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Local Stakeholders

Just finished reading a few passages from Stephen Marglin’s critique of the way “thinking like an economist” undermines community – called “The Dismal Science.” It is not a polemic, the title notwithstanding, but there are some points worth talking about later on in terms of the conclusions he draws about the problems with “capitalism” (e.g. growth for its own sake is good). What I want to talk about is a point he raised late in the book talking about the social responsibility of “corporations.”

He argues, correctly, that the actions of corporations often have undesirable consequences on local communities (e.g. outsourcing may devastate a one-company town). Many in the economics profession do not gloss this over, nor do we glorify it, nor do we just call this “unfortunate” – much to the disagreement of Mr. Marglin. He suggests one step toward improvement in this situation: give local citizens and governments a “voice” in these corporations.

Now I have no idea what Marglin means or how he envisions it will happen (he admirably talks about how difficult it is to find any hard “solutions” to many problems) but I have three thoughts.

  1. The large majority of these corporations are publicly held, no? If persons in a community want to have a vested interest and a voice in how the company operates, why are they not purchasing up the shares in said companies? You cannot argue that it is because they wish to diversify their investments – because by living and working in towns that are “dependent” upon this corporation, they have already been unwilling to diversify some of this risk away. It is far easier to tell corporations what to do with other people’s money than it is to actually do it yourself with your own money on the line. To wit, why have the local employees of such companies not taken more aggressive steps to purchase ownership stakes in such companies?
  2. The potential loss of a company from a town is no doubt difficult. But to prevent it is to ignore two important points: first, what was the force that led to the creation and location of that company in your town in the first place? Are you ready to throw away the process that led to decades of prosperity for you at the expense of other towns and locations? Second, suppose the issue is outsourcing of jobs to rural Mexico. Are the communities in Mexico, which stand to be enriched in both the monetary and community sense, not worthy of these opportunities? And for all of the discussion of the corruption of community, why does such a strong focus on corporations and economics become necessary for continuing strong communities? The point of such books seems to be that our economic way of thinking and the corporate culture undermine community … then why should we even want such things in our communities? To argue that we need businesses to consider “staying” for the sake of community seems to be having your cake and eating it too.
  3. If having a company remain located in your city is such an obvious and wonderful idea, what is preventing other entrepreneurs, or even the local governments, from opening up similar or other businesses and doing exactly what it is that you want Kenmore or GM to do?

3 Responses to “Local Stakeholders”

  1. Harry says:


    I bristle whenever I see the phrase “Stakeholders.” Having fed many wintercows and plowed my own fields, “stakeholders” evokes a picture of people coming up from Philadelphia, buying a lot, and expecting the farmer who owns the land across from them never to sell it to anyone, including them, so it will not obstruct their view.

    The land across the street is for sale, but they choose not to buy it. Rather, they ask our government to do whatever is necessary to deprive the other person of his rights to his property. Do whatever it takes, just so long as we don’t have to pay for it.

    There is plenty of money available in my community to buy the land across the street, so Lowe’s does not buy it. Instead, they are happy to screw the farmer, and have the government condemn the land and buy it for a pittance.

    This did not happen to me, but it is happening to neighbors, who are landowners, not “stakeholders.”

    You raise many questions worthy of discussion in your post. In passing, I would question that a large majority of corporations are publicly held, but I would concede the point if your unit of measure is capitialization, not number.

    Finally, I’m not sure how economists think — I guess it depends on how you define an economist. Looking nearby, I note you have Thomas Sowell on your reading list. He is no doubt a different thinker than Paul Krugman.

    Let us know if our government has sent you and your herd to Siberia.

  2. Peter says:

    He may mean something like what they do in Germany. Here is a recent article about it: http://www.economist.com/businessfinance/displaystory.cfm?story_id=14183029

  3. Michael says:

    I know I’m on an old post now, but I did a few classes on development and none of them really addressed an important issue: when should towns die? We tend to focus so much on building up places, but rarely is it mentioned that because some factors change, like transportation costs, it maybe better if the town loses its charter.

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