We're living in two economies at once.

One is declining - shareholder capitalism, built for extraction and short-term returns, is still dominant but showing structural cracks. Volatile markets. Democratic backsliding. Climate costs companies can no longer externalize.

Another is emerging - stakeholder capitalism, built for regeneration and shared value, is still nascent but growing fast. 10,000+ B Corps worldwide. Benefit corporation laws in 40+ US states. The EU making stakeholder accountability mandatory.

This isn't chaos. It's how systems change.

The Two Loops Framework

The Two Loops framework, developed by systems thinkers studying social transformation, shows that during any major transition, old systems decline while new ones rise. And both exist simultaneously for an extended period.

The old loop: dominant, resourced, powerful, but increasingly unable to meet the needs it was designed for. It resists its decline. It defends its position. But the fundamental conditions that allowed it to thrive have shifted.

The new loop: small, experimental, building momentum, but not yet at scale. It proves out new models. It attracts early adopters. It tests what works. Over time, as conditions continue to shift, it crosses a threshold and becomes dominant.

We're somewhere between those two points right now.

Shareholder capitalism is the declining system. It delivered enormous gains in productivity and wealth creation for decades. But it also concentrated power, externalized harm, and treated ecological limits as irrelevant. Those externalities are now coming due in the form of climate disasters, institutional breakdown, and social instability that even the wealthy can't insulate themselves from.

Stakeholder capitalism is the emerging system. It's being built by B Corps that legally commit to balancing profit with purpose. By cities like Barcelona and Portland that redesigned their procurement to support local, worker-owned businesses. By benefit corporation laws that give boards legal cover to consider stakeholders beyond shareholders. By the EU's Corporate Sustainability Due Diligence Directive, which makes stakeholder accountability mandatory for companies operating in Europe.

These are more than one-off initiatives. They're proof that stakeholder models can work, and they're laying the groundwork for what comes next.

The Crossing Point Isn't Automatic

The crossing point isn't guaranteed. The new system doesn't win just because the old one is failing.

It wins when leaders build the infrastructure that makes stakeholder capitalism easier than shareholder capitalism. When legal structures reward long-term value. When financial systems channel patient capital to regenerative enterprises. When governance models distribute power instead of concentrating it. When cultural narratives treat care and cooperation as competitive advantages.

Right now, that infrastructure barely exists. Which means stakeholder practices remain harder than extraction. More expensive. More legally risky. More culturally stigmatized.

And that's where business leaders come in.

Two Roles Leaders Must Play

Business leaders hold unique leverage in this transition. They can operate in both systems. They can model what works in the emerging one while advocating for the infrastructure that makes it the default.

That means two roles:

1. Model stakeholder practices internally

Show that long-term value creation works. Treat workers as assets to develop, not costs to minimize. Treat communities as partners, not externalities. Treat ecosystems as foundations for business, not resources to extract.

Companies like Patagonia, Greyston Bakery, and illycaffè prove this model can deliver financial performance, operational resilience, and competitive advantage. But they remain exceptions because the infrastructure to support them at scale doesn't exist yet.

2. Advocate for enabling infrastructure

This is the harder role but, ultimately, the more important one. Business leaders must use their influence to push for:

• Legal structures that allow (and reward) long-term value creation over quarterly extraction

• Financial systems that channel patient capital toward regenerative enterprises

• Governance models that distribute power and accountability across stakeholders

• Cultural narratives that treat stewardship and care as strategic imperatives, not costs

Government struggles to build this alone. It's constrained by short election cycles, lobbying pressure, and political polarization. Civil society can advocate and organize, but it doesn't control capital or employment at scale.

Business must lead by more than example. Companies must advocate for the conditions that make stakeholder capitalism the path of least friction.

The Transition Is Already Underway

The Two Loops framework describes what's already happening.

Shareholder capitalism is declining because its core logic of externalizing harm and concentrating value no longer works in a world where climate costs can't be deferred and institutional trust has collapsed.

Stakeholder capitalism is rising because the conditions that favor it, interconnected crises, demand for accountability, proof that regenerative models work, are strengthening.

The question isn't whether the transition will happen. It's whether we lead it intentionally or stumble into it through crisis.

For business leaders, that means deciding which loop to invest in. The declining system that rewards short-term extraction? Or the emerging one that builds long-term resilience?

The transition is underway. The leadership opportunity awaits.

Next week: Why shareholder capitalism's failures aren't bugs, they're features of how the system was designed.

The End of Extraction maps this transition in detail: how the Two Loops framework applies to our economic moment, what infrastructure must be built, and what role business leaders must play.