Dear CEOs of the Business Roundtable
As I have observed the political events of the last several years, I have noticed that corporations today have strayed from their missions as profit-seeking organizations and have become social service warriors. I have also noticed the Business Roundtable and the adoption of a new form of capitalism called “stakeholder capitalism”. This new form is intended to replace shareholder capitalism with a new approach that places stakeholders above shareholders – a bad idea for many reasons.
As I wrote in my book, How Pragmatism Destroyed a World:
“The Business Roundtable is a group of 181 CEOs from some of the biggest corporations in the U.S. (including Apple, American Airlines, Accenture, AT&T, Bank of America, Boeing, Comcast and J.P. Morgan Chase and Co.)”
As we think about the ideas that dominate our culture today, we must recognize the essential fact that, in order for ideas to be efficacious, they must relate to reality. They must not be based upon distortions that mangle reality while we are in the process of understanding them. It is a focus on the objective nature of ideas that should be central to our thinking. The central thesis of this letter is that pragmatism, the philosophy of indeterminism, is an impractical distortion of reality. We start by examining the inefficacy of the idea of stakeholder capitalism.
The arguments for a stakeholder capitalism have the effect of collectivizing identity politics and giving the various pressure groups in society a voice in how they want the capitalist system to foster the government’s desire to capture the practice of profit-seeking and turn it from a focus on the satisfaction of shareholders and turn it into a social service slave dedicated to re-distributing profits to identitarian social groups.
First, we must understand why it is better for a corporation to be shareholder-centric as compared to being stakeholder-centric.
In my book, How Pragmatism Destroyed a World, I wrote:
“What is Wrong with the Corporation?
“Liberty is meaningless if it is only the liberty to agree with those in power.” - Ludwig von Mises
“The modern mind is beset with a number of cognitive errors that bear upon the purpose of this book. They also bear upon a philosophy which essentially prohibits a free flow of ideas and opinions. This is the philosophy of pragmatism. Yet, few people know they are living under the oppressive nature of pragmatism. Instead, they think they are free to do whatever they want to advance new ideas and challenge the status quo. More importantly, they don’t know that their deepest held beliefs are destroying their knowledge of reality and fomenting social failure.
“…I propose that pragmatism, and its parents in Europe, have negatively impacted man’s mind and have restricted human development. In order to understand this, we must understand pragmatism.
“Pragmatism is considered to be the first “American” philosophy because of its distinctly American features, its appeal to “what works” and blind leaps of action, its focus on results that have “cash value” and its decidedly false practical mindset. Yet, pragmatism is only “American” if you focus on these derivative concepts rather than its foundational beginnings. The foundational source of pragmatism is European philosophy.
““It is sometimes said that the movement variously called pragmatism, instrumentalism, and radical empiricism is an expression of “Americanism.” It is true that most of the leading pragmatists have been Americans, and that pragmatism has had a wider impact in this country than in others. But actually, much more than merely local influence went into the development of pragmatism. Hume’s empirical analysis, Kant’s phenomena (but not his noumena), Hegel’s phenomenology and his soft-pedaling of “spirit,” the social orientation of the Utilitarians, the positivism of Comte, and Bergson’s activism—these and other lines of thought influenced Dewey.” (Dewey is one of the founders of pragmatism)
“In particular, ‘the social orientation of the Utilitarians” has influenced many of today’s CEOs, college professors and other Americans. Their calculation of corporate “results” means calculating the views and opinions of society (perception is reality). The pragmatic businessperson today walks on both sides of every political fence to avoid displeasing anyone. In fact, being nice and uncontroversial is always counted as the most intelligent way to deal with people among the pragmatists. No businessperson today stands for his right to earn money, express his own opinions and keep the results of his work because that is just too selfish in their view. It ignores the wellbeing of society.
““In Dewey’s view, intelligence cannot attain to eternal truths, but, rightly understood and rightly applied, it is capable of dealing effectively with pressing social and political problems…Dewey focused on the actual world and on what “interested” thought can do in it.”
““They (the pragmatists) really mean the fact that there are no ethical absolutes. There is no knowledge for certain in ethics any more than there is knowledge for certain in any other field. You have to try and see, you have to experiment, you have to see what works (with people). You have to give up the idea of unyielding, unswerving loyalty to moral principles.” (Parentheses mine)
“Men, instead of being proud of accepting and asserting beliefs and “principles” on the ground of loyalty, will be as ashamed of that procedure as they would now be to confess their assent to a scientific theory out of reverence for Newton or Helmholz or whomever, without regard to evidence.
