Stakeholder Capitalism: How Economic Power Becomes Political Power

The World Economic Forum presents stakeholder capitalism as the future solution to the world's problems. But history warns us: when power is concentrated in the hands of a small, self-appointed elite, freedom, democracy, and popular control suffer. A comparison with the former Soviet Union's governance system, as described by Michael Voslensky in Nomenklatura: The Soviet Ruling Class, gives cause for serious concern.

What is Stakeholder Capitalism?

Stakeholder capitalism, often called stakeholder-oriented capitalism in Norwegian, presents itself as an ideal where companies should no longer merely make money for their owners, but also take into account employees, local communities, the environment, and society in general. It is also referred to by names such as "sustainable capitalism" and "socially responsible capitalism"—terms that superficially signal care but in practice function as platitudes that conceal a dramatic power shift from popular governance to corporate governance systems. It is promoted as a "reform" of capitalism, intended to ensure that economic growth also contributes to social justice, sustainability, and technological development—all within private structures.

We know that in Norwegian, it is the shareholders (aksjonærer) who own a company, and in English they are called shareholders. They invest capital and expect financial returns. It is their interests that traditional capitalism is built around. When the World Economic Forum instead speaks of stakeholders, they mean a much broader group: employees, customers, suppliers, local communities, authorities, the environment, and even future generations. Stakeholders are, in other words, everyone who is affected by or affects the business.

In stakeholder capitalism, it is claimed that the company should not only serve the owners but balance consideration for this entire community of interests. It is this change in power perspective that makes the model so fundamentally different and controversial.

Klaus Schwab, the founder of the World Economic Forum (WEF), is one of the most prominent advocates for this model. In his book Stakeholder Capitalism (Schwab & Vanham, 2021), he argues that the companies of the future must play a leading role in solving global problems—not just through profit, but also by acting as stewards of the community and the environment.

He formulates it thus:

The purpose of a company is to engage all its stakeholders in shared and sustained value creation.

– Klaus Schwab & Peter Vanham, Stakeholder Capitalism

On the surface, this seems like a positive vision. But in reality, the model means that the power to define what is "society's best interest" shifts from democratic institutions to global corporations and private networks. Stakeholder capitalism thus challenges the traditional distinction between political power (what should be democratically governed) and economic power (what should be competition-driven and open).

How Does Stakeholder Capitalism Work in Practice?

In practice, stakeholder capitalism is implemented through frameworks such as ESG and the UN's Sustainable Development Goals (SDGs).

ESG stands for Environmental, Social, and Governance. It is a tool used by companies and investors to assess how a business considers sustainability, human rights, and ethical leadership. Many large companies now report regularly on ESG factors, and such assessments influence who receives investments and access to capital.

SDG, or Sustainable Development Goals, are the UN's 17 goals for sustainable development. They aim to, among other things, combat poverty, reduce inequality, and halt climate change. Many companies attempt to align their operations with these goals, both to demonstrate social responsibility and to maintain trust with authorities and consumers.

By using ESG and SDG in their strategy, companies acquire a new role, not just as economic actors but also as co-players in societal development. This is the core of stakeholder capitalism: that companies should not only make money but also take responsibility for how the world develops.

International Examples:

• BlackRock, the world's largest asset manager, integrates ESG considerations into its investment decisions and expects companies to handle environmental and social risks as part of long-term value creation. This gives the financial sector increasing influence over which societal goals companies prioritize. This applies not only to economic considerations but also to political and climate-related concerns.
• Microsoft, Apple, and other tech giants participate in "net zero" initiatives that commit them to climate goals defined at global summits.
• The World Economic Forum has launched projects such as "The Great Reset" and "Global Redesign Initiative" where it is proposed that companies, not states, should lead the development of political solutions in areas such as health, technology, and climate.

Norwegian Examples:

• Equinor announces in its sustainability reports how they will contribute to the green transition, but bases their strategies on international ESG standards defined by global financial circles.
• DNB and several Norwegian banks now require sustainability reporting from businesses seeking loans, based on international norms.

This means that Norwegian companies and societal actors are increasingly adapting to global guidelines. When private actors assume the role of unofficial legislators, power is quietly and effectively transferred from national parliaments to closed governance forums, often dominated by billionaires, large corporations, and technocrats.

