Shareholder Capitalism
Most free-market fans are aware of Milton Friedman's 1970 statement regarding the responsibility of business owners, "there is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits…"
However, those with more knowledge of economics would quickly point to a more extended comment by Friedman.
"In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom."
Within economic conversations, this is referred to as shareholder capitalism because the driving impetus of interactions with the market is profit maximization for investors.
Stakeholder Capitalism
In 2020, during the World Economic Forum (WEF) in Davos, Switzerland, three men became inextricably linked with rethinking Friedman's shareholder-focused approach. The first two — WEF founder Klaus Schwab and Larry Fink, the CEO of nine-trillion-dollar asset management firm BlackRock — advanced an economic position that argued for greater weight on environmental, social, and governance concerns in how capital is allocated. While functionally distinct, these became widely referred to in popular culture as ESG or stakeholder capitalism.
In his annual letter to CEOs that same year, Fink laid out the reasons behind the new policy for assessing future partnerships.
"As I have written in past letters, a company cannot achieve long-term profits without embracing purpose and considering the needs of a broad range of stakeholders. A pharmaceutical company that hikes prices ruthlessly, a mining company that shortchanges safety, a bank that fails to respect its clients – these companies may maximize returns in the short term. But, as we have seen again and again, these actions that damage society will catch up with a company and destroy shareholder value."
The economic debate and cultural conflict generated by this proposal were swift and politically charged. Many on the left were thankful to have some real financial weight behind their mission to drive new behaviors in the C-suite towards their ecological, cultural, and political endgame to use business and corporations as chief architects of cultural formation and social change. For those on the right, the terms ESG and stakeholder capitalism became a dog whistle for wokeism, Marxism, socialism, communism, and the worst aspects of the DEI (Diversity, Equity, and Inclusion) agenda and needed to be strenuously opposed. Their concern was further fueled because of the presence of the third person often seen as pushing the ESG and DEI agenda, billionaire philanthropist and cultural lightning rod George Soros. In 2022, Fink even addressed this seismic backlash with the statement:
"Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not 'woke.' It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper. This is the power of capitalism."
This ideological rift has made its way to policy center conversations, campaign speeches, party platforms, Cabinet agency regulation, family and workplace conversations, and, of course, has become a hot topic of Christian public square dialogue and social media posts.
A Christian Assessment
A relevant pastoral concern regarding the conflation of ESG and stakeholder capitalism is that upon hearing "ESG," many evangelical Christians discard the stakeholder question as an ideological import — never noticing that "for whose benefit does a business exist?" is a question Scripture answered long before Davos convened. Perhaps the question should be: What should an evangelical Christian think about these positions, and how well do they conform to Scripture?
First, while rich resources exist throughout two thousand years of church history regarding economics, vocation, markets, and morality, they are rarely discussed in seminary, leaving most pastors without a developed vocabulary for forming their people economically from the pulpit, let alone any church-based discipleship initiatives.
Second, let's remember that evangelical is not a political demographic but a biblical term that means to announce the good news of the gospel of Jesus Christ (Mark 1), to make disciples of all nations and teach them to obey all that He commanded (Matthew 28), to be sent as the Father sent the Son (John 20), to be his witnesses (Acts 1) and to proclaim the excellencies of him who called us out of darkness and into his marvelous light (1 Peter 2).
Third, if that is what evangelical means, then Christians need to understand what Scripture teaches about economics related to the purpose of the markets. In Leviticus 19, we learn that the LORD (Yahweh) cared very deeply about how the slaves he had just rescued out of Egypt understood the worship implications of economic behavior.
Lessons in Leviticus 19
Nestled within a disordered retelling of the Ten Commandments are the following directives:
"When you reap the harvest of your land, you shall not reap your field right up to its edge, neither shall you gather the gleanings after your harvest. 10 And you shall not strip your vineyard bare, neither shall you gather the fallen grapes of your vineyard. You shall leave them for the poor and for the sojourner: I am the LORD your God.
11 "You shall not steal; you shall not deal falsely; you shall not lie to one another. 12 You shall not swear by my name falsely, and so profane the name of your God: I am the LORD.
