Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, released his new book, “Stakeholder Capitalism: A Global Economy that Works for Progress, People and Planet”, co-authored with Peter Vanham.
In the book, Schwab looks 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, he writes. But they also led to historical economic inequality, and the degradation of the environment.
“We can’t continue with an economic system driven by selfish values, such as short-term profit maximization, the avoidance of tax and regulation, or the externalizing of environmental harm,” Schwab writes. “Instead, we need a society, economy, and international community that is designed to care for all people and the entire planet.”
Schwab proposes a third way: the model of stakeholder capitalism. It is one where companies seek long-term value creation instead of short-term profits; governments cooperate to create the greatest possible prosperity for their people, and civil society and international organizations complete the stakeholder dialogue, helping balance the interests of people and the planet.
Schwab first wrote about the stakeholder model in his book “Modern Enterprise Management” in 1971. 50 years on, his views are becoming mainstream in the global business community. Advocacy groups such as the US Business Roundtable endorsed stakeholder capitalism in 2019, and more than 60 World Economic Forum members this week signed up for the “Stakeholder Capitalism Metrics”.