Stakeholders or shareholders – where should capitalism’s focus be?

Company managements are busying themselves fighting climate change, increasing diversity and fostering employee wellness. That’s all well and good, says Merryn Somerset Webb. But shouldn’t they just stick to making money?

Coutts supporting Pride in London
Companies are much more inclusive now
(Image credit: © Quintina Valero/Getty Images)

Is it the job of a company to attempt to mitigate climate change? Milton Friedman would have said “No”. Back in 1970, he popularised the idea that the primary aim of executives should be to maximise the value created for their shareholders in a (still) brilliant essay. Companies should make stuff or create a service within the appropriate regulatory boundaries, he wrote; then sell it, and pay the proceeds to the providers of its capital. Aiming for anything else, he said, is to spend “someone else’s money for a general social interest”. And why would you want to do that?

It was compelling stuff — and its logic held firm in the corporate world for nearly 50 years. But today Friedman is old news. In 2019, the US Business Roundtable decided to redefine “the purpose of a corporation to promote an economy that serves all Americans ”. It comes with five commitments — to customers, employees, suppliers, communities and shareholders. This was soon followed by the Davos Manifesto 2020, where lots of people who have benefited from shareholder capitalism laid down their thinking on getting rid of it. Shareholders are mentioned last again, behind “society at large”.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.