I’ve reached an intellectual limit with the comically farcical notion that corporate America is engaged in an attack on the nation’s values and cultural heritage via something called “woke capitalism.”
This is a daily debate and it’s part and parcel of the noxious “culture wars” responsible for the fraying of America’s social fabric.
On Sunday, Bloomberg ran an entire article documenting the “messy breakup” between Republicans and their erstwhile corporate allies. “The incoming GOP majority plans to pressure companies on immigration, equality and climate change stances that are now being assailed by key Republicans,” Laura Davison wrote.
I’ve addressed this on any number of occasions. I’m going to recycle some language from previous articles below (because this issue is more relevant than ever), but before that, I want to dispense with the obvious: The idea of “woke capitalism,” where “woke” suggests an agenda that’s entirely divorced from the profit motive, is completely ridiculous. Major corporations are profit maximizers first, foremost and forever. If they’re virtue signaling, it’s because management views that as a means to an end — namely, higher sales, which, assuming managerial competence on the cost side, means higher profits.
Period. That’s actually all you need to know. I won’t stop there, but I could. There are, of course, examples of companies foregoing profits in pursuit of some “greater good,” but you will never find an example of a major corporation putting virtue over profits for the sheer hell of it, let alone to an extent that threatens an all-out shareholder revolt or deliberately undermines the long-term viability of the company as a profit-making enterprise. (Note my use of “deliberately.” It’s always possible that management inadvertently screws up while attempting to exploit some social cause, but in the final analysis, that’s no different from any other operational error.)
Consider, for example, the recent “cancellation” (to employ the vernacular of the culture wars) of Kanye West. I can assure you that the boardroom rationale for severing ties with someone who, as recently as late-2010, was destined to be awarded every conceivable accolade conferred by the music industry (and multiple times for accolades that can be conferred more than once), wasn’t motivated primarily by management’s aversion to his erratic behavior. Sure, management might’ve been aghast at Kanye’s remarks like almost everyone else on Earth, but you can be absolutely certain that if he’d said something less universally contentious, any personal aversion among executives would’ve been weighed against the balance of the mood among consumers. In this instance, the consensus among consumers was unanimous: Kanye crossed a line you don’t cross. Then he crossed several related lines in rapid succession. Mr. West became, in the words of the late Charlie Murphy describing the late Rick James, “a habitual line-stepper.” Canceling deals with Mr. West could entail huge write downs for corporations in the near-term, but not canceling deals with him risked an existential crisis for the same corporations. Or at least that’s how they appeared to view the situation.
From a strict, business textbook perspective (i.e., stepping outside of the specifics of Mr. West’s current troubles), this is no different from sundry (sometimes apocryphal) “save the polar bears” campaigns. Do hugely wealthy executives all around the world share a deep-seated love of polar bears? Maybe. Given the choice between dead polar bears and live ones, it’s safe to say most executives would choose the latter unless they were being chased by one, but if every major company on Earth is dedicated to saving the polar bears, it’s probably because those companies believe consumers don’t want polar bears to go extinct. Helping the polar bears thus helps the bottom line even if, for example, the cost of manufacturing sustainably-sourced, eco-friendly sweaters, hand-stitched by descents of the Inuit people, is astronomical. You’ll happily take a loss (a massive loss, even) on the polar bear merchandise if it means consumers keep buying the rest of your products (so, all the high-margin shoes and shirts you make from slave labor in sweat shops around the world). The gamble is this: We’ll happily sell the polar bear stuff at a loss because when consumers see how much we care, they’ll think we’re a “good corporate citizen” and keep buying all the other stuff we produce for huge gains.
So, “woke capitalism” doesn’t really exist. Saving polar bears is a means to an end. Just like incentivizing corporations to save polar bears is a means to more assets under management if you’re the CEO of a giant asset management firm.
But let’s say, for argument’s sake, that it does exist — that some corporations actually are “woke” and thereby prone to sacrificing profits for the sheer sake of altruism or even for the sake of promoting a political agenda. In America, that’s free speech, and nobody knows that better than Republicans. Or, I should say, better than old guard Republicans. Born again Republicans (from far-right House members to perpetually aggrieved electric vehicle magnates doing their best impression of a libertarian) don’t seem to understand it so well, though. Given the confusion in those circles, let me clear it up: Corporations are “people” in America, and The Constitution protects people’s right to express themselves. Attempts to prevent corporate “people” from expressing themselves are in conflict with The Constitution, and could be loosely construed as illegal.
Of course, I was being sarcastic when I spoke of “confusion.” There’s no confusion. The fact is this: For one half of America’s political duopoly, principles aren’t just malleable depending on the circumstances, they’re completely expendable. Deficits, debt and fiscal rectitude only matter when a Democrat is in the White House, for example. That’s ironic because, if you know anything at all about the history of fiscal policy in America, you know that it was the Ronald Reagan administration which did away with the idea of deficits as fiscal constraints.
