Data is changing shareholder capitalism

IF AMERICA’S CEOs have learned one lesson over the last half decade, it’s this: Avoid politics. It is the right lesson – as usual, Milton Friedman was correct, the primary purpose of a business should be to increase its profits – but the rapidly changing nature of the economy calls for an update: Avoid politics whenever possible, but never when necessary.

The recent history of corporate activism is instructive. Just before the pandemic, the chief executives of 181 of the largest US corporations signed a pledge to “lead their companies for the benefit of all stakeholders”, not just shareholders.

They essentially promised to pursue a better world beyond profits. It did not go well. After several prominent instances of companies or executives getting burned for taking political stances – just ask Budweiser or Elon Musk – most companies now just stick to business or at least stay silent.