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Should Corporations Be Democratic?

photograph of chairs in a boardroom

It can be easy to forget what a corporation essentially is. We may all have preconceived notions about what a corporation should do, but, ultimately (and historically), a corporation is simply a group of people engaged in some kind of enterprise that are legally recognized as a distinctive entity. It is common enough to think that a corporation should primarily focus on maximizing its returns for shareholders, but obviously the business world is more complicated than the narrow view of earnings. We saw this last week with Elon Musk highlighting that he is willing to prioritize political principles over profits. A similar question was raised regarding the future of OpenAI when its board of directors was forced to rehire its CEO after employees threatened to leave. This tension between profits and principles gives way to an interesting question: Should corporations be democratic – should employees have a direct say over how a corporation is run? Is this likely to result in more ethical corporations?

There is no fixed notion of what a corporation is for or how it is supposed to be run. Typically, a corporation is governed by a board of directors who are elected by shareholders and who appoint a CEO to run the company on their behalf. Typically, this creates a structure where executives and managers have a clear fiduciary responsibility to act in the interests of shareholders. This can create tension within a corporation between management and labor. Whereas the owners and managers seek to maximize profit, employees seek higher wages, greater benefits, and job security. But would it be better if the gap between workers and owners were erased, and employees had direct democratic influence on the company?

Industrial democracy is an arrangement where employees are capable of making decisions, sharing responsibility, and exercising some authority in the workplace. Giving employees a democratic say can be done in many ways. A company could include employees in a trust where that trust controls the corporation’s shares and thus the board of directors. Another way employees can engage in democratic control over a corporation is by establishing a cooperative where every employee owns a share. Finally, a third form of industrial democracy takes the form of “codetermination” such as is practiced in Germany where any corporation with more than 1,000 employees must be given representation on the corporation’s board of directors.

Defenders of industrial democracy argue that the practice would ensure employees have a more meaningful influence on their workplace, giving them greater say over how corporations are run and what their wages will be. They further argue that this can lead to higher wages, less turnover, greater income equality, and greater productivity. For example, Mondragon – one of the largest worker cooperatives headquarters in Spain – allows their employees to vote on important corporate policies. They have, for instance, enacted regulations that require that wages for executives be no capped at a certain ratio compared to those making the lowest wage.

Some have argued that efforts to democratize the workplace help to offset the lost influence and bargaining power that’s come from the demise of unions. It’s possible that some forms of industrial democracy could be an alternative to unions where rather than creating a countervailing power to management, individual employees can enjoy a seat at the table. In this way, employees might become more invested in the company, and also potentially prevent disputes and conflicts between employees and management.

Supporters of industrial democracy argue that reforming the corporate governance system is necessary because the standard model contributes to economic underperformance, poor social outcomes, and political instability. Giving employees more say can make them more enthusiastic about the company. It may also be especially desirable in a case like OpenAI’s where there is concern about how the AI industry is regulating itself. Greater employee say could even encourage greater accountability.

On the other hand, critics worry that increasing democracy in the workplace, particularly if required by law, represents an unwarranted interference with business practice. Obviously, people on different sides of the political spectrum will differ when it comes to regulations mandating such practices, but there may be a more fundamental ethical argument against granting employees representation on a board of directors: they don’t deserve it. The argument that investors should have representation follows from the idea that they are choosing to risk their own funds to finance the company. Given their investment, the board and corporate executives have the right to dictate the company’s direction.

In the abstract, critics of industrial democracy argue that it will undermine the business ultimately because employees will be incentivized to work to their own self-interest rather than what is best for the company. However, in practice perhaps one reason for not adopting industrial democracy is that it doesn’t necessarily have a significant impact on business practices in areas where it is practiced.

A 2021 study from MIT found “the evidence indicates that … codetermination is neither a panacea for all problems faced by 21st century workers, nor a destructive institution that appeals obviously inferior to shareholder control. Rather, it is a moderate institution with nonexistent or small positive effects.” When employees have a stake in the company, they tend to behave more like shareholders. If their bottom lines are affected, there is no reason to think that an employee-controlled corporation will be more inclined to act more ethically or more cutthroat.