13 "You shall not oppress your neighbor or rob him. The wages of a hired worker shall not remain with you all night until the morning. 14 You shall not curse the deaf or put a stumbling block before the blind, but you shall fear your God: I am the LORD.
15 "You shall do no injustice in court. You shall not be partial to the poor or defer to the great, but in righteousness shall you judge your neighbor. 16 You shall not go around as a slanderer among your people, and you shall not stand up against the life of your neighbor: I am the LORD." [...]
18 “You shall not take vengeance or bear a grudge against the sons of your own people, but you shall love your neighbor as yourself: I am the LORD.”
The LORD's instruction continues:
30 “You shall keep my Sabbaths and reverence my sanctuary: I am the LORD.” [...]
32 “You shall stand up before the gray head and honor the face of an old man, and you shall fear your God: I am the LORD.
33 "When a stranger sojourns with you in your land, you shall not do him wrong. 34 You shall treat the stranger who sojourns with you as the native among you, and you shall love him as yourself, for you were strangers in the land of Egypt: I am the LORD your God.
35 "You shall do no wrong in judgment, in measures of length or weight or quantity. 36 You shall have just balances, just weights, a just ephah, and a just hin: I am the LORD your God, who brought you out of the land of Egypt. 37 And you shall observe all my statutes and all my rules, and do them: I am the LORD."
In these verses, the LORD, the covenant God of steadfast love and faithfulness, is giving economic instruction to landowners, businessmen, market participants, and communities regarding the connection between proper practices and function based on moral good and evil. These comments undergird a strong sense of private property, access to free markets, fair weights and measures, wealth accumulation, creation care, workers' rights, the disabled, the elderly, and even the immigrant.
Application in Ruth
The Book of Ruth provides a real-world performance of the economics of the LORD's kingdom.
After fleeing a famine in Israel, Naomi, her husband, and two sons settle in Moab. Her husband, a landholder in Israel, dies, leaving her with two sons. These sons marry, and shortly thereafter also pass away. This leaves a bitter Naomi with two widowed daughters-in-law, and more importantly, no one to redeem her land back in Israel where the famine is now over. Knowing that she lacks a kinsman-redeemer for her land, that she will return as a widow with no economic means and will have to rely on charity, she attempts to persuade the new widows to return to their families rather than face the difficult economic outlook ahead. While one takes her suggestion, the other, Ruth, decides that Naomi's people are now her people.
They end up gleaning in the fields of a successful entrepreneur, wealthy landowner, large-scale employer, and skilled marketplace participant named Boaz. Nowhere in the Book of Ruth is Boaz chastised for the amount of his wealth. Instead, Boaz is put forth as a moral exemplar and a type of Christ, who provides shelter for the poor, the sojourner, and the widow (Lev. 19:9–10, 33), as well as the elderly (Lev. 19:32).
He is, however, not as wealthy as he could be if he fully harvested everything from his fields (Lev. 19:9–10), cheated or oppressed his neighbors (e.g. workers) with regard to their wages (Lev. 19:13a), withheld his day-laborers' pay while he waited for his personal investments to pay out (Lev. 19:13b), neglected to take the Sabbath off (Lev. 19:30), refused to let his workers have a day of rest (Lev. 19:18), used deceitful business practices (Lev. 19:11), or rigged the scales in his favor (Lev. 19:35). Boaz understands he is free to pursue massive profits for himself and any future shareholders, and also has a moral obligation to the stakeholders in his community as defined by Leviticus. In other words, Boaz is following a higher calling than those articulated by the economic ideologues above, because his missional directive came from Yahweh, not man-derived political or economic theory. This calling has moral implications which are, in turn, worship implications.
The Missing Eschatological Framework
The shareholder versus stakeholder capitalism debate has devolved into a political conversation where it has been straw-manned, stereotyped, and weaponized in the ideological culture war. That is not to say there are not real and weighty ideological issues that need to be addressed. Rather, it is to say that Christians are being swept up into those conversations without assessing both from a biblically grounded, eschatologically focused perspective. We have already looked at some biblical content that addresses how the markets and wealth creation should function. But looking at those passages without an eschatological framework is where the real breakdown occurs.
