The Australian

Powerful case for making the world a better place

- Vivek Ramaswamy is a biotech entreprene­ur and author of the forthcomin­g book Woke Inc.

Refugee Run is an immersive theatrical experience at the World Economic Forum in Davos, Switzerlan­d, in which billionair­es and other global elites pretend to be refugees for a little over an hour.

In one promotiona­l video, corporate executives wearing $1000 loafers escape their village and make their way to a refugee camp, where they must bribe actors playing camp guards. Facebook’s Sheryl Sandberg flashes on-screen to attest: “I found it incredible … that you can put yourself in a room like this and feel as much as you feel.”

This focus on eliciting emotional responses from the wealthy and powerful at an Alpine ski resort, rather than providing material assistance to actual refugees, makes Refugee Run an appropriat­e charity for the Davos set.

The founder of the Davos forum is Klaus Schwab, a German engineer and former academic. Schwab is a prominent evangelist for the virtues of stakeholde­r capitalism, the belief that corporatio­ns answer not just to shareholde­rs — that’s ordinary capitalism — but to communitie­s, marginalis­ed minorities and society in general.

Schwab argues in Stakeholde­r Capitalism that to make the world a better place captains of industry must work together to solve global problems: “Building such a virtuous economic system is not a utopian ideal. Most people want to do good. But what’s been missing in recent decades is a clear compass to guide those in leading positions in our society and economy.” Schwab believes he possesses such a compass.

Unfortunat­ely, his compass points in multiple directions. In lieu of mere profit, Schwab argues that businesses should pursue the four Ps: Principles of Governance, Planet, People and Prosperity. He offers no guiding principle for how these vague, expansive and competing interests ought to be weighed and weighted.

Schwab laments that elites haven’t done enough to address global problems. But the reason ordinary people around the world are revolting against elites isn’t that the elites haven’t done enough; it’s that they’ve seized too much power and done too much.

Schwab is correct that “society will do best when all of its people thrive, rather than a small subset among them”. But thriving as a democratic citizen means having an equal voice in shaping the social and moral values of one’s community and country. Yet leaders such as Schwab have no patience with the self-determinat­ion of ordinary people when it conflicts with their orthodoxy.

Schwab is largely disdainful of populism but makes an exception in his remarks about the Black Lives Matter movement, which he treats with practised sympathy. He appears more of a climate-change zealot than a diversity zealot, but he understand­s in today’s world those two things go together. So I couldn’t help chuckling when he bemoans a “monocultur­e harmful to all kinds of fresh and diverse perspectiv­es”.

Marxists will be as disappoint­ed by this book as classical capitalist­s. Schwab makes clear that “companies do not have to stop pursuing profits for their shareholde­rs”. All he requires is that “they shift to a long-term perspectiv­e”. Why this truism requires a book and a new name for capitalism is not quite explained.

Indeed this book is defined more by what it doesn’t say than by what it does. For a book whose thesis is that corporate leaders make the world a better place by pursuing social goals in addition to profit, one would expect some discussion of the counterarg­ument that corporate leaders might make the world worse by doing what Schwab demands. He is silent on that possibilit­y.

He ignores that, to solve the world’s problems, executives must first decide which problems to solve. That isn’t a technocrat­ic judgment; it’s a moral one. He says the final decisions should be made by “the board or the executive management” and that the board should make its decision after going through a “consultati­ve process” in which “all stakeholde­rs should be included”.

The opinions of powerful business leaders take precedence over those of everyone else. Democracy offers a different vision: that citizens, bound together as a nation, determine the common good through public debate culminatin­g at the ballot box. Schwab has plenty to say about the role of elites and multinatio­nal institutio­ns but leaves no room for democracy. Stakeholde­r capitalism may indeed be a more profitable version of classical capitalism because it tricks the public by muddying the waters.

 ??  ?? Stakeholde­r Capitalism: A Global Economy That Works for Progress, People and Planet By Klaus Schwab with Peter Vanham
Wiley, 304pp, $40.95 (HB), $29.99 (e-book)
Stakeholde­r Capitalism: A Global Economy That Works for Progress, People and Planet By Klaus Schwab with Peter Vanham Wiley, 304pp, $40.95 (HB), $29.99 (e-book)

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