In other words, the greatest argument against increasing workers’ say in the workplace may be that it simply won’t have the positive effects on corporate governance that might be hoped for. Even with direct representation on the board, that does not mean that this will equate to any kind of direct control over the corporation’s practices, particularly if they are in the minority. Union supporters have long argued that rebuilding union strength is a superior alternative to increasing employee representation.

It is worth pointing out, however, that even if workers don’t invest money directly in a business, they do invest their time and risk their livelihood. Perhaps this fact alone means employees deserve greater voice in the workplace. While representation on the board of directors won’t necessarily lead to dramatic change, numerous studies have shown that it can supplement union and other activities in increasing employee bargaining power. Thus, while it may not be a full solution to improving corporate governance, it might be a start.

Rainbow Myopia: The Left-Wing Case Against “Woke Capitalism”

photograph of colorful orchid tunnel

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.”

This year, NYC Pride is supported by (take a breath) T-Mobile, MasterCard, Hyatt, TD Bank, Macy’s, Delta, Virgin Atlantic, Target, HSBC, Unilever, Coca-Cola, Proctor and Gamble, AXA, Chase, American Airlines, Netflix, Airbnb, Nissan, IBM, Pepsico, Wells Fargo, United Airlines, TD Ameritrade, Microsoft, Deloitte, Starbucks, Johnson and Johnson, and Uber. Never before has a left-wing political movement enjoyed such overwhelming corporate support.

Companies have long acknowledged the value of “pink money.” Known to corporate demographers as “DINKY” (dual income, no kids), most gay couples have higher average levels of disposable income. As such, they are highly desirable customers and are often specially targeted. American Airlines, for example, formed a team devoted to gay and lesbian marketing and saw its earnings from this demographic rise from $20 million to $194 million in just five years. Pink money is approaching the buying power of all Black Americans, of Hispanic Americans, and exceeds that of Asian Americans.

Corporations have nothing to fear, and perhaps some good customers to gain, by supporting the LGBTQ+ movement.

The current outpouring of corporate support for the LGBTQ+ movement is an obvious example of so-called “Woke Capitalism.” Defining this term is difficult, as Ken Boyd explains here; its critics and defenders often seem to have different ideas of what it means. Boyd claims the criticisms of Woke Capitalism tend to fall into two broad camps. Capitalist critiques claim that the “woke” part of Woke Capitalism is bad for business, while conservative critiques reject the progressive values that Woke Capitalism promotes. I want to offer a third kind of critique — one from the political left.

If Woke Capitalism is meant to be supportive of progressive values, shouldn’t those on the political left be in favor of it?

Not necessarily. For example, many gay rights activists reject their newfound corporate support as “Rainbow Capitalism,” mere virtue signaling or “pinkwashing.” This is the most common left-wing critique of Woke Capitalism — that it’s cynical, insincere, and perhaps even hypocritical.

The critics are right in that there is something insincere about Woke Capitalism. For Pride Month, the major software company Bethesda changed its Twitter avatars to rainbow versions. Well, they did so in the USA, France, Brasil, New Zealand, Italy, Netherlands, and Germany. But Bethesda decided to leave its icon solid black in the Middle East, Turkey, and Russia. The same weakness of conviction is clear from the history of the gay rights movement. No major corporation supported the movement while it was still struggling for social and political recognition decades ago.

Arguably, these corporations are chasing popular opinion on these issues, rather than attempting to change it.

But the pinkwashing critique only goes so far. For one thing, being cynical, insincere, or even hypocritical does not necessarily mean your actions are wrong. It’s still good to give to charity, even if the reason you’re doing it is simply to get a tax credit or to impress a colleague. Even if the Woke Capitalists are doing what they’re doing cynically, they could still be doing good.

It’s also implausible that Woke Capitalism is entirely cynical. The people working in executive corporate roles are, demographically speaking, more likely to be politically liberal. Many of these people are surely genuine in their political convictions and are sincerely trying to do some good, as they see it. So we can’t dismiss Woke Capitalism as entirely hypocritical virtue signaling. Whether or not you agree with the progressive values Woke Capitalists push, we can surely acknowledge there is sincere goodwill behind at least some of these efforts.

What should most concern us about Woke Capitalism, however, is not merely the sincerity of its corporate practitioners. Instead, we should consider its actual political effects.

