Sunday, December 31, 2023

How would you describe your philosophy?

 


I don’t think anyone has ever asked me the question posed above. When I tell people that I am an economist, some of them ask about my views on economics before regaling me with their opinions. When I tell people that I am a blogger, they usually ask what I blog about before telling me what I should blog about. I don’t claim to be a philosopher, so there has been no reason for anyone to ask me to describe my philosophy.

However, a comment by Ed Younkins in the addendum to the preceding post on this blog prompted me to think about whether it would be possible for me (as a casual reader of philosophy) to prepare a coherent summary of my philosophical beliefs.

Some readers might be interested in the process I used to summarise my views. I asked ChatGPT to ask a series of questions to help me to explore my philosophical beliefs. I responded to her questions by providing copies of extracts from blog posts etc. that I had written, and asked her to summarise my responses. The summary she produced was done competently, but I did some further editing.

I view the outcome as a work in progress. If anyone points to holes in my reasoning, I will endeavour not to be excessively defensive in my responses.

Summary

I am a Neo-Aristotelian classical liberal.

As will be apparent from what follows, I am strongly of the opinion that it is appropriate to consider what kind of thing an individual human is before engaging in philosophical reasoning related to any aspect of human experience. That is why many of my beliefs are grounded in current scientific knowledge (and speculation) about human evolution, neurology, and psychology.

It seems appropriate to begin with philosophy of mind because awareness of our own awareness is the starting point for all consciousness reasoning. I will then proceed to outline views on epistemology, metaphysics, human nature, ethics, and political philosophy.

Philosophy of Mind:

We cannot doubt that we think. When we are thinking, we may be aware of the flow of inner thoughts and feelings and of our experience of the world in which live. Our observations of other animals suggest that they share with us some awareness of their surroundings. That awareness is a product of evolution – it serves a purpose in helping animals to survive and reproduce. Similarly, our awareness of our own awareness is just another step in the evolutionary process – the purpose it serves is to help individual humans to flourish within the cultures in which they live.  (Main influence: Richard Campbell).

Epistemology:

Humans are born with a potential to acquire knowledge that is particularly relevant to human flourishing. However, knowledge acquisition is primarily experiential. Experiences during early childhood have a major impact on brain development. As brains mature, neural maps become increasingly solidified, but brains retain some plasticity throughout life. Brains learn by evaluating feedback from actions taken – they adjust internal models when predictions are incorrect.

Conscious reasoning plays a crucial role in determining what knowledge adult humans acquire. It makes sense to use probabilistic reasoning when considering alternative explanations for observed phenomena.

Practical wisdom (wise and well-informed self-direction) is integral to individual flourishing. As well as being important in its own right, it helps individuals to maintain good physical and psychological health, good relations with other people, and to live in harmony with nature. (Influences: Aristotle, David Eagleman, Michael Huemer).

Metaphysics:

Metaphysical realism: We exist as part of a real world. Beings exist independently of our cognition of them. (Influences: Douglas Rasmussen and Douglas Den Uyl).

Human Nature:

Humans have inherent potentialities that are good. (Main influence: Abraham Maslow).

Ethics:

Our awareness that we need to make something of our lives emerges before we can make conscious choices relating to our individual flourishing. Ethical intuitions relating to traditional virtues – practical wisdom, integrity, courage, temperance, justice – are a product of social evolution and family upbringing.

Ethical intuitions provide only a foundation for ethical reasoning. Although everyone has a natural inclination to engage in activities that contribute to their own flourishing, actualization of their individual potential requires some understanding of that potential, and the application of practical wisdom that is linked to that person’s dispositions and circumstances. Each individual is responsible for developing his or her own character, and adopting the good habits required to flourish more fully. (Influences: Robert Nozick, Aristotle, Douglas Den Uyl and Douglas Rasmussen).

Political Philosophy:

Individuals should be free to pursue their own ends provided they do not encroach upon the rights of others. Recognition of individual rights enables individuals to flourish in different ways without interfering unduly with the flourishing of others.

