“Stakeholder capitalism” appears to be yet another attempt at a Third Way between free enterprise and communism. It’s just as futile.

1. Klaus Schwab writes: “All Stakeholders matter equally.” The ultimate stakeholders in society are the consumers. Under free markets, the consumers are sovereign. Moreover, they are sovereign equally, as in all have the power to judge production attempts. (They of course receive unequal incomes, but this too is an effect of previous consumer choices.) And since everyone is a consumer, under laissez faire it is literally true that all stakeholders matter equally.

2. Further, under stakeholder capitalism, “Society’s goal is to increase the well-being of people and the planet.” This is gibberish. Society, and the economy, is not an organism, still less a rational individual, but a process of social cooperation. An individual to society is not like a cell to the body.

It may be Schwab’s goal, it may under communism be the goal of the dictator, it may be a utilitarian goal. But society is not a person and has no goals.

If shareholder capitalism is utilitarian, as is now indubitable, then it is it that most efficiently increases well-being.

3. Again, stakeholder capitalism claims to “Focus on long-term value creation and ESG measures.” It is a mistake to say that the state is prudent and sagacious and the market is shortsighted. Indeed, the opposite is the case.