““If one stops to consider the matter, is there not something strange in the fact that men should consider loyalty to “laws,” principles, standards, ideals to be an inherent virtue, accounted unto them for righteousness? It is as if they were making up for some secret sense of weakness by rigidity and intensity of insistent attachment. A moral law, like a law in physics, is not something to swear by and stick to at all hazards; it is a formula of the way to respond when specified conditions present themselves. Its soundness and pertinence are tested by what happens when it is acted upon. Its claim or authority rests finally upon the imperativeness of the situation that has to be dealt with, not upon its own intrinsic nature—as any tool achieves dignity in the measure of needs served by it. The idea that adherence to standards external to experienced objects is the only alternative to confusion and lawlessness was once held in science. But knowledge became steadily progressive when it was abandoned, and clews and tests found within concrete acts and objects were employed. The test of consequences is more exacting than that afforded by fixed general rules. In addition, it secures constant development, for when new acts are tried new results are experienced, while the lauded immutability of eternal ideals and norms is in itself a denial of the possibility of development and improvement.”
““When pragmatists do advocate political views of their own, because they have no principles, you cannot get anything too coherent out of them, but the typical pragmatist on the street would be an advocate of a mixed economy. That’s the type of system that would fit best with pragmatism politically. Since they have no basic principles in politics, as in any place else, there is no absolute right or wrong political system, they would par excellence be the type that prides itself on being called moderate as opposed to the extremists, you see, who attach themselves rigidly to fixed absolutes, they say all men have absolute rights, or whatever the system happens to be. Particularly today pragmatists would be advocates of the mixed economy because in politics as in ethics, they are parasitic, they feed off the prevailing value code, they adopt and absorb as they are being brought up the values that are presently extant in the culture and since the prevailing values in America today are a mixture of pro-freedom and pro-collectivism, this is what is present in the mind of the typical pragmatist when he consults his unquestioned values in any given moment, he finds a whole mélange mixed of part pro-freedom and part pro-collectivist values, and therefore, he will oppose absolute individual rights or absolute totalitarianism. There is, I may say a pronounced slant to the left in pragmatists as the country moves further to the left in general, the pragmatists are carried along. The ones I know, I may say, normally call themselves advocates of democracy but they are extraordinarily vague as to what they mean by democracy. I’ve heard democracy by pragmatists characterized as a system which fosters (mind you, this is a political definition), a system which fosters growth and creativity, shared experience, equality of opportunity. Now, you go and figure what political system would implement that. The one thing you can know for sure is that there will be a pronounced collectivist bias and that will be dictated by their epistemology. If adherence to society is the standard of the truth then society and its welfare will also be the standard of the good; implicitly it has a strong anti-capitalist streak, a kind of woozy socialism which is characteristic of most pragmatists, but it is woozy; one commentator that I’ve read on pragmatism and is sympathetic said that they are vague on principle because they don’t want to commit themselves to some absolute; there is just a very generalized sketch and in particular cases, we try to see whether it works or not. In other words, in politics it has no more specific principles than it does in ethics.” (Consider what this means in education)
“Pragmatism holds that reality is made by the collective, which, to the pragmatist, makes the views and ideas of people to be very important. To see this more clearly, let’s look at the Business Roundtable. The Business Roundtable is a group of 181 CEOs from some of the biggest corporations in the U.S. (including Apple, American Airlines, Accenture, AT&T, Bank of America, Boeing, Comcast and J.P. Morgan Chase and Co.) Recently, the CEOs of the Business Roundtable decided to change the definition of the “corporation”; a grand gesture whose intent is to change the nature of capitalism itself in the minds of customers, employees and shareholders. Their views are considered important because how they think determines their views of the corporations.
“Pragmatists consider themselves to be problem-solvers; but they never solve problems with a sweeping review and sweeping recommendations. They only wait until a problem threatens and rather than changing a whole system, such as capitalism, they merely try to stamp out that singular isolated problem that has arisen. They deal with it then move on to the next problem. This is in keeping with avoiding extremes of the left and right as we saw above. Today, and for many decades, the “problem” for the Business Roundtable is public opinion and the overall moral premise that capitalism is evil. As is fitting with their general approach, …, pragmatists will only change the definition of the corporation and declare that the problem of public opinion is now solved (although they are really looking and seeing).