The role of government is protection of individual rights. Performance other roles should be contingent upon consent of the governed. (Influences: Friedrich Hayek, James M Buchanan, Douglas Rasmussen and Douglas Den Uyl).

Notes

The summary presented above focuses on some broad categories of philosophical beliefs. I have left out some categories of beliefs (philosophy of science and methodology of economics) because they are too specific to be covered in this overview. One of the most popular posts on this blog is about aesthetics, but I have not read widely on that topic. Some other important categories (e.g. religion) have been left out because I prefer not to display my ignorance.

Anyone interested in further explanation of my beliefs is welcome to ask me. Many of the relevant topics are covered in my book, Freedom, Progress, and Human Flourishing. There are also relevant articles on this blog that have been written since that book was published e.g. a discussion of Richard Campbell’s views on the emergence of consciousness (here), and David Eagleman’s views on neural mapping and plasticity (here).

References

Philosophy of Mind

Campbell, Richard, The Metaphysics of Emergence, Palgrave Macmillan, 2015.

Epistemology

Aristotle, The Complete Works (Kindle Edition), ATN Classics, 2023.

Eagleman, David, Livewired: The Inside Story of the Ever-Changing Brain, Canongate Paperback, 2021.

Huemer, Michael, Understanding Knowledge, 2022.

Metaphysics

Rasmussen, Douglas B., and Den Uyl, Douglas J, The Realist Turn, Palgrave Macmillan, 2020.

Human Nature

Maslow, Abraham, Toward a Psychology of Being (Chapter 14), D Van Nostrand, 1962

Ethics

 Nozick, Robert. Invariances, The Structure of the Objective World, Harvard University Press, 2001.

Aristotle, The Nichomachean Ethics (Translator: F.H. Peters) Online Library of Liberty, 1893

Den Uyl, Douglas J., and Douglas B Rasmussen, The Perfectionist Turn: From metanorms to metaethics, Edinburgh University Press, 2016.

Political Philosophy

Hayek, Friedrich. The Constitution of Liberty, The University of Chicago Press, 1960.

Rasmussen, Douglas B., and Den Uyl, Douglas J, Norms of Liberty, Pennsylvania State University Press, 2005.


Monday, December 18, 2023

Why am I thinking about selfishness during the season of goodwill?

 


The reason I am thinking about selfishness has to do with Ayn Rand. It has little to do with her attitude toward Christmas, but I was pleasantly surprised to discover the sentiment expressed in the quote above (written by Ayn Rand in the December 1976 entry in The Objectivist Calendar). I had previously wondered whether Rand might have been one of those people who say “Bah Humbug!” at this time of the year.

I have been prompted to think about Rand’s view of selfishness by a discussion that has been taking place on The Savvy Street. Ed Younkins wrote an essay, Objectivism and Individual Perfectionism: A Comparison, which has induced Roger Bissell to write a two-part response. Bissell’s responses have been published under the title: Ayn Rand’s Philosophy Decoded: Replies to Recent Criticisms of the Objectivist Ethics. (Part 2 is here.)

Before I discuss those contributions, it is relevant to mention my previous attempts to understand Ayn Rand’s view of selfishness. Before you finish reading the essay you will understand why that is relevant. 

My previous musings

I was brought up to believe that selfishness is a sin. In Australia, it is common for parents tell children not to be selfish, for example, if they attempt to take more than a fair share of a delicacy at mealtimes. What the parents mean is that such opportunistic behavior shows no regard for others. People of goodwill would not do such things.

Perhaps that understanding of the meaning of selfishness was reinforced by Australia’s “fair go” culture. Dictionary definitions of selfishness suggest, however, that it is also common for selfishness to be viewed similarly in Britain and the United States.

I can’t remember when I first became aware that Ayn Rand viewed selfishness as a virtue, and had written a book entitled The Virtue of Selfishness. During the 1990s, I was certainly aware that most the small number of Australians who were knew of Rand’s existence were of the opinion that she and her followers were ethically challenged and encouraged narcissism. That view was later expounded in a book by Anne Manne, which I commented upon here.

