“Milton Friedman was wrong.”
The late economist and Nobel Laureate was renowned for (among other things) insisting that the only proper concern of business was shareholder value.
Whether he was right or not, over the past two generations, business interests adhered to his doctrine as the Catholic Church adheres to the Nicene Creed.
That the quotation above appears on the website of the Wharton School of Business suggests the truth of the article’s headline: “Corporate Governance Is Changing”.
The turning point came in 2019, when the Business Roundtable, an association of the leading CEOs in the nation, issued a revised version of its principles of corporate governance.
Dumping Friedman’s monotheistic doctrine of shareholder value, the Roundtable called for “a fundamental commitment to all of our stakeholders,” including not only shareholders but customers, “the communities in which we work,” and employees.
The statement aroused controversy, including fulminations from the predictable sources (the editorial pages of The Wall Street Journal).
More than one critic dismissed it as greenwashing. Even so, you can gauge the statement’s influence by the frequency with which the word “stakeholders” now appears in the business press.
I do not believe in prophecies, but I am willing to predict one thing: the world of work as it was in 2019 will never return. How it will mutate is impossible to guess. Leftist thinkers have even been propounding the notion of “antiwork”—a subject for discussion in its own right.
Without commenting on such a huge issue, let me at least pick out one strand to deal with here. At the very least, the new world of work is demanding a completely different attitude toward labor (always the top concern of the produce industry, in whatever quarter).
I think that at minimum, employers should stop regarding labor as a dispensable item and regard it as capital.
Here’s what I mean. You buy (or rent) a tank of propane, you use it up, and get another. One tank of propane is the same as any other.
Labor has been seen that way more often than has been good for anyone, including business itself.
But your capital—whether it is your stock portfolio, your cash in hand, or your facilities—is quite another matter. A prudent business watches over it jealously, avoiding anything that will deplete its value and doing everything possible to enhance it.
It seems that business will only dig itself out of its current hole by treating its human capital—its workforce—as equally precious and, indeed, the most precious form of capital it can possess.
This would include not only paying a living wage but treating each employee with decency and respect—including respect for the fact that this employee has a life outside of the job.
I am hardly preaching anything new here. Good employers have long known this and acted on that knowledge. But many have not, and their failures are causing the social fabric to tatter.
I’ve interviewed enough people to know that many companies in the produce industry feel this way and treat their most precious resource accordingly.
In this or any industry, I suspect that this attitude is making the difference between companies that are doing well and those that are not—both now and in the future.
