As Facebook misrepresents many decisions about its role in shaping public discussion among its employees and the public, it is becoming clear that it resolves its findings without a major change in its business model does not make. And a new model is readily available: for profit conditions.
For decades, a misguided ideology has warned companies, economies, and societies: that the sole purpose of corporations is to maximize short-term returns to a set of stakeholders – those who have bought shares. Neither the law nor history needs to be true.
But shareholder value-maximization ideology has cemented into corporate practice too much at the expense of social welfare. It manifests in many ways: a sluggish adherence to the “market” decision, even when other social cues are more powerful; Officers enriched by stock options; Whenever stock prices fail to meet quarterly “expectations”, companies fearing “proactive investors” who attack and often push shareholder lawsuits for stock gains at all costs.
The epidemic, however, has already intensified the spreading recognition that shareholder value maximization is often a harmful option – by no means an ethical imperative or even a bizarre responsibility.
The major institutions of capitalism are turning into a new vision for this. 2019 Business roundtable CEO’s statement Said that corporate strategy should benefit All Stakeholders – including shareholders, yes, but equally customers, employees, suppliers, and the communities in which companies operate. Blackrock CEO Larry Fink’s recent annual papers emphasize new ideas on how an investment company, the world’s largest company, should invest billions of dollars.
Fink’s 2019 letter gave a mantra New vision for corporate purpose; Subsequent 2020 and 2021 papers focused on business responsibility around climate change, particularly in light of the epidemic. B Corporation And conscious capitalism movements are increasing. The World Economic Forum is a “champion”Fourth sector, “The Purpose of Combining With Profit. Vocational schools, facing a student revolt against a purely profit-maximizing curriculum, are rapidly changing what they teach.”
And with society under siege, many more businesses, including social media, seem like good corporate citizens. They have no choice.
For example, Facebook has doubled new efforts to combat philanthropy and misinformation, even increasing usage and share price. Platforms such as WhatsApp (owned by Facebook) have become essential services to connect people, whose physical connections have suddenly changed during the global epidemic. Shelter-in-place has, in many ways, become a Shelter-in-Facebook property.
But Facebook and its siblings remain fragile. Since the 2016 presidential election in the US, Facebook has faced government hearings and regulation, public upheaval (#deleteFacebook), and heavy fines for invading privacy and undermining democracy. These calls were extended in the weeks following the January 6 capital riots. Separately, it faces accusations of large-scale (though not entirely) prejudice from political authority. These have called for the repeal or reform of section 230 of the Communications Mitigation Act, which gives it immunity from the actions of its users.
A huge company that is simultaneously essential and pillaged is insecure. Just John D. Ask the ghosts of Rockefeller and his fellow bandits Baron, whose vast monopoly industrialized America more than 100 years ago. Journalists and public outrage targeted him for his abusive practices until the government finally disbanded his companies through antitrust laws.
Because Mark Zuckerberg maintains full control of Facebook, they can publicly protest unilaterally and turn down heavy-handed regulation by converting Facebook into a new kind of business: the For-Benefit Corporation.
Under Public benefit corporation The legal model, firms bind themselves to a public benefit mission statement and both meet the required ongoing reporting on standard financials And How the company is living up to its mission. That position protects the company against profit-seeking shareholder lawsuits, and also attracts employees and investors who want to combine profits with purpose.
Dataworld It is one of the thousands of certified B corporations that have seen good returns on the financial matrix. Alebirds, For example, launched into some permanent materials using a pro-sustainability process to manufacture casual footwear, quickly reaching revenues of $ 100 million and $ 1.7 in an industry with concerns for sustainability and human rights. Billion was evaluated. Other household names which are B core include the body Shop, Coursera, Danone, To Jamie Oliver Group, King arthur flour, Naumi Tea And Patagonia.
Many companies have not taken formal B certification from B Labs, yet have done well by changing their business practices, such as Carpet and Company. The interface. Some firms incorporate ESG principles into their management systems – $ 24 billion (market cap) Dutch life sciences company DSM For years there were meaningful sustainability goals for his senior management that accounted for 50 percent of his annual bonus. Both Interface and DSM focus on non-financial considerations for their commercial success.
Beneficial Facebook can similarly relate to the world differently, with a variety of iconic shocks and regulatory responses that have led to heavy stock dips and heavy fines. Its operations will align with Zuckerberg’s stated objective to enable the potential abundance that can occur from connecting everyone in the world.
Imagine a Facebook town hall as a true public square, not another way of collecting and selling people’s data without their explicit consent. Imagine a Facebook that puts its users first and its advertisers in second place; Found out where the advertisements came from; That Earned In a way your attention which you controlled through machine-driven algorithms maximized your attention for good or ill. Such a profitable Facebook can create true buying and transparency with its large-scale community around the world.
Of course, Facebook’s new move Oversight board, Which may provide some meaningful review, does not require legal change. But if shareholders and employees are rewarded primarily by the success of the problematic advertising revenue model, then a continuing conflict between private profit and public benefit makes it impossible to believe what is happening behind the scenes . A change to in-benefit incorporation and appropriate authentication brings with it various performance metrics and accountability systems Public score.
In turning Facebook into a for-profit corporation, Zuckerberg could inspire himself against the president’s anger by rehabilitating his reputation – and his company. This will likely create a huge wave both in Silicon Valley and beyond – and it could help change capitalism.