In a post on this blog in 2009 I asked myself: Did Ayn Rand regard selfishness as a virtue? I knew she did, but I pondered the question because the heroes of Atlas Shrugged did not seem to me to be selfish. I noted that Rand’s view that selfishness is a virtue followed from a narrow definition of selfishness as “concern with one’s own interests”, and speculated that Rand had used that definition to draw attention to her opposition to the view that self-sacrifice is a virtue.

A few months later, I wrote on the topic, How far can Ayn Rand’s ethical egoism be defended? That post was an attempt to summarize some of the views of participants in a Cato symposium on ‘What’s living and dead in Ayn Rand’s moral and political thought’. One of the aspects I focused on was the question of whether Rand, like Aristotle, viewed virtue – including regard for others - as a constitutive part of the agent’s own interest, or as an instrumental strategy for attaining that interest. Although the participants in the discussion were all scholars familiar with Rand’s writings, they were unable to agree on that point.

The other aspect I focused on was the question of whether it was defensible for Rand to argue that what is objectively good and right for one individual cannot conflict with what is objectively good and right for another individual. Most, but not all, of the participants viewed that argument as indefensible.

Younkins’s contribution

In his essay, Ed Younkins seeks to compare the ideas of Ayn Rand with those of Douglas Rasmussen and Douglas Den Uyl (the Dougs). Younkins’s purpose is mainly descriptive and explanatory, but Roger Bissell has seen his contribution to be critical of Rand.

The summary table published at the end of Younkins’s essay is reproduced below.

Younkins's Summary Table



My focus here is entries relating Normative Morality, the Virtues, and Conflicts of Interest. The discussion in the preceding post on this blog is relevant to “the Good and Value”.

Younkin’s summary table doesn’t mention Rand’s view of selfishness explicitly, but it is lurking in the background in his discussion of morality, the virtues and conflicts of interest.

Bissell’s response

Roger Bissell doesn’t accept that Rand’s primary concern in respect of normative morality was that the agent should always be the beneficiary of his actions. He notes that in the introduction of The Virtue of Selfishness, Rand states that ego vs altruism is not the fundamental issue in ethics. He claims that “under all the ‘selfishness’ window dressing”, Rand is “actually just another individualistic perfectionist”. Perhaps Bissell is correct, but if so I am left wondering again, as in 2009, what purpose Rand saw in the selfishness window dressing.

With regard to the virtues, Bissell objects to the implication that Rand did not regard them as constitutive of a person’s flourishing. That difference of opinion takes me back to the Cato symposium referred to earlier, where several scholars were unable to agree on that point. My conclusion is that Rand’s views on that matter cannot have been stated clearly and consistently.

Roger Bissell’s support of Rand’s view on conflicts on interest also brings to mind the views expressed in the Cato symposium. I find it difficult to understand why anyone who recognises the importance of property rights would seek to defend the proposition that there can be no conflicts of interest among rational and objective individuals. Nevertheless, Bissell makes a heroic effort:

“To put it yet another way: whatever conflict two rational people might have on the level of individual values is subordinate to and outweighed by the common value they both have in everyone’s doing their own personal best and letting specific outcomes be determined within the framework of voluntary choice and peaceful interaction. They want their specific individual values to be achieved, but not at any cost—while they want their common higher rational values to be upheld, whatever the cost.”   

Perhaps we could imagine two rational and objective individuals with conflicting interests – for example, a farmer and a cowman living on the American prairie in the 19th century – agreeing on rules about property rights at an authentic constitutional convention, of the kind suggested by James Buchanan and Gordon Tulloch. However, it should be noted that the possibility of agreement has less to do with the personal qualities of the participants than with the imagined institutional context in which participants are uncertain about the impact that rules under consideration might have on their interests, and those of their descendants.

