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… is from page 51 of the 1958 edition of E.A.G. Robinson’s 1931 book, The Structure of Competitive Industry [2]:
The shareholders of a company perform two separate functions. They provide the capital and they run the risks, the risks either of losing their money or achieving wealth.
DBx: Real-world Bond villains and other proponents of replacing shareholder capitalism with so-called “stakeholder” capitalism are proponents of continuing to have the risks of business failures be borne by those persons who supply businesses with capital, while simultaneously compeling the suppliers of capital to share any profits that their capital makes possible with non-suppliers of capital.
Proponents of “stakeholder” capitalism, in short, are proponents of externalizing the upside ‘risks’ of private businesses while keeping the downside risks internalized on the suppliers of capital. In more pedestrian terms, proponents of “stakeholder” capitalism are proponents of free-riding loading.