capitalism requires outputs from government that include stable governance, effective bureaucracies, rule of law, and public accountability. During the managerial and stakeholder eras, businesses worked with government to serve both societal demands and capitalist needs.
Yet capitalism and democracy entered a new phase after the economic and political crises of the 1970s—the phase of “shareholder capitalism,” one that is also marked by deregulation, globalization, and financialization. This new era has entailed a new conception of the corporation—one that, as Milton Friedman explained, has no moral obligation except to increase profits for shareholders. By this logic, outcomes that are good for capitalists need not be good for the public, and problems of stagnant wages and productivity, economic inequality, and labor risk and precarity need not concern capitalists.
In a democracy, the primary social contract should be between citizens and elected officials, not between consumers and corporations.