The ability of rational and objective individuals to avoid conflict are greatly enhanced by social, political, and legal orders that enable individuals to pursue their own ends without interfering with each other. Friedrich Hayek made the point clearly:

“The understanding that ‘good fences make good neighbors’, that is, that men can use their knowledge in the pursuit of their own ends without colliding with each other only if clear boundaries can be drawn between their respective domains of free action, is the basis on which all known civilization has grown.” (LLL, Vol1, 107)

The metanormative ethics expounded by the Dougs seems to me to be consistent with that view. Recognition of individual rights provides a context in which individuals can flourish in different ways without interfering with the flourishing of others.

Concluding comments

Ed Younkins concluded his essay by noting that although Ayn Rand differs from Douglas Rasmussen and Douglas Den Uyl “on how a number of issues are expressed, they agree on the desirability of a free society and are among the best-known proponents of capitalism from a neo-Aristotelian perspective”.

Roger Bissell concludes his response by suggesting that Younkins’s “descriptions of Rand’s ideas are too often inaccurate and his explanations too often flow from misunderstanding of those ideas”. I don’t know enough about Rand’s philosophy to make an independent judgement of the veracity of Bissell’s claims, but it is clear from contributions to the Cato symposium that I have mentioned several times that Younkins’s views are shared by other scholars who are familiar with Rand’s philosophical efforts.

It seems to me that this difference of opinion over the description of Rand’s ideas should be viewed in the context of ongoing discussions between those who see Objectivism as a closed system and those who see it as an open system. Those who see objectivism as a closed system accept that people should not label themselves as Objectivists unless they agree with all of Rand’s philosophy. Those who view objectivism as open system believe that it can be enhanced by incorporating new ideas that are broadly compatible with Rand’s ideas. (Younkins discusses the different views here).

I have the impression that those who see objectivism as an open system have an interest in minimizing the difference between Individualistic Perfectionism and Rand’s philosophy. As I see it, the Individualistic Perfectionism developed by Rasmussen and Den Uyl has been influenced by Rand, but deserves to be viewed as a coherent body of ideas that differs somewhat from Objectivism.


Addendum

Ed Younkins has provided the following comment.

"It seems to me that the Dougs (Rasmussen and Den Uyl) want to create some distance between Individual Perfectionism (IP) and Objectivism (O). Roger Bissell, on the other hand, appears to be be acting as if IP does not exist as separate from O. He may be viewing the Dougs as open Objectivists (like he appears to be), but who are mistaken in their interpretation of some of what Rand is saying. Younkins, like Winton Bates, is not wedded to either O or IP. Both Younkins and Bates  may be Rand influenced (as are the Dougs), but each of them develops his own unique and particular philosophical worldview or paradigm of freedom and flourishing (as do the Dougs). Of course, each of the 5 individuals mentioned (who are all friends) is promoting his own vision and version of a philosophy of human flourishing in a free society. This is how it should be."





Saturday, December 9, 2023

Did Ayn Rand recognize the capacity to exercise practical wisdom as a basic good?




 This question is of interest to me for two reasons. First, I am a fan of Ayn Rand’s novels. Second, in the first chapter of my book, Freedom, Progress, and Human Flourishing, I seek to identify the basic goods that a flourishing human could be expected to have.

My view of basic goods

The chapter identified the basic goods as: wise and well-informed self-direction, health and longevity, positive relationships, living in harmony with nature, and psychological well-being. I suggested that the exercise of wise and well-informed self-direction helps individuals to obtain other basic goods.

The chapter also noted that Aristotle saw the exercise of reason as the function that distinguishes humans from other animals and held that a good man’s purpose is to reason well (and beautifully).

I argued that individuals develop and realize their potential for wise and well-informed self-direction largely by learning from experience. I therefore accepted implicitly that it is good for adults to have a capacity to self-direct even if they make choices that on mature reflection they might later regret.

Rand’s view

Until recently, I was fairly sure that my view of what is good for humans was broadly similar to that of Ayn Rand. Some of the things she wrote suggest that impression was correct. For example, John Galt’s speech (quoted above) suggests that it is good for humans to have the capacity to exercise practical wisdom. A similar sentiment is expressed in the following passage in the chapter, ‘What is Capitalism?’ in Capitalism: The unknown ideal:

“Man’s essential characteristic is his rational faculty. Man’s mind is his basic means of survival – his only means of gaining knowledge.”

However, later in that essay, in endorsing “the objective theory” of the nature of the good, Rand rejects the idea that good can be an attribute of things in themselves:

“The objective theory holds that the good is neither an attribute of ‘things in themselves’ nor of man’s emotional states, but an evaluation of the facts of reality by man’s consciousness according to a rational standard of value.”

It seems to me that Rand is suggesting that it would not be legitimate to say that the capacity to exercise practical wisdom – which is a thing in itself - is a good attribute for an individual to have, irrespective of how it is used. Rand seems to be implying that having the capability is only good when it is used to make evaluations according to a rational standard of value.

Grades of actuality

Douglas Rasmussen and Douglas Den Uyl (the Dougs) seem to me to provide a less ambiguous approach to considering the nature of the good in a recent article in which they compare their Individualistic Perfectionism (IP) to Rand’s Objectivist Ethics (OE). (‘Three Forms of Neo-Aristotelian Ethical Naturalism: A Comparison’, Reason Papers 43, 2, 14-43, 2023.)

The Dougs acknowledge that a person does not have a concept of moral good apart from the self-directed use of their conceptual capacity. The human good is individualized. It is good for a human being to engage in the act of discovering human good.

However, the Dougs suggest that the process of discovering the human good can be thought of in terms of grades of actuality:

“IP holds with Aristotle that there is a distinction between grades of actuality when it comes to living things. The first grade of actuality is the possession of a set of capacities that are also potentialities for a living thing’s second grade of actuality—that is, their actual use or deployment by a living thing. Included among the set of potentialities of a human being that comprise its first grade of actuality is the potential to exercise one’s conceptual capacity. This first grade of actuality is a cognitive-independent reality. However, when one’s conceptual capacity is exercised and used in a manner that actualizes the other potentialities that require it, then a second grade of actuality is attained. For example, one has the capacity to know one’s good and attain it (first grade of actuality), but one needs to engage in knowing and attaining it in order to be fully actualized (second grade of actuality).”

One’s inner nature

In 2008 I wrote a blog post on the topic, ‘Is our inner nature good?’. The post consisted of a discussion of the views of Abraham Maslow, Aristotle, J S Mill, David Hume, and Jonathan Haidt and Fredrik Bjorklund. My outline of the views of Abraham Maslow is reproduced below because it seems relevant to the current discussion.

Abraham Maslow suggested that humans have an inner nature or core which is good. According to Maslow this inner core is “potentiality, but not final actualization”. He argued that in principle our inner core can easily self-actualize, but this rarely happens in practice due to the many human diminution forces including fear of self-actualization and the limiting belief in society that human nature is evil (“Toward a Psychology of Being”, 1968, chapter 14).

On reflection, I am not sure that the concept of an inner nature makes much sense. However, the idea that all humans have good potentiality is appealing.

Conclusions

In my view it is good for adults to have a capacity to self-direct even if they make choices, that on mature reflection, they might later regret.

I am unsure whether Ayn Rand would have agreed. At one point she seems to imply that a capacity to exercise practical wisdom is only good when it is used to make evaluations according to a rational standard of values.

Douglas Rasmussen and Douglas Den Uyl offer a less ambiguous approach by recognizing different grades of actuality. They suggest that the first grade of actuality is cognitive-independent. On that basis, there is no reason to doubt that the potential to exercise practical wisdom is good.

I like the idea that all humans have good potentiality.

Postscript

My understanding of the quoted passage by Doug Rasmussen and Doug Den Uyl is as follows:

Though we must use our minds and act in the appropriate manner to self-actualize, that is, to attain our second grade of actuality, it does not follow from this that what is being actualized is merely a potentiality.  Rather, it is a cognitive-independent actuality that also has potentialities.  The distinction between actuality and potentiality in the case of living things does not require a dichotomy. It is not 'either-or'. Aristotle is subtle.

