Podcast Summary:

Podcast: New Books Network
Host: Alfred Marcus
Guest: Stuart Hart, author of Beyond Shareholder Primacy: Remaking Capitalism for a Sustainable Future
Date: October 22, 2025

Overview

In this episode, Alfred Marcus interviews Stuart Hart, a prominent scholar in sustainable business strategy, about his new book Beyond Shareholder Primacy: Remaking Capitalism for a Sustainable Future. The conversation traces the evolution of American capitalism, critiques the dominant “shareholder primacy” model, and explores pathways toward a regenerative, stakeholder-oriented system. Hart draws from business history, economic philosophy, and contemporary challenges—from AI to business education reform—to argue the urgent need for systemic change. The tone is intellectually rigorous yet candid, drawing on decades of practical and academic experience.

Main Themes & Discussion Points

1. Motivation for the Book & Critique of Win-Win Sustainability (04:48–08:05)

• Hart reflects on 35+ years of promoting sustainable business within the prevailing American shareholder-centric model. He notes that incremental, “win-win” changes—ecoefficiency and product stewardship—fit the old system but fail to address core crises.
• The “business case” for sustainability—proving environmental or social actions also yield increased shareholder value—has limited real transformation.
• Hart’s realization: meaningful, systemic business transformation is stymied by shareholder primacy doctrine, leading to persistent incrementalism.

“By and large we were still stuck in greening. The reason…was that the larger system just really precluded it…as long as we were living in a world dominated by American style, shareholder first financialized capitalism, we’re doomed.”
— Stuart Hart, (07:59)

2. The Problem with Shareholder Primacy (08:44–16:11)

• Key arguments:
  • Shareholder primacy fosters relentless short-termism—companies and executive compensation focus on quarterly earnings, at the cost of long-term value.
  • The broader worldview (rooted in Milton Friedman’s legacy) defines profit maximization as a corporation’s sole purpose.
  • The “401k culture” means most Americans’ retirements are tied to stock market performance, reinforcing the status quo.
  • Stakeholder-centric models are marginalized, even when many privately-held businesses operate more purposefully.
• “Saddlebags, not transformation” analogy: Sustainability programs are often peripheral, not fundamental to company purpose.

“If the purpose of business and the purpose of the firm is to maximize profits, then that sort of discounts the idea that…an important purpose…is to solve real problems in the world and make a positive societal contribution. Profit is really a result.”
— Stuart Hart (17:15)

3. History and Evolution of Capitalism’s “Reformations” (23:22–38:28)

• Hart contextualizes today’s crises as part of cycles in capitalism:
  • Mercantilist era: Early joint-stock companies (e.g., British East India Company) served investors and the crown, often extractively and violently.
  • American Revolution: Motivated in large part by resistance to monopolistic, extractive British trading companies.
  • Second Reformation/Gilded Age: Industrialization, massive inequality, environmental degradation, and the formation of managerial capitalism.
  • The New Deal: A breaking point and a “flip” to a different societal-business contract.
  • Shareholder primacy is recent, not inevitable; shifts have occurred before at moments of social and ecological stress.
• Hart references Carl Jung’s “enantiodromia”—extremes naturally flip to their opposites—and emphasizes cyclical historical dynamics.

"A lot of these challenges... extraction, externalizing negative impact, subjugating populations, exploiting workers, environmental degradation, inequality—these are not new problems... They’ve been around for a long time... When things reach extremes, you tend to get pushback and then there’s a point at which things give and it flips."
— Stuart Hart (24:36)

4. Current Dynamics: Authoritarianism, Policy, and Business Models (38:28–44:53)

• The present “pushback” against ESG and sustainability may signal the last gasp of an outdated order.
• Hart characterizes the Trump administration and broader trends as a shift from neoliberalism to corporatism and statism, where business elites seek monopolistic advantage via alignment with state power.
• The notion of “interregnum” (per Gramsci)—the old order is dying, but the new is yet to be born—aptly describes the current liminal state.
• China's “state capitalism” is acknowledged for driving sustainable innovation, challenging the Friedman doctrine that economic and political freedom are inseparable.

“You can’t revoke physics, chemistry and biology, which is…what underpins all of this.”
— Stuart Hart (38:58)

“Capitalism is flourishing in China under conditions of no political freedom and statism… It’s the complete opposite of what Friedman talked about.”
— Stuart Hart (44:23)

5. Innovation, Fossil Fuels, and the Limits of Corporate Change (47:22–51:33)

• Hart highlights the divergence among industries and companies in sustainability leadership. The fossil fuel sector, especially Saudi Aramco, is called out for maximum extraction and record profits.
• Despite pressures, there are examples of transformation, e.g., Trane Technologies—pivoting to electrification and decarbonization as their core business logic, achieving growth.

"Saudi Aramco achieved the single highest quarterly profit in the history of capitalism in 2022—over $80 billion in one quarter."
— Stuart Hart (48:00)

• The AI boom exemplifies how new technological “revolutions” can reinforce industry concentration, corporatism, and unsustainable energy demand unless specifically directed otherwise.