“In other words, if the corporation was once meant to pursue shareholder value, holding this idea must be, according to pragmatists, a denial of the possibility of development and improvement. This old view of the corporation is the present problem with which they must deal. Yet, we must ask, how can holding to a specific definition be wrong if there is no reason to change it? Men are still doing business the way they always used to do. Their minds are still pursuing values in the way they always used to pursue; and the pricing mechanism still functions under the rules of supply and demand. So why change the definition of the corporation? To answer this question, remember the quote above: “You have to try and see, you have to experiment, you have to see what works. You have to give up the idea of unyielding, unswerving loyalty to moral principles.” So, here you have it, pragmatism in action. Oh, but there is so much more.
“If your previous concept of a corporation is no longer useful, if it is under attack, then the members of this organization solve the problem of today by putting a band aid on it. For them, the problem is threats from the government (antitrust, regulations, bad publicity, etc.) and a public opinion that views corporations as greedy and selfish. In fact, these illustrious CEOs make their million + salaries because they are trained on how to solve problems like bad public opinion. They take a bold new leap by changing the definition of the corporation and including altruism (a very old concept) within that definition. They make altruism the new social reality. But wait, that’s not new …as the country moves further to the left in general, the pragmatists are carried along.”
“In fact, many of the ideas coming out of the universities today involve a strong hatred of self-interest, capitalism and profits. Advocates of altruism (socialists, communists, fascists and pragmatists) excoriate CEOs for being selfish and predatory. The result is that CEOs who feel guilty for being “capitalists” often promise to give away their profits. (Therefore, the idea that stakeholder value should replace shareholder value.) (Parenthesis mine)
“Indeed, the idea that the end (solving a problem) justifies the means (indoctrinating the shareholders) requires setting all opposition aside and forcing it to accept new altruistic trends and floating abstractions. This practice is a typical pragmatist tactic that has been used often by the left to politically disenfranchise free market advocates. No opposing argument stands a chance against the steamrolling of opinion as it is practiced by leftists in organizations such as the Business Roundtable. It is convenient for them that they routinely use altruism and the appeal to “doing good” in order to motivate society. The entire nation must now christen the new definition of the corporation and fall in line with the massive government-inspired giveaway of the profits of the corporation. Everything will be just fine if we all change our models of thinking.
“If you doubt that Business Roundtable membership is made up of dupes for the politicians, consider these words: “those at the very top, the richest individuals and the richest corporations are going to pay more” (Warren), “we’re going to stand up to the greed and corruption and price fixing of the pharmaceutical industries” (Sanders), “hell yes, we’re going to take your AR-15s, your AK-47s” (O’Rourke), “I have proposed…that we, by 2028, cut all carbon emissions from new buildings, by 2030, carbon emissions from cars, and by 2035, all carbon emissions from the manufacture of electricity” (Warren), “as long as Washington is paying more attention to money than it is to our future, we can’t make the changes we need to make. We have to attack the corruption head on” (Warren). Don’t be surprised that most CEOs in this country agree with all of these statements. Don’t be surprised that our government gets bigger and more oppressive every day. The pragmatists in the business world went to school with the pragmatists in government.
“In the real world, a corporation is made up of departments, business units and managers that work cooperatively to achieve shareholder value. If any action within the corporation detracts from that goal, it is seen as counterproductive and harmful to shareholder value. Shareholders, seeing inefficiencies, would perceive the loss of value and take their investments elsewhere. This is called the movement of capital to better uses, a free market principle at the heart of capitalism. This hasn’t changed. But the CEOs of the Business Roundtable want to change it – and for that they must rope the shareholders into christening the new definition of the corporation.
“Many CEOs, educated as altruists since kindergarten, see the corporations’ need for profits as selfish and they spend lots of money to produce well-polished press releases, prospectuses and earnings statements to convince shareholders that altruism and social responsibility are the best ways to earn profits. Like Leninists in the past, their rationalizations are intended to indoctrinate all parties that goodwill comes to the corporation through government contracts, subsidies and government grants, not to mention beneficial legislation that improves market share. By fostering the social goals of the government, the corporation declares itself a good community partner that puts people first not profits. How Dewey of them.