Stakeholder Capitalism and Marxism: Different Forms of Power Concentration

Although stakeholder capitalism and Marxism superficially represent different economic models, they share an important common denominator. Both risk concentrating power in the hands of a small elite that acts "on behalf of the community."

In Marxism, the state owns the means of production, and the idea is that workers through the state should govern the economy for everyone's benefit. In practice, this led in the former Soviet Union to a small ruling class called the nomenklatura controlling resources without real popular influence. The state managed ownership, but those in positions of power used it to strengthen their own privileges.

Stakeholder capitalism formally retains private ownership of the means of production but shifts the power to define what constitutes proper societal development to a handful of global companies and financial actors. Instead of people determining society's priorities through democratic processes, norms are set by private actors by virtue of their economic and network power.

Thus, stakeholder capitalism, even though it dresses itself in language about inclusion, sustainability, and responsibility, can lead to a form of power concentration reminiscent of what we have seen in state-planned economies. The real difference is who holds the power. In Marxism it is through the state, and in stakeholder capitalism, the private sector.

Common to both systems is that a small group is given power to govern on behalf of the many, without the people themselves having decisive control. History shows that such systems, regardless of ideological packaging, have a tendency to develop into privilege societies where ideals are left behind as empty slogans.

The Nomenklatura: The Former Soviet Union's Hidden Ruling Class

Michael Voslensky was himself part of the former Soviet system before he defected. In Nomenklatura: The Soviet Ruling Class, Voslensky documents how the former Soviet Union, which officially proclaimed classlessness, developed a hidden ruling class called the "nomenklatura."

This was a class that did not necessarily exist in name but in practice controlled the entire society. As Voslensky expresses it:

The whole power of the socialist state is concentrated in its hands. It alone makes political decisions.

– Michael Voslensky, Nomenklatura: The Soviet Ruling Class

Some key characteristics of the nomenklatura:

They had access to special shops, hospitals, housing, and vacation resorts that ordinary citizens could not use.

This privilege system was not accidental. It was the result of a power structure that provided access to goods not based on effort or the market, but on position. Voslensky summarizes:

The nomenklatura is a class of privileged exploiters. It acquired wealth from power, not power from wealth.

– Michael Voslensky, Nomenklatura: The Soviet Ruling Class

They appointed each other to high positions through a closed network, without popular control or transparency. They explained their privileges as necessary to "govern society for the best," but were in practice a self-perpetuating class. Criticism of the nomenklatura was met with sanctions, persecution, or censorship.

The nomenklatura legitimized its power through idealistic slogans in the same way that stakeholder capitalists today use words like "sustainability" and "social responsibility" to cover up a growing concentration of power.

Voslensky pointed out that perhaps the most comprehensive deception in the Soviet system was the notion that the nomenklatura's privileges served the people's best interest, when in reality they primarily served the nomenklatura's own interests.

Stakeholder Capitalism: A New Nomenklatura?

By studying the mechanisms Michael Voslensky described, we see clear similarities between the former Soviet Union's nomenklatura and what can emerge through stakeholder capitalism:

In both cases, the concentration of power occurs behind facades of high ideals. The World Economic Forum wants companies to be not just market actors but also moral and political actors. When large corporations define values, sustainability goals, and "social responsibility" on their own terms, an unofficial but real governance structure is established.

As Voslensky shows, a class that claims to govern on behalf of everyone will in practice end up governing for itself.

Why This Concerns Us All

Stakeholder capitalism is presented as a reform to solve the world's challenges—inequality, climate change, health crises—but at its core, it is about who should have the power to define society's direction.

History shows that when power is concentrated, it rarely solves the problems it claims to address. Stakeholder capitalism, with its praise of community without popular mandate, carries precisely this danger. When the world's largest companies and most powerful institutions gather to define future policy without democratic anchoring, the citizen's voice is replaced with the technocrat's vision. Elections become formalities, and society's direction is decided behind closed doors.

What is at stake is not just economic models or market mechanisms. What is at stake is who should own the future. Will it be a free population governing its own society, or a new nomenklatura shaping the world in its image behind smiling slogans and global conferences?

Michael Voslensky's work reminds us that when power is concentrated, it never happens without consequences, no matter how beautiful the words covering it may be.

Freedom can disappear not with a scream, but with a promise of security. Therefore, we must listen to history before we are left without real choices, but only illusions of influence.