Moreover, though attaining one's second grade of actuality requires both cognition and practical actions to exist, this does not make human good simply an evaluation (which Rand claims). To hold that an objective view of human good is an evaluation is a further non sequitur.  Consider this analogy:  Phar Lap was a thoroughbred racehorse, as such he would not have existed without much human thought and effort, and in terms of the function of racehorses he was very good.  But the reality of his goodness did not consist in our evaluation of him as good but in how well he fulfilled his function. The same is so for human beings, mutatis mutandis.  Humans attaining their second-grade of actuality does require cognitive effort and choice, but this does make the goodness thereby expressed merely an evaluation.

Further Reading

I was prompted to write this contribution by my reading of two recent essays on The Savvy Street:

Ed Younkins, Objectivism and Individual Perfectionism: A Comparison; and

Roger Bissell, Ayn Rand’s Philosophy Decoded: Replies to Recent Criticisms of the Objectivist Ethics.

Roger Bissell has also responded to this essay.

I encourage anyone wishing to obtain a better understanding of the issues to read those articles as well as the article by the Dougs referred to above.


Sunday, November 26, 2023

Does stakeholder capitalism contribute to human flourishing?

 


Many people reading this are likely to view the use of stakeholder terminology by business leaders as little more than a public relations tool. That is certainly how I have viewed it in the past. If you are a business owner, or executive, who wants to encourage employees, suppliers, customers, and community members to feel loyalty to your business, it makes sense to acknowledge that they may also have a stake in seeing it prosper. And it does no harm to remind governments of their stake in the prosperity of your business via its contributions to tax revenue.

However, I have recently come to associate stakeholder terminology with stakeholder capitalism. That ideology has close links to the concept of corporate social responsibility (CSR) and the increased tendency of businesses to seek rewards from governments for pursuit of environmental and social goals (ESG). Reading about stakeholder capitalism has added to my previously expressed concerns that such interactions between business and governments are leading liberal democracies more deeply into a corporatist quagmire.

Stakeholder capitalism


Michael Rectenwald’s book, The Great Reset and the Struggle for Liberty, has persuaded me that in advocating stakeholder capitalism, Klaus Schwab, the founder of the World Economic Forum (WEF), has in mind a corpus of ideas and policies that are fundamentally opposed to free markets and classical liberalism. Moreover, the WEF may have sufficient influence among powerful elites to eliminate the already dwindling influence that classical liberalism has been having on public policy.

Rectenwald’s book was written in response to a book by Klaus Schwab and Thierry Malleret entitled Covid-19: The Great Reset, which was published in 2020. Rectenwald draws attention to the open espousal of policies opposed to free markets in that book. Schwab and Malleret welcomed the possibility that governments might take advantage of the pandemic “to permanently increase their role”, and eliminate classical liberalism, which they refer to as neoliberalism. They write:

“COVID-19 is likely to sound the death knell of neoliberalism, a corpus of ideas and policies that can loosely be defined as favouring competition over solidarity, creative destruction over government intervention and economic growth over social welfare. For a number of years, the neoliberal doctrine has been on the wane, with many commentators, business leaders and policy-makers increasingly denouncing its “market fetishism”, but COVID-19 brought the coup de grĂ¢ce.”

They go on to predict:

“Shareholder value will become a secondary consideration, bringing to the fore the primacy of stakeholder capitalism.”

Klaus Schwab has been advocating stakeholder capitalism for over 50 years, and has been influential in having that concept endorsed at international meetings of powerful people from business and government. The first Davos Manifesto, signed in 1973 states:

“The purpose of professional management is to serve clients, shareholders, workers and employees, as well as societies, and to harmonize the different interests of the stakeholders.”

The 2020 Davos Manifesto is titled: “The Universal Purpose of a Company in the Fourth Industrial Revolution”. It includes similar sentiments to the 1973 Manifesto, but goes on to state, among other things:

“B. A company is more than an economic unit generating wealth. It fulfils human and societal objectives as part of the broader social system. Performance must be measured not only on the return to shareholders, but also on how it achieves its environmental, social and good governance objectives. Executive remuneration should reflect stakeholder responsibility.”

