Last week, I posted the abstract to my paper Crony Stakeholder Capitalism (here).  One of the comments to that post perspicaciously noted the issue of “how to ensure democratic accountability for private actors that are taking on social goals historically reserved for democratically accountable government.”  In my brief reply, I focused on the duties to shareholders, but I want to follow-up here to note that I do in fact flag the relevant threat to democracy in a footnote in my paper:

A related concern is the potential for stakeholder capitalism to undermine our political system by shifting governmental power to private actors, thereby undermining public accountability of government. Cf. Dorothy S. Lund, Asset Managers as Regulators, THE CLS BLUE SKY BLOG (June 16, 2022) (“allowing three private investment companies that lack political accountability to set regulatory policies for the U.S. economy is dangerous for our democracy”), available at https://clsbluesky.law.columbia.edu/2022/06/16/asset-managers-as-regulators/ ….

Along these lines, I recently came across some related podcast comments from Vivek Ramaswamy, author of Woke, Inc.: Inside Corporate America’s Social Justice Scam, and co-founder and Executive Chairman of Strive Asset Management (“Our mission is to restore the voices of everyday citizens in the American economy by leading companies to focus on excellence over politics.”):

[W]hat the ESG movement has allowed … the progressive movement to do in this country is to allow government actors to do through the back door what they could not get done through the front door. Let’s take the green new deal for example. There was not enough political support to get the green new deal done through the front door of congress so what they did is they deputized companies like Blackrock … just like they did to big tech by the way … to force … asset managers to enforce these values through the back door. So it is politics, but it’s politics in the avatar of the free market. And this is a threat to both capitalism and democracy…. A lot of Milton Friedmanites … worry that this makes companies less effective. I think that’s definitely true. I’ve seen that firsthand and I have a concern about it. But the real problem is that it is a threat to democracy. And that’s the part that the left especially misses. But the left and the right both miss [this] because what this says is the questions that we should be sorting out through free speech and open debate in the public square as citizens in a democracy … we should sort them out through the political process — we’re instead working it out through force using capital as a vehicle of force in the private sector to decide on one monolithic view of how to fight systemic racism or how to fight environmental challenges like global climate change by enforcing one orthodoxy and using capital as the vector to do it. That’s the real threat to democracy.

Some relevant questions that flow from this are: (1) To what extent, if any, are these concerns about ESG and stakeholder capitalism valid and what, if anything, should be done in response? (2) Even if the substance of the concerns should be dismissed as some sort of conspiracy theory what, if anything, does the perception of such a threat tell us about the challenges faced by the ESG and stakeholder capitalism movement going forward?