business ethics

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages.

Adam Smith’s matter-of-fact account of the moral consideration we should expect in our economic transactions will strike many as the self-evident ideal. The divorce of the social or political from the economic is nothing more than savvy industry. Business-as-usual. The introduction of sentiment to our dealings would only make for bad business and worse politics. This is the position of those condemning the rise of “woke capitalism.”

“Woke capitalism” has become a catch-all term standing in for a hodge-podge of ideas, convictions, and positions. Coined by Ross Douthat in 2015 to describe businesses’ hollow virtue-signalling, the term has been expanded to include even the slightest appearance of corporations “bending a knee” to the cancel culture mob.

Critics characterize woke capitalism as a kind of ill-informed and ill-intentioned boardroom activism solely invested in the construction and maintenance of a PR image. It represents a superficial dedication to sanitizing bad looks and poor optics. It presents as an unwillingness to countenance anything with a whiff of controversy about it. In this, cynics see a poorly disguised feint aimed at getting out in front of political blowback and indicating one’s social justice bona fides before the torch and pitchfork crowd come knocking.

But for many, the problem isn’t so much its falseness as its ambition. Corporations, these voices contend, shouldn’t be in the business of criticizing public policy or shaping public opinion. They shouldn’t be throwing their weight around when it comes to matters of state. It’s corporatism, plain and simple — rule by unelected magnates rather than by the will of the people.

Thus the woke capitalists are either cowards submitting to progressives’ demands in pursuit of the path of least (commercial) resistance, or power-hungry usurpers bent on circumventing Congress in transforming their cultural preferences into social reality. Whether motivated by fear or greed, these elites are beginning to play an outsized and objectionable role in shaping our shared future.

But does this picture reflect reality?

Progressives would be surprised to see CEOs listed as co-conspirators. Woke capitalism will strike many as an oxymoron. Exploitation appears inevitable and its effects are not suffered equally. Our consumer society’s commitment to cheap goods and even cheaper labor seems wholly at odds with the project of social justice dedicated to revealing and combating inequality and discrimination.

While we may have moved on from Milton Friedman’s assertion that a corporation’s sole responsibility is to its shareholders, we’re still struggling to articulate a vision of businesses’ greater obligations that might be as equally concrete and action-guiding. We remain in dire need of defining just what considerations these corporate entities owe us — the people who make these businesses run, as consumers, laborers, voters, and tax-payers. From offshoring to tax evasion to union-busting, we need to know whether a corporation can be an ally.

The ongoing debate over the power and limitations of “woke capitalism” provides ample material, space, and opportunity for sustained examination of the kinds of problems corporations create, the kinds of problems they aggravate, and the kinds of problems they can (and cannot) solve.

-Tucker Sechrest

Kenneth Boyd — “What Is Unwoke Capitalism?”

Daniel Story — “Corporate Activism and Non-Ideal Democracy”

Elizabeth Williams — “The Limits of Consumer Activism”

Giles Howdle — “Rainbow Myopia: A Left-Wing Case Against ‘Woke Capital’“

This piece is part of an Under Discussion series. To read more about this week’s topic and see more pieces from this series visit Under Discussion: “Woke Capitalism.”

It’s Pride Month, which means that many of your favorite or not-so-favorite corporations have likely been changing their social media avatars to their rainbow versions, and perhaps making statements about how they currently/always have/have at least thought about supporting the rights of those in the LGBTQ+ community. Sometimes called “rainbow capitalism,” this yearly trend is one form of so-called “woke capitalism,” in which corporations disingenuously champion social causes with the sole purpose of making more money off of their left-wing consumers.

At least, that’s how it started out when the term was coined way back in 2018.

These days, however, “woke capitalism” is poorly defined.

Sometimes it refers to what critics call a hollow kind of virtue-signalling, either to court new left-leaning consumers or out of a fear of losing existing ones. But it has also taken on another meaning: whenever a corporation is guided by any kind of social values (or, at least, certain kinds of social values – more on this in a bit) and not by increasing value for its shareholders, it is engaging in “woke capitalism.” Interestingly, this new kind of woke capitalism ditches the requirement of being insincere: even, and maybe even especially, companies that have demonstrated a genuine interest in social causes have been placed under the umbrella of woke capitalism.