“The CEOs of the Business Roundtable would likely respond to shareholder opposition by declaring that they should not be expected to buck the trend of the entire world toward corporate benevolence. Why should they have to take a stand against the trend of ever-growing government? One should not have to oppose a government that acts on behalf of all citizens by taking care of them, protecting their environment, making sure they have health care, childcare, free college and free everything. Why shouldn’t citizens want to give up their guns now so that government can be their caretaker? All they are trying to do in the Business Roundtable is make sure they do their part. What is so bad about that? What kind of monster would oppose such benevolence?
…
“In a capitalist system, corporate strategies must work together without internal conflict. They must serve the interests of the shareholders who seek real bottom-line results. If a corporation declares that it will not seek profits alone, but also other goals not directly related to profits, the shareholders will take notice. This is because capitalism, real capitalism, depends upon knowledge (to make good business decisions) and justice to enable the best products and services to be created.
“The Business Roundtable, on the other hand, is not made up of people who seek knowledge and justice. For them knowledge is not possible; their metaphysical principles don’t recognize the existence of a means to knowledge nor even the possibility of it. As for justice, they prefer regulations that stifle their competitors. They don’t want to win customers anymore; they want to capture them by making it impossible for the competition to flourish. This isn’t capitalism but more like mercantilism, captive markets, government protectionism and conquered loot. This is loyalty marketing and the glues that hold it together are collectivism and altruism. Don’t ask these CEOs to function in a free market – how could you? Free markets? That means greed and corruption just like Bernie Sanders said.
“Many shareholders are “old-timers” like me. We think the result of seeking profits is an ever-improving society, a cleaner environment, better paid and happier employees and more efficient social institutions. For centuries, it was thought that the result of capitalism was our wonderful living environments, more leisure, better transportation, better highways, air conditioning and affluence for all citizens. The provision of jobs in a nurturing work environment meant happier, more productive, more intelligent and more dedicated employees; and this meant bigger markets for the products of the corporation. In short, capitalism has created many of the enjoyments of life and it lifts society by its constant development of value for the consumer. Profits are earned by the companies that do a better job of improving the lives of employees who are not downtrodden and poor but educated and affluent. The law of supply and demand and the free flow of capital are the hallmarks of capitalism; but not anymore. The successful company is the one who has a presence in DC, a company that “spreads the wealth” – the shareholders wealth.
“What happened? Where did capitalism go? Why do CEOs think they need to redefine, not only the definition of the corporation but, as a consequence, the definition of capitalism itself? Where is capitalism failing that we have arrived at this situation? How is it that capitalism is blamed for creating the very poverty that it is lifting from society? There is no proof that capitalism is failing; there is only the pull to the left…”
What happens when a country begins to operate on the idea that profits are evil and should be given away to the poor? What happens when a company thinks it is doing something good to ostensibly ignore shareholders and put stakeholders front-and-center? The first thing that goes is a respect for the individual whose life is based on self-interest and quality work. These people are deemed to be slaves, and eventually, they leave the company for better companies, or they retire and live off of their saved equity. This leads to a lowering of quality work standards and quality products and services. Food no longer tastes good, products don’t work as well as they once worked, even work itself is no longer valued as more and more employees take more and more vacations days, care less about the customer and begin the process of weeding out of the company the people who work hard and have pride in what they do. This is how and why pragmatism destroys our world.
What we have here, the outcome of pragmatism, is what we call Diversity, Equity, and Inclusion, also known as DEI. When companies embrace this concept, they are attempting to appease, not only government, but political progressives, communists, and fascists who run the world. They are changing the role of profit seeking and making it the role of “social justice”. The fact that virtually every company in the Business Roundtable has embraced DEI tells you why our world is going to hell, quality is declining, and shareholders are being cheated of their wealth. The decline of capitalism will also result in the decline of society.
Diversity means that the company holds pride, not in providing great products and services for customers (and giving value to shareholders), but in bragging to government that it holds identity and politics above those values. On this basis, it must drop the pursuit of excellence which means quality takes second place. When it practices “equity” politics it holds that profits need not go to shareholders but instead must be re-distributed to programs that help collectives and the needy. When it pursue inclusion, it seeks to include, as stakeholders, the less productive and more downtrodden individuals. All of these values create general malaise in society and cause various forms of re-distribution that are based on altruistic human sacrifice.
If you would like to read “How Pragmatism Destroyed a World by Robert Villegas, use this link:
