Many on the right fear “woke capitalism” and the idea that corporate leaders will bow to pressure to advance a worldview that replaces their values with progressive ones.
To those who care, I say, be grateful for the pursuit of profit. To progressives who push for such practices, I say, be careful what you wish for.
Regular free market capitalism does not conflict with corporations spending their own money in pursuit of whatever goals they choose. Even Milton Friedman wouldn’t raise an eyebrow at a dedicated LGBTQ baker who only bakes cakes for gay weddings or a company that only hires workers from underrepresented minorities.
But woke capitalism becomes more contentious when Delta Air Lines, JPMorgan Chase and Apple use inflammatory and questionable talking points against Georgia’s electoral reform legislation, or when Major League Baseball withdraws its All-Star Game from that state in sign of protest.
“Woke” is a loaded and political term. The enthusiasm it generates gets in the way of the fact that behind the whole concept there is a real set of values, and many of them, such as tolerance and equal opportunity, deserve to be promoted. However, when practiced by companies under pressure from vocal customers, employees, or even investors, woke capitalism often incites loud, low-cost cues rather than real cultural change.
There is evidence, for example, that some businesses are more likely to be woken up when it won’t cost them a lot of customers. I don’t know if that was on Delta executives’ minds when, in 2018, they used a very public announcement to end a travel discount for NRA members traveling to its annual convention. . But with only 13 customers taking advantage of the discount, Delta has lost almost nothing. According to at least one analysis, the revival of society has not increased its stock price, and there is no reason to believe that it has decreased gun violence.
Other companies talk about a big game but make no real changes to their business models. A good example is the group of 136 companies that first signed the Business Roundtable’s statement of “Company Purpose”, which boasts of a commitment to delivering value not just to shareholders, but to all “stakeholders”, including customers, employees, suppliers and communities.
Yet two years after signing, the companies’ updated corporate governance guidelines showed no real change or attempt to elevate stakeholders. Most of them even reiterated their attachment to the primacy of shareholders. Eighty-five percent didn’t even say they signed it in a proxy statement sent to their shareholders. Those who mentioned it did not add how they would change their business models.
More discouraging examples include Wells Fargo employees interviewing “diverse” candidates even though the positions had already been filled. The same seemed to happen to former Miami Dolphins head coach Brian Flores, who spent three days interviewing for the New York Giants’ top coaching job. after they would have promised it to a white candidate. Flores argues in a discrimination lawsuit that the team circumvented the NFL’s diversity-focused Rooney Rule.
The recent dismissals of junior employees at various companies for petty offenses following Twitter mob campaigns are also discouraging.
Behind all this mess is the progressive belief that requiring a company to sell you mayonnaise with a social justice side will pay off for the cause and the business. Both are unlikely. Attempts to measure the profitability of awakening reveal that many companies that incorporate politically correct actions into their strategies could be losing significant revenue and disabling large portions of their consumer bases. Lost profits are bad for the future of the company, as the CEO of Netflix finally seems to have understood.
And who benefits from demonstrations of enlightened virtue? Although they may not realize it, they are not the ones hoping and demanding that companies be used as agents of change. Nor are they about communities or members of underrepresented minorities. This theater also does not bring much benefit to virtue-signalling companies.
This explains why some on the left are now speaking out against woke capitalism. As Helen Lewis wrote in The Atlantic a few years ago, “If you care about progressive causes, then woke capitalism is not your friend.”
The way forward is for CEOs and other business leaders to abandon the pretense of being a culture warrior and focus once again on delivering quality results to all of their clients. However, it is equally important that awakened warriors stop demanding that companies produce results they are not designed to and instead focus on convincing people that their values are worth embracing.
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Véronique de Rugy is the George Gibbs Chair in Political Economy and Senior Fellow at the Mercatus Center at George Mason University.