Imagine you are Mr. Corporate McCapitalist (if it helps, picture a hybrid of Mr. Peanut and Gordon Gekko). Things are very simple. You want a high return on your capital and you don’t want disruptive left-wing political movements getting in the way with policy interventions that empower workers or raise taxes on your profits. Uh-oh! The working class looks like it might come together and vote for meaningful political change! Workers are talking about unionization and politicians are advocating laws that would make you “pay your fair share” to support a decent welfare and education system! What can you do to stop this madness?

Sure, you could fund corporate propaganda campaigns or pro-corporate opposition candidates. These are both solid, well-established moves. But, if you’re feeling just a bit more ambitious, you might be able to pull a political Indiana Jones — replacing the golden idol with a bag of sand (or, in your case, replacing dangerous traditional left-wing economic causes with harmless left-wing “woke” causes).

This is, in cartoon form, the alternative left-wing critique I have in mind;

Woke Capitalism operates as a misdirection, sapping political movements of the focus and energy needed to make tangible gains.

Woke Capitalism has been incredibly effective at directing public and media attention. It has played a decisive role in pushing the most divisive social issues, so-called “wedge issues,” into the political limelight. Take Nike’s controversial Colin Kaepernick advertising campaign. It boosted Nike sales by 31%, creating $6 billion in brand value in the process. It was also perfect fuel for the culture war fire. “It doesn’t matter how many people hate your brand as long as enough people love it,” explained Phil Knight, Nike founder. The political controversy saturated political discussion for months.

These divisive political fights over “woke” issues such as race and gender inevitably divert precious media attention and grassroots political effort from likely more impactful economic struggles — struggles that threaten corporate financial interests. Our society uses more attention and energy debating something as insignificant as who should be allowed to use what bathroom than it does debating the merits of a carbon or wealth tax. CEOs must be pinching themselves to make sure they’re not dreaming.

The more controversial, engaging, and fierce the fight over these “woke” issues becomes the safer corporate profits.

According to this critique, Woke Capitalism is objectionable because it (very effectively) distracts the political left from taking effective action on the most impactful political struggles. By going woke, the corporate world has managed to neuter its traditional political opposition. Left-wing politics is no longer a significant threat to corporate economic interests. Instead, the political left sees corporations as allies in the culture war.

Politics is the art of the possible. It demands we do what we can with the time and resources we happen to have at hand. Therefore, some of the most important political questions are (and ought to be): What should we prioritize? On what should we focus our limited attention? Toward what goal should we put our limited resources? These are difficult questions to answer, but we can’t afford to let corporations answer for us.

​​The Limits of Consumer Activism

blurred photograph of crowd below large interactive billboards

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.”

In response to Walmart’s roll out of new Juneteenth party supplies, wine, and themed ice cream, among other offerings (including a “Congrats Officer” police banner labeled as Juneteenth Day Party Decorations), prominent Black activists and comedians on Twitter, TikTok, and other social media platforms critiqued the corporation for failing to understand the actual values the holiday represents.

From Walmart’s trademark of the word “Juneteenth” to the promotion of its own branded Juneteenth ice-cream instead of a Black-owned ice cream brand with the same flavor, the company’s effort to bring in Black dollars read as tone deaf. Beyond the problems with the products themselves, Twitter users pointed out the general meaninglessness of corporate pandering when larger issues of oppression are still unaddressed.

What should we ultimately expect from influential companies like Walmart? Better products? Donations to just causes? More diverse representation within corporations? And, what is the role of activism targeted at corporations as it relates to larger projects of liberation?

Let’s start with the first set of questions: What should we expect from corporations? It seems that the primary issue in the Juneteenth merch case is that there is a disconnect between the company’s values and the buyers’ values. Whether Walmart made a good-faith effort to embody the values of Juneteenth or just attempted to maximize profit, the company failed to understand the values behind Black liberatory projects and the holiday itself.

One thing that we could expect from corporations is better products. Representation in product choice is important — when things are made for you with an understanding of your needs and expectations, it can improve quality of life and help you feel seen. But products alone are rarely the focus of our liberatory projects. What else might we expect companies to change?

