“Stakeholder capitalism poisons democracy, partisan politics poisons capitalism, and in the end, we are left with neither capitalism nor democracy” – Woke, Inc.
In September 2022, Florida Governor Ron DeSantis sent nearly 50 Venezuelan asylum seekers to the affluent island of Martha’s Vineyard, in the best troll move of the year. Within 45 hours, the unwelcome visitors would be whisked to a military base on Cape Cod, before a single blade of grass on any manicured lawn could be trampled. Believing that their virtue-signaling lawn signs boasting that “no human is illegal” would fulfill any obligation they might have for immigrants, they never expected to dirty their pristine hands with any such vulgarity. Instead, these same moral preeners regularly condemn Southerners in border towns as xenophobic for appealing for help when millions of immigrants repeatedly pass through their property year after year. But this righteous posturing wouldn’t be contained to the fancy enclave of Massachusetts. It has now, unsurprisingly, found its way into corporate America.
In Vivek Ramaswamy’s 2021 book, “Woke, Inc.”, Ramaswamy warns of similar social justice ruses disguised as Corporate Social Responsibility (CSR), Environmental, Social, and Governance (ESG) and Diversity, Equity, and Inclusion (DEI). Also known as stakeholder capitalism, corporations have expanded their focus to not only fiscal responsibility but now, to social, cultural, and political activism. Dubbed Crony Capitalism 2.0, Ramaswamy cautions that the newest variants are a lot like the familiar quid pro quos we’ve seen in the past.
As expected, the critical theory phenomenon that started in the halls of academia has gained steam with corporate leaders and government bureaucrats. As such, a fusion of big government and big business (democracy and capitalism) has aligned to expand their mutual influence. Applying the same structural disadvantages of non-whites to corporations, the diversity of immutable characteristics assigned at birth must now be reflected on corporate boards, in leadership, and in staff, eliminating the wealth-producing benefits of merit. As we’ve seen throughout history, when corporations and governments collude, you have fascism, or the more palpable name, corporatism.
Milton Friedman notably proclaimed that the focus of corporations should be solely on shareholder value, by maximizing profits. It is here where a business’s responsibility lies in the quality of its products and services. By keeping its concentration on profits, a corporation’s sphere of influence in society is limited to its area of expertise. Stakeholder capitalism, however, focuses not just on its shareholders, but also on employees, vendors, customers, and the community at large. And that means wading into areas outside their typical corporate domain, including social and political life.
But stakeholder capitalism is also where corporations not only fund politicians in exchange for favorable treatment, for themselves and their businesses, but are now immersed in promoting social viewpoints, forcing changes in behavior, and driving compliance. By allowing corporate self-interest to masquerade as morality, the new packaging has simply replaced the 1.0 version of cronyism. Now, corporate CEOs determine not only the causes they will champion but also what employees and customers are expected to accept, assuring that there is no apolitical place left in society.
New SEC rules about ESG factors propose that corporations provide not only their financials, but also their positions on race, gender, climate, and certainly whatever the next political fad happens to be. The untenable outcome has been for corporations to either begin to use their power to interfere in politics or expect to be run out of business. Then, instead of relying on Congress to pass legislation in a divided chamber, business leaders can simply enact change, without public input or debate.
In a resurfaced video interview from 2017 with the New York Times, Blackrock CEO, Larry Fink, bragged “At Blackrock, we are forcing behavior”, particularly in the areas of race, gender, and climate change. As the world’s largest investment company, using its considerable asset base to pressure other companies to advocate for certain political and social positions is a dangerous precedent, giving unlimited new power to unelected CEOs. This circumvention of the democratic process must be rejected before it’s too late.
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