Some CEOs would welcome a long muddled list of performance objectives because it offers them the opportunity to “do their own thing” and provide ready-made excuses for poor performance. Others would prefer to see governments pursue social and environmental objectives by more efficient mechanisms, and to have their own performance judged according to more tangible benefits to shareholders. How does the WEF propose to encourage compliance with its Manifesto?

The WEF’s ESG Index

The WEF published a report in 2020 setting out metrics for measuring company performance with regard to ESG goals. The title of the report is  Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Reporting of Sustainable Value Creation.

A mechanism for grading companies in terms of their environmental, social, and governance practices and plans might be thought to offer useful information to investors and consumers who concerned about the environmental and social impacts of their decisions. However, Rectenwald points out that it also has potential implications for interactions between business and government:

“Woke planners wield the Environmental, Social, and Governance (ESG) Index to reward the in-group and to squeeze non-woke players out of business.”

Ideological reach

In a recent Newsweek article, Jon Schweppe asks, Why did corporations go ‘woke’? His response, in brief, is that “this is part ideology, part price of admittance to an elite club, and part protection racket – doing everything one can to avoid upsetting the mob”.

Rectenwald’s book suggests to me that the WEF should come to mind following any mention of “ideology” and “an elite club” in this context. The corporate partners of the WEF include over 1000 of the world's largest business organisations. The annual meeting of the WEF in Davos is an invitation-only event but is widely reported in the media. Many notable political leaders, journalists etc. have been members of the Forum of Young Global Leaders, which is reserved for people under 40 years of age who show promise of global leadership. In addition, the WEF’s Global Shapers movement, a training camp for young change-makers (under 30 years old) has over 10, 000 active members.

Implications

Rectenwald points out that because ESG is “an impressionistic, qualitative, metric” it exposes business leaders and companies to the whims of woke arbiters. He cites the recent experience of Elon Musk who has been unfairly besmirched because he may have benefited from an emerald mine owned by his father in South Africa during the apartheid era. He sums up:

“In today’s political economy, satisfying shareholders, employees, and customers to earn profits has become less important for corporations than ingratiating the woke cartel and the governments that support it.”

Rectenwald’s book goes on to discuss possible implications for individual liberty of potential innovations such as an individual carbon footprint tracker, but in this essay I want to stick with the implications of stakeholder capitalism.

The Hayek quote at the beginning of the essay suggests another important implication of stakeholder capitalism. The quoted passage is from Law, Legislation, and Liberty (v3, p 82). The context of the quote is a paragraph in which Hayek is responding to the idea that large corporations should be required to consider the public or social interest. He suggests that “as long as the large corporation has the one overriding duty of administering the resources under its control as trustee for its shareholders its hands are largely tied; and it will have no arbitrary power to benefit this or that particular interest”. The paragraph ends by suggesting that obliging large corporations to consider the public interest gives them uncontrollable power that “would inevitably be made the subject of increasing public control”.

There is also reason for concern that obliging corporate managers to adhere to ESG will make them less accountable for productivity performance of enterprises because it will be difficult for company boards to assess the veracity of claims that performance has been adversely affected by ESG. Wokeness can be expected to provide a cover for inefficiency.

I acknowledge that stakeholder capitalism may have some positive implications for human flourishing, that should be offset against the negative implications discussed above. For example, in my book Freedom, Progress, and HumanFlourishing, I note that the difficulty that governments have been experiencing in agreeing upon concerted international action to combat climate change was ameliorated by the actions of business organisations in planning for a carbon free future.

Nevertheless, as I also argue in that book, there is more reason to be concerned about the implications of declining productivity growth than about climate change. By further reducing productivity growth, stakeholder capitalism seems likely to cause a great deal of economic misery.

Unfortunately, major economic crises will probably need to be endured before political leaders inspired by classical liberalism emerge once again to implement the public policy reforms that are needed to restore free markets.