We can also expect corporations to hire a diverse team of workers throughout all levels of the company. This helps to ensure not only fair equality of opportunity, such that anyone of any race, gender, or other social position can come to hold power within the company, but also good product design, because there will be multiple perspectives to influence the process. Walmart still has work to do in this regard, as Black employees are overrepresented in lower wage positions and underrepresented in higher wage positions.

However, diversity in corporate positions of power isn’t enough. If the lowest paid workers in a company make up the greatest share of workers and aren’t paid enough to live on, then we have simply created new hierarchies of inequality and injustice.

Corporate diversity, without fair wages, only liberates a select number of people (and those who make it into the halls of power often find them hostile to the historically marginalized).

It seems that better representation demands, in part, the material and social conditions for people of all different backgrounds to be able to live and flourish. For instance, a company should not merely hire disabled people and expect them to conform to company expectations without accommodation — the physical and organizational structures of the company should be rebuilt to allow those employees to carry out their jobs well.

This holds true at the level of corporate donations. We often expect corporations to donate to just causes and critique them when they don’t, but there are also unfortunate power differentials that arise when the corporate elite can hoard money to donate to political goals instead of paying their workers a fair wage that would allow them to donate to causes they care about. In the age in which money is speech, surely this is not what we want our representative democracy to look like.

The main issue with our discussions around woke capitalism is not any of the individual critiques: it’s the big-picture strategy. What seems to be happening in our collective discourse is that we get caught up in easily Twitter-izable consumer issues that companies will quickly respond to in order to avoid a social media backlash. Even at the level of corporate diversity, it’s much easier to put a few Black employees in positions of power than to ensure a living wage for all employees.

In some ways, the “woke capitalism” battle between conservative and liberal forces is the easier battle to win, and so we get stuck in these proxy wars for the harder work of systemic change to address inequalities compounded by history and multiple intersecting oppressions.

Instead of focusing our efforts into getting companies to respond to issues regarding product design, representation, and charitable donations, it would serve us better to treat these as issues that arise from the same central problem: class-based inequities that are built upon white supremacy and that disproportionally impact marginalized groups.

If we can shift our energy to the more difficult battles of ensuring that companies make the material and organizational changes for workers to have a good quality of life and that our broader social and legal structures are made more just, our victories will be more meaningful. We will ultimately have a greater impact, even if, on the whole, we have more failures at the level of responding to bad product design.

Black activists understand this point well. The Walmart social media outcry and subsequent apology happened over a relatively short period of time, and it represents a small (though not inconsequential) piece in a much larger project of policing and prison reform, affordable housing and fair wage fights, and other efforts to celebrate Black freedom and joy. Unfortunately, our collective discourse tends to highlight these shorter-term projects and hide the longer and more difficult labors of organizing. So long as we, especially as allies, remember to engage in and contribute to these larger projects of liberation, there is no problem in using consumer activism to promote better corporate practices. We just need to understand the limits of that approach.

Corporate Activism and Non-Ideal Democracy

photograph of Disney and Mickey with castle in the background

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.”

In March, Florida Governor Ron DeSantis signed the Parental Rights in Education Act (PREA). The “Don’t Say Gay” law restricts classroom instruction about sexual orientation or gender identity and empowers parents to sue school districts over teachings they don’t like.

Many are critical of the PREA, including, controversially, the Walt Disney Company. On the day it was signed, Disney released a statement saying that the PREA “should never have been signed into law” and declared that its “goal as a company is for this law to be repealed” or “struck down.” DeSantis and the state legislature retaliated by canceling some important privileges afforded to Disney. DeSantis described this as a wakeup call, declaring that Disney needs “to get back to the mission” and “back on track.”

The quarrel between DeSantis and Disney is representative of a broader ongoing controversy about the proper role of corporations in politics and public discourse.

Recent developments have propelled this issue into the spotlight. In 2010, the Supreme Court ruled that the First Amendment prohibits the government from restricting corporations from independently advocating for or against political candidates, opening the door to unlimited corporate spending. Moreover, corporations have recently become increasingly active in signaling support for progressive social causes, a trend which has been described as “woke capitalism.”

There are many reasons to be critical of corporate involvement in politics and public discourse. In most cases it’s probably motivated mainly by a cynical desire to curry favor with lawmakers, distract from corporate exploitation, or otherwise advance profits; corporate activism can exacerbate cultural divides and grievances; it’s unclear whether corporations have a moral right to free speech. And, most importantly, a democracy should be governed by the people, not by businesses or the economic elite.

