Conservative Journal in Hungary: ‘Companies Must Serve the Interests of All Stakeholders'
Citing Catholic teachings and the failures of shareholder-focused, the authors of this article published in a conservative journal in Hungary, argue that it’s time to implement what they call inclusive or stakeholder capitalism. It appears that Europe may have bypassed the worst of the greenwashing that has tainted the brand of stakeholder capitalism.Spiritual Underpinnings of Stakeholder Capitalism
The Failure of the Friedman Doctrine
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Of all the countries in the European Union, Hungary is generally considered among the most conservative. So, it might come as a surprise that one of its leading conservative journals, The Hungarian Conservative, recently published Capitalism’s Facelift: Helping to Create a Fairer Social Market Economy and the Global Fight against Climate Change Concerning Domestic Companies.
In it, the authors Adam Gyongy and Gabor Nemes write: “We believe that in the coming years, during the UN’s Decade of Action1 by rethinking and reassessing the relationship between humans and the planet, we can contribute to the healing of our common home, the Earth, and to the sustainability transition not just with lofty words and theories, but with active action by rethinking economic activities
Gyöngy is a Laudato Si’ Animator. He has an MA in public administration from Hilbert College and a BA in international relations from the Pázmány Péter Catholic University. Nemes is a human resources consultant, chief security officer, aviation and green human resources expert, and a sustainable travel and tourism advisor.
Spiritual Underpinnings of Stakeholder Capitalism
Arguing that the Milton Friedman doctrine has led to a world in which a “narrow realm of the extremely wealthy continues to distance itself from the world of the average person and particularly from that of the poor.”
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Without referencing Friedman’s often overlooked caveat that organizations need to act ethically and with a level playing field in their pursuit of optimizing profit, the authors argue that shareholder capitalism defies basic Catholic teachings embodied in the works of Pope Leo XIII, who gave voice to these thoughts in his 1891 encyclical ‘Rerum Novarum’: “It is a tough task to balance the rights and duties that regulate the relationship between the rich and the poor, the capitalists and the workers. Our venture is perilous because troublemakers and deceitful people can easily exploit it to distort the right position and incite the masses.”
According to the authors, 40 years later, Pope Pius XI wrote: “To each, therefore, must be given his own share of goods, and the distribution of created goods, which, as every discerning person knows, is laboring today under the gravest evils due to the huge disparity between the few exceedingly rich and the unnumbered propertyless, must be effectively called back to and brought into conformity with the norms of the common good, that is, social justice.”
These sentiments were later expressed in Pope Francis’s Encyclicals:
“Fratelli Tutti”, which emphasizes solidarity, social justice, and the common good, urging greater fraternal love and comprehensive human development.
“Laudato si’”, earlier encyclical focusing on environmental stewardship and the interconnectedness of social and ecological issues, calling for a collective effort to care for our common home, the Earth,
Principles of the Gospel, an article highlighting the need for economic systems to align with the principles of the Gospel, which advocate for justice, compassion, and the dignity of every person.
These principles underly the authors’ call for a more equitable and sustainable form of capitalism that aligns with Catholic social teachings on justice, solidarity, and care for creation.
The Failure of the Friedman Doctrine .jpeg)
The authors write,” In our view, the Friedman Doctrine had failed by the early twenty-first century, and going beyond his ideas has become essential. By calling on corporations to at all costs maximize shareholder value—meaning profits and stock prices—regardless of the consequences for employees, consumers, suppliers, and local communities, they have created a level of societal inequality and harm to the natural environment that is no longer sustainable: it is unjust and runs counter to its original purpose.”
Citing Unilever, Johnson & Johnson, and other organizations as examples, they write: “There are alternatives to profit maximization and shareholder-centric approaches.... Stakeholder capitalism is...a system in which a company strives to consider the needs of all stakeholders. These include customers, suppliers, employees, shareholders, and local communities alike. In this system, the goal of the corporation is long-term value creation, rather than merely profit maximization. Proponents of stakeholder capitalism believe that serving all stakeholders is essential for the long-term success of any business, as opposed to focusing solely on shareholder interests. Its main precepts are that companies must serve the interests of all stakeholders; emphasis should be placed on long-term value creation rather than solely increasing shareholder value; and prioritizing shareholders should be abolished.”
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