Schwab Did Not Invent Stakeholder Economics

Everyone knows I became friends with Milton Friedman. Back in 1970, Milton exposed how Stakeholder Economics was inefficient and stupid long before Schwab claimed he invented it. Milton stated that such a role was that of government, not corporations, whose #1 fiduciary obligation was to its shareholders. Under Schwab, I could say, “OK, I will go public; everyone sends in money. I will give you shares in return and then say — OMG, there are people starving in Africa!” So, I decided to give 50% of all the profits to them and not my investors. This is Stakeholder Economics.

The New York Times wrote on September 13th, 1970:

“WHEN I hear businessmen speak eloquently about the “social responsibilities of business in a free‐enterprise system,” I am reminded of the wonderful line about the Frenchman who discovered at, the age of 70 that he had been speaking prose all his life. The businessmen believe that they are defending free enterprise when they declaim that business is not concerned “merely” with profit but also with promoting desirable “social” ends; that business has a “social conscience” and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact they are—or would be if they or any one else took them seriously— preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.”