Let’s suppose (as seems plausible) that there are many good objections against corporate activism and that in a well-functioning liberal democracy, corporations have no place in politics or public discourse. It does not follow that corporations should not participate in politics or public discourse in our society. The significance of this supposition for the Disney-PREA case (and the general controversy) depends largely on whether we live in a just and well-functioning liberal democracy. I’d like to suggest that we don’t.

If we live in a society that is only partially democratic and only partially liberal, a society that is characterized by serious systemic injustices, then perhaps we should welcome the efforts of the powerful, including corporations, when they act to redress injustices.

Perhaps corporate activism is less than ideal but nevertheless all-things-considered justified in our non-ideal situation.

To explore this line of thinking, I need to paint an ugly picture. We are told in school that the United States is a beacon of freedom and hope for the world. We are told that the U.S. is a liberal democracy, a state committed to protecting the basic freedom and equality of all its citizens, governed by the will of the people.

There are good reasons for thinking this is a convenient bit of propaganda that is only partially true.

We can look outwards first. The U.S. is an empire of sorts. Old-style empires exerted power over territories by conquering and directly ruling them. Contemporary empires like the U.S. exert imperial power less directly. The U.S. furthers its international interests through soft-power and diplomacy, like when it leverages its considerable power in the UN to influence foreign governments. It also wields unprecedented hard power. For example, the U.S. has about 800 foreign military bases in 80 countries. It uses its economic and military might to overthrow foreign governments, influence foreign political and revolutionary movements, and generally meddle in the affairs of other countries.

Although those who have a grip on the levers of U.S. imperial power are ostensibly accountable to voters, we voters have virtually no de facto control over U.S. foreign affairs.

Consider the presidency. The president has a lot of say over how U.S. military power is deployed in the world. But voters only have two real options in presidential elections. And despite the standard rhetoric to the contrary, presidents from both parties tend to wield military power in more or less continuous ways. The War in Afghanistan is a representative example. This war was started by a Republican (Bush) and expanded by a Democrat (Obama). A Republican (Trump) initiated withdrawal from the region, which was completed by a Democrat (Biden).

Things look about the same looking inwards. The Declaration of Independence states that governments derive their just powers from the consent of the governed. Yet our laws routinely fail to conform to the will of the people. For example, U.S. federal laws currently fail to reflect that a majority of voters support changing the electoral college (55%), protecting access to abortion (61%), greater action on climate change (65%), decriminalizing marijuana (68%), health insurance public options (68%), universal background checks on gun purchasers (84%), and price limits on lifesaving drugs (89%). Many entrenched factors contribute to this, from the fact that some voters have far more power than others, to the influence of industries and economic elites (especially super-rich private donors) on public policy, the disproportionate wealth of lawmakers, the various demagogues clogging public discourse with inane conspiracy theories, and so on. The undemocratic elements in our society are coupled with illiberal systemic injustices like extreme economic inequality and laws that protect freedoms selectively. For example, in 2021, the top 1% of households held 32.3% of all household wealth, while the bottom 50% held only 2.6%. And at the time of this writing, federal law does not protect LGBTQ people from discrimination in employment and housing (although 70% of people support such protections).

The picture that is emerging is one of an empire that, despite having democratic and liberal elements, is largely run by elites and routinely fails to protect the basic freedom and equality of its citizens.

Suppose this picture is roughly accurate. Also suppose for the sake of argument that the PREA is seriously unjust. Since it is seriously unjust, we citizens should work to see it repealed. But we do not have as much power to affect legislation as we are encouraged to believe. Wealthy corporations have power, however, and we can solicit assistance from them. Now if the U.S. had legitimate democratic institutions, then corporate meddling in democratic processes would threaten the legitimacy of those institutions. But by supposition that legitimacy is already seriously compromised by entrenched factors. So, arguably we should solicit and welcome assistance from powerful entities like Disney insofar as this increases the likelihood that the PREA will be repealed and the expected side effects are acceptable. And arguably this is compatible with maintaining that corporate activism is ultimately a bad thing.

