing case in October of 2021.
So why this disconnect between stakeholder capitalists and anti-monopolists?
While both movements have gained traction in recent years, the two communities and conversations rarely intersect. Both, however, ask fundamental questions about the nature and obligations of firms in society. Stakeholder capitalism generally focuses on what happens inside corporations, while anti-monopoly focuses on what happens between corporations, in markets and economies. These terrains overlap in important ways and, when seen this way, the potential congruence between the movements becomes clearer.
In their latest paper, Michelle Meagher and Denise Hearn argue that the failure to integrate the problem of concentrated corporate power into the stakeholder capitalism agenda not only undermines its stated goals, but creates a clear problem of political legitimacy for its proponents. Today’s markets are highly concentrated, and it is within this economic structure that stakeholder capitalists and ESG investors make their case for better corporate behavior.