Depending on who you ask, woke capitalism is the future. Or a force that desperately needs to be fought. This fight is either a bad and regressive thing, or a good and necessary thing. Capitalism is something that the right has become ashamed of, or else it’s businesses that have become ashamed of being woke. When companies do go woke, they’re making good social progress, or not nearly making progress quickly enough. It can be difficult to keep up.

When considered in the broadest sense of merely being guided in some way by a concern for social causes (as opposed to the hollow virtue-signaling kind), a form of capitalism in which companies make at least some effort to address social issues seems better than nothing.

What corporate responsibilities ought to be, exactly, is a matter worth discussing. But with the notion of “woke capitalism” being as nebulous as it is, and with so much discussion about its merits, it’s also worth considering: are there good arguments for an alternative?

There seem to be two options. The most popular is what appears to be a return to shareholder capitalism: the idea that a corporation’s sole responsibility is to make money for its shareholders, and thus any potential decrease in profits in the name of furthering progressive social causes (or, really anything besides profits) is, in some sense, not what a business should be doing.

This seems to be the default position of many of woke capitalism’s critics. The main target is businesses that have expressed concern for environmental, social, and governance issues (ESG, for short). This is bad business, it is argued, since ESG puts causes over profits. For example, Disney’s recent speaking out against Florida’s “Don’t Say Gay” bill has the potential to cost the company money after Florida governor Ron DeSantis vowed to eliminate the special status that the state had given to Disney theme parks. Although not exactly hurting for cash, Disney could have hoarded even more if it had just stayed quiet.

Of course, defenders of woke capitalism will respond that investing in social causes is not antithetical to making profits, either because doing so helps capture certain consumers, or because failing to do so risks alienating them. Others will point out that shareholder capitalism has been challenged long before the rise of woke capitalism.

Indeed, DeSantis’ actions seem much more motivated out of spite rather than a desire to maintain the sanctity of shareholder capitalism. Instead, they are indicative of another way in which one can reject woke capitalism, namely to adopt what we might call unwoke capitalism.

If woke capitalism is that which is driven by a concern for causes that are typically viewed as progressive, then unwoke capitalism is driven by a concern for causes that are typically viewed as conservative.

For example, a recent opinion piece describes Elon Musk’s attempted takeover of Twitter not just as the acquisition of a business, but as “a wider fightback against a hyper-liberal version of global capitalism” as one of Musk’s stated goals in acquiring Twitter is “to correct what he sees as Left-liberal bias.” Unwoke capitalism pops up in smaller places, as well, in businesses such as Black Rifle Coffee – which touts itself as pro-military, pro-law enforcement, and “anti-hipster” – as well as other coffee businesses that feel like Black Rifle wasn’t sufficiently right-wing. Or consider Coign, the self-proclaimed “America’s first credit card for Conservative” which, as part of its fight against wokeness, pledges to donate part of its profits to “Conservative causes” (although said causes have yet to be determined). Other examples are easy to find.

Here, then, we can see three different ways to understand the backlash to woke capitalism. One predicates itself on a concern for capitalist values (specifically that of maximizing profits); a second is based on a rejection of a specific set of progressive values (specifically ESG); and a third not only rejects those values but replaces them with conservative ones. While these positions are distinct, opinions and other think-pieces on woke capitalism often run them together.

For example, in the opinion piece on Musk’s attempt to acquire Twitter, the move was initially portrayed as one in which the historically unprofitable Twitter could finally be made profitable under Musk’s tutelage. The author also claims that woke capitalism is responsible for “soaring inflation, flat-lining growth, and massive debt mountains.” If any of this were true, it would constitute financial reasons for rejecting woke capitalist business models. However, the motive to “open debate that includes the Right as well as the Left” on Twitter is clearly based on values beyond pure profit-maximization.

Criticisms of woke capitalism thus tend to conflate two arguments.

The first is that businesses being concerned with social values is bad business; the second is that many businesses are concerned with the wrong values. But accepting the one doesn’t require accepting the other: for instance, one could argue that businesses that are concerned with advocating for conservative values also violate capitalist norms, as doing so risks putting values ahead of profits, they just happen to be different values from the woke capitalist crowd. In this way, woke capitalism and unwoke capitalism would share the same flaw.

Whether woke capitalism is bad for business is an empirical question. While there is no real indication that it is, rejecting it does not mean needing to replace progressive values with conservative ones.