BoA Moynihan’s “Shareholder Capitalism” Metrics Reveal The Ruse

There has been considerable discussion in this space about the fundamental incoherence and fraudulence of the “stakeholder capitalism” theory. Today I offer some additional proof arising from the very metrics touted as the way to measure the theory in action.

Scott Shepard

Scott Shepard

The theory itself, long pushed hard by academics either naïve and partisan or simply gormless, was formally taken up in 2019 by the Business Roundtable CEO Self-Appreciation Society. Its latest avatars intend, by aggressive manipulation of the otherwise empty theory, to be its chief beneficiaries, even while the politicians who push it instead intend to twist it to their own ever-greater-control-of-everything purposes.

Brian Moynihan, the CEO of welfare-queen Bank of America (BoA) has established a set of metrics by which, he boasts, investors and the public would be able to gauge, and companies should be required to report, the efficacy of the conversion to stakeholder capitalism. He touts the standards, and stakeholder capitalism generally of course, as necessary to bring diversity and equity, and to save the environment.

In reality though, these metrics will merely instantiate his – and his CEO pals’ – own personal policy preferences and personal wealth-preservation strategies while asking no questions that he or his World Economic Forum colleagues would find personally troublesome.

Consider, for instance, that the metrics would require reporting of diversity by sex, age and other characteristics, but not reporting about diversity by – or even about minimum protections against discrimination on the basis of – viewpoint or political participation. And there are no reporting requirements about companies’ continued commitment to merit-based decision making, measures to ensure that surface-characteristic quotas are not established, or other barriers against active discrimination to achieve arbitrary numerical metrics.

Likewise, the metrics would require reporting about greenhouse gas emissions, but would not require reporting on comparative analyses of the emissions being created in jurisdictions and by corporations not amenable to these metrics, or about the creation and actual or potential effects of fuel substitutes. But overfocusing on greenhouse-gas production by western firms and polities ignores the fact that reductions in the west will be meaningless if they are swamped, as they are being swamped, by production increases elsewhere in the world. And they ignore the very real environmental concerns and reliability (and therefore health and safety risks, as illustrated by the cold snap that hobbled Texas this winter) that arise from the use of “green” alternatives.

Needless to say, there are no metrics that make any demands on CEOs or other executives like Moynihan and his friends themselves. There are no requirements to report whether the companies have ridded themselves of all company jets, or refused to hire or retain any employees who live in homes larger than 1,000 square feet per person, or personally account for something more than some bare minimum of carbon production. Nor are there any metrics that would require companies to account for all the money that they take from government agencies in all forms; and what efforts they make to return such funds, with appropriate interest, to those government agencies; and what measures they take to avoid any contentious political positions while they remain in hawk to taxpayers. BoA in particular would find those last questions particularly galling – and so of course they don’t appear anywhere in Moynihan’s grand plans.

Perhaps the most startling illustration of the distance between Moynihan’s ostensibly egalitarian and all-stakeholder-pleasing goals and his self-protective metrics is this: in pretending to be interested in pay equality, one metric would require disclosure of the “ratio of the annual total compensation of the CEO to the median of the annual total compensation of all its employees, except the CEO.” This metric allows Moynihan & Co. to say they included a pay-equity measure. But those metrics are usually the ratio between the CEO and the lowest-compensated full-time employee. Ben & Jerry famously limited themselves to a 6:1 ratio – until, like their fellow socialist Vermonter Bernie Three-Houses Sanders, the possibilities of actual riches pushed them away from their poor-guy purities. The wealth gap is, by itself, a silly concern, and companies shouldn’t bother to measure it. But the pretense and duplicity evinced here – pretending to be dedicated to leveling pay while coming up with a metric that in truth incentivizes granting gigantic pay packages to other directors and fellow executives, while replacing low-skill, low-pay positions with automation – runs straight through these metrics.

Finally, and most revealingly, there are no metrics that ensure that corporations – which are rhetorically entreated by Moynihan, Fink, and others to act in the interests of “all stakeholders” – are taking the steps necessary to ensure that they objectively determine and genuinely act in accordance with the real concerns and wishes of all stakeholders. Of course that’s not required; it’s not even desired. Stakeholder capitalism is just a front for Moynihan and his friends to make political demands throughout the corporate world and to protect themselves while pretending to work “for all.” Really learning what everyone wants would both show that stakeholder capitalism is incoherent and make it much harder to just do whatever they want while ascribing their actions to the Rousseauvian “general will” of stakeholders.

Moynihan’s stakeholder-capitalism metrics, simply as an additional cost, work in his – and BoA’s, and the Business Roundtable crowd’s – personal favor. Adding these incredibly expensive data-collection and reporting burdens will not crush BoA and other current industry giants. The costs won’t have much effect on BoA, which is worth hundreds of billions of dollars and, because it’s deemed “too big to fail,” gets bailed out with our tax money any time it really does fail. But they will greatly impede start-ups that could compete with the goliaths or offer less or differently politicized services and investment opportunities, especially if those new firms are started up not by other oligarchs, but by innovators starting with great ideas (and possibly a different worldview), but more modest assets.

We’re being had.


Scott Shepard is a fellow at the National Center for Public Policy Research and Deputy Director of its Free Enterprise Project. This was first published at Townhall Finance.

The National Center for Public Policy Research is a communications and research foundation supportive of a strong national defense and dedicated to providing free market solutions to today’s public policy problems. We believe that the principles of a free market, individual liberty and personal responsibility provide the greatest hope for meeting the challenges facing America in the 21st century.