6. Reforming Business Education and Mindset (56:10–64:50)

• Hart and Marcus review the evolution of sustainability in business schools:
  • 30+ years ago, sustainability voices were marginalized; now, more research exists and there is student appetite.
  • Yet, the core MBA curriculum—dominated by shareholder-primacy-trained faculty and financial economics—remains largely unchanged; sustainability is usually relegated to electives.
  • Business schools act as “finance and consulting schools,” placing students in fields that perpetuate the system under critique.
  • The broken model—expensive education, outdated curriculum, status-quo job funnels—is under pressure as student numbers drop and demands shift.

“The core curriculum in most business schools is still fundamentally the same as it was in the 80s. And that’s a huge problem…”
— Stuart Hart (62:17)

7. Pathways for Systemic Reform: Leverage Points (65:39–72:25)

• Hart is focused on two major leverage points for transformation:
  • Business Education: Demonstrating alternative models, such as the Sustainable Innovation MBA at UVM, and pushing for curricular overhauls and global leadership initiatives.
  • Privately-Held Mid-Tier Firms: Launching the “Internality” project to support and connect purpose-driven, privately-held companies (not private equity–owned), which are the “guts of every economy.” The goal is to organize, share innovation (e.g., “Pivot Labs”), and influence broader policy and practice—mobilizing a critical mass for systemic change.

“Factoid: In the US, of those corporations that earn $100 million or more in revenue, 90% of them are privately held, not private equity owned, and they create 80% of the new jobs… If you get a dozen CEOs…going to state capitals in Washington, they’re going to be more persuasive than a bunch of paid lobbyists.”
— Stuart Hart (68:57; 72:10)

Notable Quotes & Timestamps

• “As long as we were living in a world dominated by American style, shareholder first financialized capitalism, we’re doomed.” — Stuart Hart (07:59)
• “Shareholder primacy has…created the equivalent of a market with an invisible dog fence…If you try to run…and get free of that, you get shocked back inside the fence.” — Stuart Hart (11:37)
• “Profit is really a result...to deliver on your purpose…to solve real problems in the world and make a positive societal contribution.”—Stuart Hart (17:15)
• "Adam Smith…totally misinterpreted by most…modern…He was essentially…a professor of moral philosophy…The whole point is to grow this thing so the Commonwealth can grow, that you can hire more people…and the better off everyone is. It's a virtuous cycle." — Stuart Hart (29:00–29:45)
• “We’re at…what Gramsci talked about as the interregnum: the old has died but the new cannot yet be born.” — Stuart Hart (40:41)
• “I think there's a certain inevitability to all this: extremes…then there's a breaking point and things flip…What separates now from anything in the past: never before has capitalism and business threatened the life support system of the entire planet. But it does now.” — Stuart Hart (31:56, 38:58)
• “The core curriculum in most business schools is still fundamentally the same as it was in the 80s. And that’s a huge problem…” — Stuart Hart (62:17)
• “Our thesis is…If you get a dozen CEOs…going to state capitals in Washington, they're…more persuasive than a bunch of paid lobbyists.” — Stuart Hart (72:10)

Memorable Moments & Closing Thoughts

• Marcus’s quick fact: The number of US publicly traded firms has halved in recent decades; private equity ownership largely escapes public scrutiny, often exacerbating negative social impacts. (19:32–21:42)
• Hart exposes the paradox: Most small and medium privately-held businesses already operate with stakeholder logic, while reforms target either megacorporations or too-small B corps. (18:39–20:22)
• The discussion on business school inertia is both nostalgic and biting, as both speakers reflect on 1980s marginalization and today’s stalled curriculum. (56:10–64:50)

Timestamps for Key Segments

• Motivation & Critique of Win-Win Sustainability: 04:48–08:05
• Shareholder Primacy as Structural Obstacle: 08:44–16:11
• Philosophical Roots—Friedman vs. Stakeholder Theory: 12:32–19:32
• History of Capitalist Reformations: 23:22–38:28
• The Era of Corporatism & China’s State Capitalism: 38:28–44:53
• Innovation, Industry Change (Aramco, Trane Technologies, AI): 47:22–56:10
• Business Education Reform: 56:10–64:50
• Leverage Points & Internality: 65:39–72:25

Summary and Takeaway

Stuart Hart’s Beyond Shareholder Primacy is not just a plea for “greener” corporations, but a sweeping call to rewrite the economic “source code” of capitalism for a sustainable and equitable future. The conversation traces deep systemic roots and the inertia of current models while identifying concrete leverage points: business education reform and mobilizing the overlooked sector of privately-held, purpose-driven firms. Hart is cautiously optimistic—seeing hope in cycles of transformation and the growing forces for change—while unflinching about the scale and urgency of the crisis.

“This isn’t just a book about reforming business. It’s a book about rethinking capitalism itself. Shifting from an extractive shareholder-first model towards a regenerative, purpose-driven system. Stewart calls this our third capitalist reformation.”
— Alfred Marcus (72:41)