Here’s an imperfect but suggestive analogy. Imagine we live under a dictatorship. Many people are oppressed by harmful laws. But the dictator’s counselor is sympathetic to the oppressed. It seems to me that we could, without logical inconsistency or hypocrisy, both beseech the counselor to convince the dictator to change the harmful laws and also maintain that neither the dictator nor his counselor should have any power over us.

This suggests that corporate activism can be justified in our non-ideal situation, but only to the extent that it is efficaciously directed at making our society more just.

This marks a difference between corporations and citizens. Citizens have an autonomy-based moral right to participate in collective governance and public discourse, which entitles them to sincerely advocate for positions that are in fact unjust. Corporations have no such right. Their entitlement to advocacy is derived exclusively from the special power they have to improve our society.

It’s sensible to reject this argument if you are less pessimistic than I am about the state of our union. But I don’t think the argument should be rejected because of cynicism about corporate motivations. True, corporations are out to make a profit. Mickey is a rapacious mouse. Nevertheless, from time to time the motive of profit partially aligns with the cause of justice. We should do what we can to remind corporations of this.

Left unaddressed is the difficult practical problem of how we can effectively make use of corporate activism while also advocating for a society that is truly governed by the people, not corporations or elites. I don’t know how this problem can be solved. But I am hopeful that it can be.

“Woke Capitalism”

distorted photograph of Times Square building stretching into sky

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’

What Is Unwoke Capitalism?

close-up photograph of SHOP storefront sign

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.

The Hidden Ethics of Inflation

photograph of hands removing fiver from wallet

A danger of the modern obsession with data, facts, and figures is that it can disguise questions of ethics as questions of facts. Authors here at the Prindle Post, as well as elsewhere, have discussed the slipperiness of the slogan “follow the science.” It is easy to follow the science to belief in COVID-19 and the effectiveness of vaccination, but far harder to follow the science to what an acceptable level of risk is.

Our measures and metrics, the ways we describe the world we inhabit, involve more than taking a ruler to the structure of the universe. Science requires reflection and judgment. An awareness of the way our facts and figures are constituted opens up new space for ethical and political deliberation.

Inflation is a good case in point. The naturalization of inflation as a simple descriptive fact about the world, like bad weather, prevents a discussion of the causes of inflation and the choices behind those causes. The reporting of inflation as a single tell-all figure hinders awareness of whom it impacts most.

Inflation as simultaneously fact and decision

It is not uncommon to see inflation referenced as a cause or explanation for higher prices, in the sense that the reason prices are higher is because of inflation. For instance, in an op-ed for Newsweek, former congressman Newt Gingrich wrote, “Each day that inflation increases prices, the Democrats lose ground with ordinary Americans.” Similarly, CNBC declared, “inflation has raised the prices of many goods people want for a home revamp.” However, as economists define it, “inflation” is simply the word we use to describe any general increase in the prices of goods and services over some period of time in a country. “Inflation,” then, no more explains a price increase, than a “drunk-making power” explains the inebriating effect of alcohol. What matters is the why of inflation.

It is of course likely that businesses are partly raising prices for reasons consumers can appreciate – COVID-tangled supply lines, elevated raw materials costs, increasing production capacity or workforce, raising worker pay. However, as critics of current record profits have pointed out – such as Elizabeth Warren, economist Paul Krugman, and others – at least some inflation might be the result of large corporations leveraging pricing power due to market dominance or consolidation. Inflation is, if nothing else, a good excuse to raise prices.

But even if one grants the contentious point that corporations are actively doing this, we might still believe that it is perfectly fine for a corporation to increase profits when the consumer demand is there. These are for-profit entities after all. I am, however, not concerned with the ethics of this particular practice at present; rather, my point is that all those important debates about corporate responsibility, pricing power, and anti-trust are being obscured by our insistence on treating inflation like the weather – that is, as a force beyond human control.

Likewise, it is taken as natural that higher product costs should be passed onto consumers. Here again, there can be choice. Corporations could choose to cut executive bonuses or curtail stock buybacks (which are currently surging) rather than exclusively opt to increase prices. Yet further choices are in the background about tax levels for very high income earners and the permissibility of buybacks, which were largely illegal before 1982.

Even for the notionally bloodless topics of supply lines and logistics, choices were made by corporations about prioritizing efficiency over resilience, about offshoring and the use of cheap foreign labor, and about concentration of manufacturing in specific markets.

