Shareholder Capitalism Is Back

THE VIRTUE ECONOMY, the only bubble I have ever called, has now completely burst.

- Allison Schrager Bloomberg

Many companies are cutting their DEI programmes, flows into ESG funds in the US have fallen, and companies are being quieter about politics.

The disappearance of the virtue-industrial complex does not come without a cost, on a human as well as financial level. At the same time, there is a clear winner—the concept of shareholder primacy. The idea, popularised by Nobel laureate Milton Friedman in 1970, is that corporate executives and boards have a single goal: to maximise return to their shareholders.

The notion that shareholders are all that should matter sounded cruel and heartless in 2019, when 181 CEOs of the Business Roundtable signed a statement redefining the purpose of a corporation. They committed "to lead their companies for the benefit of all stakeholders—customers, employees, suppliers, communities, and shareholders". How they would do this, and to whom they would be accountable, was unclear. But who could argue with such a noble-sounding goal?