Capitalism and crises: A comparative analysis of mainstream and heterodox perceptions and related ethical considerations

Stakeholder theorists have traditionally objected to the neoclassical conception of the firm as a vehicle for maximizing profit or shareholder wealth, thus opening up space for controversial engagement with neoclassical economics. The present paper fills some of this space by elaborating the parallels between stakeholder theory and classical institutional economics, a heterodox school of economic thought that has long been critical of a broad range of neoclassical ideas. Rooted in the writings of Veblen and Commons, classical institutional economics explores how the social provisioning process is coordinated or hindered by real-world business institutions. From this standpoint, stakeholder theory highlights the possibility of overcoming the institutionally ingrained conflicts and trade-offs for the sake of realizing common human interests in organizing the social provisioning process in an orderly and reasonable way. This argument not only illuminates the relationship of stakeholder theory to the wider societal context of modern capitalist economies but also elaborates novel aspects of the moral nature of stakeholder management.

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Three Problems of Business Addressed by Stakeholder Theory: Insights from the Institutional Economics of John R. Commons

Valentinov

2024

J Bus Ethics

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Stakeholder theory is traditionally motivated by the need to reconceptualize three core problems of business: value creation and trade, the ethics of capitalism, and managerial mindsets. We argue that the need for this reconceptualization arises, in part, from the limitations of mainstream economic theory in grasping the evolving business environment. The original institutional economics of John R. Commons offers an alternative body of economic thought that addresses these limitations by replacing the atomistic individualism of mainstream economics with an ontology grounded in collective action. Drawing on Commons’ insights, we demonstrate how the problem of value creation and trade takes on a new meaning of promoting security of expectations through conflict resolution and the maintenance of order. We further reconstruct the problem of the ethics of capitalism by drawing on Commons’ concept of reasonableness, rooted in evolving community standards of morality. Finally, we trace the problem of managerial mindsets to Commons’ category of industrial goodwill, which suggests that managers can deliberately pursue policies that maximize stakeholders’ collaborative attitudes. We conclude that reconstructing these three problems of business through Commons’ categories reveals the deeper institutional economics content embedded within contemporary stakeholder theory.

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Capitalism and crises: A comparative analysis of mainstream and heterodox perceptions and related ethical considerations

Cited by 3 publications

References 114 publications

Ethics in Economic and Business Activity

Ethics in Economic and Business Activity

Stakeholder Theory: Toward a Classical Institutional Economics Perspective

Three Problems of Business Addressed by Stakeholder Theory: Insights from the Institutional Economics of John R. Commons

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