These choices may or may not be defensible, given one’s values and their economic framework, but it is imperative to recognize them as choices, occurring in a specific political and institutional context which facilitated them, and which could be otherwise.

Whosoever hath not, from him shall be taken away even that he hath

All sorts of significant choices and hidden values are buried within the way inflation is measured.

Inflation is typically measured by the Bureau of Labor Statistics’ Consumer Price Index (CPI). The index is, in their own words, “a measure of the average change over time in the prices paid by urban consumers for a representative basket of consumer goods and services.” (See their  FAQ.) The “basket” of goods includes gas, clothes, groceries, healthcare, and other typical purchases.

The Bureau of Labor Statistics collects an enormous amount of data, from across regions and consumer income levels. Economists quibble about the details – about how perfectly it captures overall inflation – but the more foundational concern from an ethical perspective is the move from an inflation measure, to how that measure impacts a particular consumer. While national policy decisions may take the details into account, national news will typically only report the overall Consumer Price Index. However, the very act of averaging across the diverse economic landscape of the United States entails the measure is insensitive to the specifics.

This happens in at least three ways. First, price increases are uneven across the bundle of goods. Inflation of 7% does not mean that gas rose 7% and frozen concentrated orange juice rose 7%. In fact, gas prices have increased several times that, spiking even higher after the invasion of Ukraine. Second, price increases are uneven across the country. Third, even if the bundle of goods is the same, it represents a different proportion of income for different people. (Stocks and other assets are not immune to negative effects from inflation, but inflation can potentially be waited out and money moved to less sensitive assets.)

The long and the short of this is that inflation hits different people differently. The people it hits hardest include those who must spend a large proportion of their income on consumable goods like food, those with less financial flexibility to modify their habits and assets, those with primarily cash saving, and those poorly positioned to negotiate inflation adjustments to their pay. The savvy reader may notice these are circling a central descriptor – those who are already poor.

In the U.K., activist Jack Monroe is developing a Vimes Boots Index that she believes more accurately reflects inflation specifically for people with less money. It is named after a character in a Terry Pratchet novel who comments that the poor cannot choose to buy boots that cost five times as much even if they last ten times as long because the poor never have the cash on hand to buy the nicer boots in the first place; a riff on the more general idea it is expensive to be poor.

Again, this is not to dispute that there is value in reporting the Consumer Price Index. It is instead to attend to the fact that how we discuss inflation and the metrics we use are not simply “following the science,” even the dismal science; they are, either more or less knowingly, decisions that express our values.

 

The author would like to acknowledge the valuable feedback of Rashid CJ Marcano-Rivera on economic matters.

Considered Position: Flawed Democracy – Money in Politics

cartoon image of man speaking into megaphone made of money

This piece is part of a Considered Position series that reflects on the United States’ claim to being a “flawed democracy.” To see the earlier segments, start here.

We’ve spent a great deal of time here and here, discussing ways that the current US electoral system leads to the abuse of minority rights. However, certain minorities hold an enormous and disproportionate influence on politics. In previous sections, we’ve tended to use “minority” to mean a group that has a minority of the political power, regardless of its share of the population. In this next section we will be considering a different kind of minority, one that comprises only a tiny fraction of the population but which holds a significant amount of the political power. I am speaking, of course, of the rich and of corporations and the influence of their money in politics. We will consider in turn how money is used to influence politics, the fairly recent Citizens United decision that greatly increased this influence, and some potential solutions that minimize the difference in political power between the rich and the poor.

Lobbying

Once, the US federal government was a lot more corrupt than it is now. People complain nowadays about lobbying but lobbyists only offer, or threaten to take away, campaign donations. And while sometimes politicians use their campaign money on personal expenses, this is not terribly common. Back in the late 1800s, in the so-called “Gilded Age,” politicians were wildly corrupt. In 1886, the President Rutherford B. Hayes wrote in his diary, referencing Lincoln, “This is a government of the people, by the people and for the people no longer. It is a government by the corporations, of the corporations and for the corporations.” This was the most explicit form of corruption, quid pro quo, literally “this for that.” Corporations consciously bribed politicians who gladly took the bribes. Nowadays, thankfully, quid pro quo corruption has been greatly reigned in. However, a systemic and more subtle sort of corruption remains.

