Stakeholder capitalism & the political limits of corporate morality

27th October 2022

Author:  Professor Carl Rhodes, Dean of UTS Business School, University of Technology Sydney and author of Woke Capitalism: How Corporate Morality is Sabotaging Democracy (Bristol University Press)

Social impact is all the rage in the corporate world. Gone are the days when CEOs declared undying devotion to creating shareholder value. Back then, if society were to benefit from corporate activity, it would be through the mysterious, if not mendacious, promises of trickle-down economics. Cut taxes to corporations and the rich. Set loose their animal spirits to do their natural things. Prosperity for all would ensue. Such was the neoliberal utopia peddled by politicians from the 1980s to almost the present day.

It was a lie. Over the past 30 years income inequality has increased in most developed countries, and remained high in the developing world1. Since 1995 the proportion of global wealth owned by billionaires has tripled2. Only the most obtuse neoliberal ideologue would still spruik the trickle-down effect as a moral defence of capitalism today. 

A new justification was needed!3 19 August 2019 was a key date. This was the day The Business Roundtable – the club for the CEOs of American biggest businesses – released a new version of its ‘Statement on the Purpose of a Corporation’. Doing away with shareholder value maximisation, the new resolution was for ‘a fundamental commitment to all of our stakeholders’ whether they be customers, employees, suppliers, communities or shareholders.4

Detractors have disparaged the new stakeholder-friendly social impact approach as ‘woke capitalism’, commonly understood as a superficial adoption of progressive political positions by corporations in order to curry favour with liberal interest groups. We need a ‘war of woke capitalism’5, these critics cry, claiming that instead of being hoodwinked by socialists, CEOs should stick to their knitting of making money.

It all makes for dramatic chest-beating politics, but the reality is that the new social impact agenda is not in any way a redirection of capitalism. It is just a new phase of its development. The whole premise of the social impact agenda is that it offers businesses a competitive advantage. ‘Shared value’, they call it6. With that also comes a new moral justification: ‘conscious capitalism’7 is a ‘force for good’8

It sounds like what Antonio Gramsci called a ‘passive revolution’ – the incorporation of political discontent by the elite to prevent any real systemic change to the status quo9. To that point, whether social impact initiatives result in shared value has been scrutinised at some length10. Suspending our disbelief, let’s stretch our imaginations and assume that social impact agendas did create value for all stakeholders. Where would that value be? Where would it not be?

To answer this question, it is worth considering the types of social impact initiatives businesses invest in. The main ones are addressing climate change, asserting LGBTQI rights, pursuing gender equality, supporting anti-racism and the Black Lives Matter Movement, and combatting toxic masculinity through the #metoo movement. These are all important social and environmental movements, largely associated with the left. 

In all cases, real political activists have paved the way to fight for equality and emancipation, with corporations gliding in on their slipstream with a business case in hand. Under corporate auspices, these causes also have another thing in common. They entirely avoid addressing the core economic problem of economic inequality.

No woke capitalists are demanding justice when it comes to the runaway train of obscene executive remuneration. Meaningful distribution of wealth and income through progressive taxation are absent from the corporate agenda. The positive social impact of increasing the minimum wage or introducing a  Universal Basic Income? Nowhere to be seen. 

If we start relying on corporations to solve our social problems, we will come up against a stringent limit: if it is not good for business and its bosses and owners, it will not get done. Social impact will not go beyond its current limits if corporations are in charge. As Jean-Jacques Rousseau put it many years ago: “Nothing is more dangerous than the influence of private interest in public affairs”11. The corporate social impact agenda’s avoidance of the core political issue of economic justice in its quiver of woke causes is the contemporary realisation of that very danger.

If corporations create a positive social impact, good for them, but this is no substitute for democratic politics and government. The corporate focus on social impact is a recent manifestation of a much longer trend to what Colin Crouch called ‘post-democracy’. In post-democracy, world politics is shaped by elite private interests such that “politics and government are increasingly slipping back into the control of privileged elites in the manner characteristic of pre-democratic times”.12

Beyond the corporate agenda for social impact lies a democratic agenda that has long been in in aabeyance. As Chantal Mouffe explains, the neoliberal thrust of post-democracy has resulted in “the erosion of the two pillars of the democratic ideal: equality and popular sovereignty”13. These are the crucial political values that lie beyond corporate social impact.  

While stakeholder capitalism will always align with the agenda of corporate power, real social impact requires a resurgence of democracy and a renewed political demand for economic equality


1 United Nations (2022) Inequality – Bridging the Divide, United Nations. Online, visited 25 August 2022
2 Chancel, L. (2022) World Inequality Report 22
3 Is Woke Capitalism the New Trickle-Down Economics?
4 Reference to statement
5 Edgecliffe-Joohnson, A. (2022) The war on ‘woke capitalism’, Financial Times, 28 May 2022
6 Porter, M.E. and Kramer, M.R. (2011) Creating Shared Value: How to reinvent capitalism and
unleash a wave of innovation and growth, Harvard Business Review, January-February 2022

7 Mackey, J., & Sisodia, R. (2014). Conscious capitalism, with a new preface by the authors: Liberating the heroic spirit of business. Boston: Harvard Business Review Press.
8 Hoffman, A, (2021) How business can act as a force for good, Word Economic Forum, 19 January 2021
9 Gramsci, A. (1971) Selections from the Prison Notebooks, New York: International Publishers.
10 e.g. Crane, A., Palazzo, G., Spence, L.J. and Matten, D, (2014) Contesting the Value of the Shared
Value Concept, California Management Review, 56(2): 130-153.
11 Rousseau, J-J. (1893)The Social Contract, New York: Peter Eckler. p. 95.
12 Crouch, C. (2000) Post-Democracy. Cambridge: Polity.
13 Mouffe, C. (2019) For a Left Populism, London: Verso.