“Forgetting” about budget discipline when tax cuts and military spending are in play is standard operating procedure for Republicans. But increasingly, the GOP finds itself trampling on its own orthodoxy when it comes to the government’s relationship with corporate America.
Government, the doctrine goes, should stay mostly (or entirely) out of the private sector. Washington should take a hands-off approach to corporations, traditional GOP talking points demand. That’s true even when citizens’ lives are at stake and even when heavy-handed government action is necessary to avert calamitous outcomes. Better a catastrophe than to impede “Mr. Market.”
What we learned in 2021, though, is that those principles are just as expendable as the budget. When social media took action to stop the spread of misinformation, companies were subjected to threats from the Trump White House, backed up by Republicans on Capitol Hill. The same Capitol Hill which was besieged early that year by scores of citizens whose anger was the direct result of the same kind of misinformation that social media outlets belatedly (and unsuccessfully) sought to curtail.
Corporations are increasingly prone to standing up for social causes like fighting climate change, fostering equality of opportunity and protecting voting rights. Republicans aren’t amused, and their anger was crystallized by Mitch McConnell in April of last year.
“From election law to environmentalism to radical social agendas to the Second Amendment, parts of the private sector keep dabbling in behaving like a woke parallel government,” he said, chastising the likes of Delta and Coke for expressing concern about Georgia’s voting laws. McConnell proceeded to make a threat. “Corporations will invite serious consequences if they become a vehicle for far-left mobs to hijack our country from outside the constitutional order,” he seethed.
Again: Corporations in America are free to publicly espouse any positions they like, as long as they’re legal. Coca-Cola can express dismay at public policy just like Twitter, under old management, can ban Donald Trump. The idea that government would step in and silence corporations or, more extreme, compel them to adopt positions opposite those they’d prefer to adopt, is antithetical to free-market principles. It could also be detrimental to profits.
During the same angry remarks last year, McConnell demanded that America’s private sector “stop taking cues from the Outrage-Industrial Complex” and cease and desist from “frantic left-wing signaling.” To say it was a contradictory position for McConnell would be an understatement. As Jennifer Rubin wrote at the time, “McConnell is second to none in protecting First Amendment rights of corporations — at least when the subject is money.” McConnell, Rubin reminded Americans, is “a longtime opponent of limits on campaign donations as a form of speech [and] has often defended unlimited dark money in lofty terms.”
But the subject is always money. You protect the polar bears because you think it’s consistent with protecting the bottom line. And protecting the bottom line is a solemn duty vis-à-vis shareholders.
McConnell knows that, and so, by the way, does Elon Musk. The problem isn’t that they’ve forgotten (or don’t understand) that corporate spending to promote social issues (or, in the case of corporations and Musk’s Twitter, not spending to express an opinion on the direction of the company under new management) is free speech and also the sole discretion of management. The problem, rather, is that McConnell, many House Republicans and Musk, don’t like what it is corporations are “saying” with their money anymore. Insult to injury for those of us who see through the charade are pretensions on the part of Republicans to protecting free speech by way of implicitly and explicitly instructing corporations as to what they can and can’t say.
Of course, it’s hardly surprising that the GOP would abandon principle. All politicians do that — habitually. What’s notable, though, is the extent to which Republicans seem to be slowly realizing that their positions on a variety of socioeconomic issues are no longer compatible with modernity. That’s where the panic is.
When it comes to the C-suite, I’ll always take the cynical view, not just because that’s my predisposition, but also because it strips partisan politics out of the discussion. Corporations are beholden to shareholders every quarter and, in many respects, every single day. In the past, that obligation led corporations to be among the world’s worst offenders when it came to things like harming the environment and trampling on human rights. The bottom line always comes first. Workers, communities, public health and the planet itself are secondary, at best. Often, they don’t matter at all.
That hasn’t changed in the 2020s. What’s changed is the balance of public opinion, which has shifted in part due to demographics, and in part due to the simple fact that, over time, people’s views on key issues evolve. Nowadays, it’s fashionable to be “woke” — whatever that means. And being fashionable is often synonymous with being profitable. Companies are rewarded for adopting plans to help address climate change. Conversely, failing to be sufficiently proactive when it comes to hot-button issues like gun violence and equality can cost corporations dearly, whether it’s something as ephemeral as a short-lived advertising ban or something more serious like missing out on the opportunity to be included in indices and ETFs that shun shares of companies seen as insufficiently attentive to the needs of the modern world.
Seen in that light, Republican threats (and similar accusations from the likes of Musk) are in fact demands that corporations jeopardize profitability by eschewing the benefits that may accrue from catering to social trends.
That’s antithetical to capitalism. If capitalism is synonymous with America, it’s also un-American. Think on that.