The Stakeholder Cometh

...Tories will make all of these arguments, with some justification...

...As such, he argues, these institutions "are not supposed simply to be efficient at responding to people's transient desires . . . but are rather supposed to help shape . . . the people's character, according to some version-accepted by the people itself-of the 'public good' and 'public interest...

...The result is the "stakeholder economy...

...Alas, only a dwindling band of true, red-blooded free marketeers will hold out for the unambiguous verity of profits, profits, and more profits...

...But forgivably so: The idea was presented in a speech, and was not intended to be a detailed road map...

...But these complaints fail to address the more fundamental issue raised by Blair: the role of the corporation in the political life of a modern economy...

...The term "stakeholder" refers to everybody who has an interest in a corporation: not only those who own stock, but managers, workers, vendors, and unspecified others...

...It is, of course, a transfer of property rights from shareholders to stakeholders-a kind of taking of property without compensation...

...Observers as far apart politically as Reich and Charles Murray seem to agree that America is becoming a variant of Latin America's highly stratified society, with upper- and lower-income groups separated by sturdy fences woven of money and patrolled by private security forces...

...Whatever the outcome of the debate, we can at least thank our British cousins for forcing us to think again about whether our biggest companies should keep their noses to the profit grindstone, or assume the role of their stakeholders' keeper...

...So, too, in Britain...

...That idea calls for a basic change in the way businesses are organized and run...

...The stakeholder economy is based on "trust" (Blair gives full credit to Francis Fukuyama, whom he describes as "an economist of the right who is nonetheless concerned at the selfish individualism of parts of Western society...

...And in this the left is not alone, at least not in America...

...Blair recognizes that in a competitive, globalized economy there is no hiding shoddy, costly products behind a wall of tariffs lest living standards suffer...

...It will require maintenance of a "disciplined . . . macroeconomic and fiscal policy...

...Blair would have the government see to it that workers are given "representation, consultation and prior notification of major events," in the words of the Guardian's Will Hutton, who serves as amplifier and expositor to Blair in much the way that Reich does for Clinton...

...This expansion of the role of government is precisely what Kristol, no defender of corporate perks, has warned against: The danger, he says, "is that the large corporation will be thoroughly integrated into the public sector, and lose its private character altogether...

...Few are prepared to defend a status quo that sees families disintegrating, pensioners too frightened of increasingly violent muggers to step out of doors even in the late afternoon, taxes rising, and the value of homes declining...

...Still other Tories claimed that Blair's ideas were their very own-why, witness the number of stakeholders created by the Conservative government's policies of selling shares in the once publicly owned gas, electric, telephone, and water companies to millions of citizens, and allowing residents of government-owned houses and apartments to purchase them on reasonable terms...

...Implementation of Blair's vision will require reform of the welfare state, which has succeeded neither in alleviating poverty effectively nor in assisting what Blair terms "the growth of independence, the move from benefit to work...

...Blair even goes so far as to acknowledge that the welfare system needs to be overhauled, and that many of the Thatcher-Reagan reforms, even those that diluted the power of the trade unions, were for the better and should not be reversed...

...Its purpose is to create a "cohesive society . . . with a strong sense of purpose and direction...

...Irving Kristol has pointed out that "the large corporation has ceased being a species of private property, and is now a 'quasipublic' institution...

...Maximizing the profits of shareholders is to be replaced by maximizing the well-being of all the corporation's stakeholders-its workers, customers, and the community in which it is located...

...Others contended that the idea was quite clear, and would inevitably require an enormous government bureaucracy to implement it...

...But it is surely time to assess how we shift the emphasis in corporate ethos from the company being a mere vehicle for the capital market . . . towards a vision of the company as a community or partnership in which each employee has a stake...

...Vague stuff, to be sure...

...You can be sure the "stakeholder economy" will be echoed in the speeches of Bill Clinton, Robert Reich, Robert Rubin, and all the rest of the gang as surely as the latest English fashion is headed for the showrooms of Ralph Lauren...

...We cannot by legislation guarantee that a company will behave in a way conducive to trust and long term commitment," Blair said...

...At that crucial point Blair and Kristol part company...

...second, Blair's speech contained profoundly dangerous ideas...

...Little wonder that Blair's "big idea" is receiving so much respectful attention...

...To argue that corporate managers, largely immune from removal by shareholders in all except the most extreme circumstances, are out to maximize profits is to ignore reality...

...Such is the incoherence to which the post-Thatcher Conservative party has been reduced...

...Some claimed that the stakeholder concept was so vague that it was impossible for them to comment on it...

...But he does not stop there...

...But this fear is not likely to deter Blair's American fans, Reich in particular, from taking up the British Labour leader's challenge to redefine the role of the private corporation in American life to include attention to all its stakeholders...

...Financial markets will not tolerate the inflationary budget shenanigans of previous Labour governments, and tax-and-spend-and-redistribute policies have gone about as far as they can go without destroying incentives to work and investment...

...It is also a way of imposing on corporations the cost of job training and other schemes the left realizes it can no longer pay for with tax revenues...

...No, argues the modern left, the achievements of the recent past are not good enough...

...It is the theme that unifies left-wing policies in the post-socialist age...

...third, Blair's speech stole their ideas...

...Tories raised three objections: first, Blair's speech contained no ideas...

...And it will require government policies to ensure that the riches of economic growth are fairly distributed among a population that the government will ensure has benefits from equal educational and vocational opportunities...

...Irwin M. Stelzer wrote about the Conservative and Labour party conferences last year for The Weekly Standard...

...Tony Blair, the personable leader of Britain's opposition Labour party (and, if the polls are right, soon-to-be prime minister), decided to shuck off his reputation as an intellectual lightweight...

...Most remarkably, it traffics in facts, not dreams...

...The transformation of American capitalism that this would represent . . . does constitute a huge potential threat to the individual liberties Americans have traditionally enjoyed...

...And ideas do travel-Reaganism and Thatcherism had common intellectual roots, and Joe Biden ripped off Neil Kinnock's memories of football in 1988...

...And one-time political opponents like Pat Buchanan and old-line trade unions unite in their fear of international competition and technological change to appeal to a middle class made insecure by the downsizing of large corporations...

...The Stakeholder Cometh by Irwin M. Stelzer London AFTER decades of searching, the British left may have found what it calls "a big idea," one to put it back in the big leagues with the conservatives who have dominated the intellectual agenda for the past two decades...

...If a legislative realignment of investor, worker, and customer rights is required, so be it, although Blair has made clear his preference for moral suasion...

...Its leading members have long sought relief from the demanding imperatives of profit maximization, and hanker for a kinder and gentler corporate life in which an overstaffed business can be explained away as a commitment to "stakeholding...

...And don't expect America's managerial class to object...

...There are many ways to view this redefinition of the role of the corporation...

...Or it can be seen as an effort to reestablish union power by putting workers in the boardroom where they just might achieve what is no longer attainable on the picket line...

...Which is a pity, because the idea of a "stakeholder" society demands attention...

...So he used his Christmas holiday in Australia to do something few politicians this side of Renaissance Weekend find the time or inclination to do: think...