As Christians, we are called to seek the flourishing of the land (Genesis 1:28) and people where we dwell (Jeremiah 29) — which includes economically. We do so as part of participating in Christ's mission of making all things new, through offering foretastes and previews of the New Heavens and the New Earth. We worship rightly only when our eschatological focus is right: the full rule and reign of Christ, not profits or changing the world through the markets. Since the book of Leviticus is a book of instruction on how the LORD (Yahweh) desires to be worshiped, and the Book of Ruth provides a real-world model for these principles as vocational worship, Christians should consider their economic practices as worship directed by, for, and toward their Redeemer.
Scripture is not silent on the marketplace. In fact, it directly connects market interaction with morality and worship. Unlike Friedman, it does not see "conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom" as a culturally determined or legislatively guided moving target, but as articulated by God for the flourishing of society. Nor does it see the markets as primarily existing to create wealth. Unlike Fink’s proposed correction, it does not see the market participants as the primary agents of social change. Nor does it allow "the needs of a broad range of stakeholders" to be defined based upon our personally derived or politically endorsed litmus tests for proper stewardship — both in the needs and the various categories of stakeholders. Those too are set by God.
First, when we participate in Christ's mission of making all things new we step out of the ideologically driven, social-media-fueled campaign to pick a side and fight the other. Second, when we are formed intellectually we ground ourselves in what God actually said, rather than getting wound up about the misrepresentation and even twisting of right doctrine by either side. Third, we embrace the true endgame, not making a profit for shareholders or meeting the needs of stakeholders, but worshiping the God of steadfast love and faithfulness.
Connecting Sunday to Monday
What is good that needs encouragement? Who are the virtuous participants in the marketplace and business investors within your congregation who are pursuing the generation of wealth while keeping the moral imperatives of Leviticus in mind?
What is broken that longs for restoration? What economic obstacles do the elderly, disabled, poor, and immigrants in your congregation face to having an equality of opportunity in the marketplace? What role can other members of your congregation play in helping to restore their fair access?
What is missing that awaits creation? Are there job training programs, economic incubators, or micro-funding opportunities that could be developed in your community?
What is evil that demands opposition? Are there employers in your area, or even your church, who are immorally pursuing wealth at the cost of exploiting their workers? What role could you play in addressing that situation?
Major Works Cited
[1]Davos Manifesto 2020: The Universal Purpose of a Company in the Fourth Industrial Revolution. https://www.weforum.org/stories/2019/12/davos-manifesto-2020-the-universal-purpose-of-a-company-in-the-fourth-industrial-revolution/
[2]Friedman, Milton. 1962. Capitalism and Freedom. Chicago: University of Chicago Press.
[3]Friedman, Milton. "A Friedman Doctrine — The Social Responsibility of Business Is to Increase Its Profits." New York Times Magazine, 13 September 1970, 32–33, 122–26.
[4] Fink, Larry. "A Fundamental Reshaping of Finance." Larry Fink's 2020 Letter to CEOs. BlackRock, 2020. https://www.blackrock.com/corporate/investor-relations/2020-larry-fink-ceo-letter.
[5] Fink, Larry. "The Power of Capitalism." Larry Fink's 2022 Letter to CEOs. BlackRock, 2022. https://www.blackrock.com/corporate/investor-relations/2022-larry-fink-ceo-letter.
Helpful Resources
1]Joyce, Adam and Greg Forster (editors). 2017. Economic Wisdom for Churches: A Primer on Stewardship, Poverty, and Flourishing. Chicago: The Oikonomia Network.
[2]Pope John Paul II. 1991. Centesimus Annus. https://www.vatican.va/content/john-paul-ii/en/encyclicals/documents/hf_jp-ii_enc_01051991_centesimus-annus.html
[3]Rhodes, Michael and Robby Holt. 2018. Practicing the King’s Economy: Honoring Jesus in How We Work, Earn, Spend, Save, and Give. Grand Rapids, MI: Baker Books.
[4] Sherman, Amy. 2022. Agents of Flourishing: Pursuing Shalom in Every Corner of Society. Lisle, IL: IVP.
The vision of Faithful Presence is to equip servants and leaders working in our nation’s capital to flourish as they participate in Christ’s mission of making all things new. Support this ministry and receive additional resources with a supporting subscription.