Citizen Lobbying

This is the institution of corporate lobbying. Lobbying isn’t a bad thing. Anyone can lobby. “Lobbying” just means taking action to persuade an elected official to vote one way or another on a certain piece of legislation. And it is central to American democracy. The practice is protected by the First Amendment (not Article the First) where it is written that “Congress shall make no law. . . abridging . . . the right of the people. . .  to petition the Government for a redress of grievances.” Anyone can do it, either by calling or writing individually to your congressperson or as part of a group, such as Mothers Against Drunk Driving. That organization successfully lobbied the federal government to raise the drinking age to 21. This was a good example of lobbying gone well. Increasing the drinking age was widely popular and remains so today.

Now all sorts of lobbying does have certain broad problems too. In general, lobbying results in politicians acting not according to the will of all of their constituents, or even the majority. Rather, politicians will tend to act in accordance with whichever citizen lobbying groups are most vocal. See, polls are expensive and sometimes inaccurate. But some people will voluntarily call their congressperson, or write to them, and make their opinions known. This may also be inaccurate but at least it’s cheap. Suppose that only 20 percent of a district’s constituents really support defunding Planned Parenthood. But if those 20 percent all call and write to you while, of the other 80 percent, only 10 percent contact you, it will seem like more than two-thirds of your constituents want Planned Parenthood defunded and so maybe you the congressperson will vote in support of some legislation doing just that. This is undemocratic. The minority is having their interests put ahead of the majority. But, on the other hand, it’s not the fault of the citizen lobbyists. Other, less-vocal citizens are free to speak up. They just don’t. And if a congressperson votes in accordance with those who speak up, she might be justified: those who call or write may care more and maybe those who care more should have their interests represented more commonly than those who don’t care enough to reach out.

However, economic circumstance, rather than just care, can affect who lobbies too. Consider this: everyone has the time to call or write their congressperson every once in a while. But who has the time to lobby for hours a day? The only ones who can do this are the ones who don’t have to work a normal job. And these will be the wealthy, non-working spouses, and those who are retired. These groups will have their interests overrepresented. Even if you care, if you have to work many hours a day, you’re not going to be able to make your interests known as effectively as these groups can. This seems to be unjustly undemocratic. Conventionally, we don’t think you deserve more political power just because you have more money.

Small Business Lobbying

The bigger problem, then, comes with groups that tend to have lots of money. I mean of course corporations. In 2018, $3.4 billion dollars, an unimaginable sum, was spent on lobbying at the federal, state, and local level. In its most basic form, corporate lobbying can be as innocuous as citizen lobbying. A small business, with only a handful of employees donating a few thousand dollars to a candidate who supports small businesses doesn’t seem to be doing much wrong. Now that’s still more money than most people will contribute to political campaigns. In fact, the vast majority of people don’t donate any money to political campaigns.

And, while there seems to be little problem with small businesses spending small amounts of money on local elections, when those small businesses ally with other businesses, large and small, and pool their money through large lobbying organizations, they can have enormous undue influence. The largest lobbying group is the deceptively named “US Chamber of Commerce,” which is an association of 3 million businesses of varying sizes. This group spent nearly $100 million on federal lobbying in 2018. They consistently support Republicans, having spent 93 percent of their lobbying money supporting them in the 2010 elections. And, 94 percent of those they support deny climate change.

Given that climate change is a problem that hurts all of us, including business owners, we are also forced to wonder, in whose interest are these corporations, or associations of corporations, acting? If not in the interest of their owners, then in the interest of whom? And, notice: in the previous sentences, it seems natural to attribute a responsible action with intent and all to a corporation or group of them. We treat corporations like people in the way we speak and in fact legally they have a certain kind of personhood. So maybe, given that people can act in their own interests, the corporation is acting in its self-interest. But that’s not quite right, right?

Ultimately, corporations aren’t really people. They are associations of real people. So it must be that the corporation is acting in the interests of those who compose it. But most people who are part of a corporation day-to-day are the people who work for it. But they rarely have real power over the decisions the corporation makes. Rather, that power belongs to the owners. In a small corporation, that’s usually just a person and the few employees might have a personal connection to him or her and can exert influence that way. But in larger corporations, ones that are publicly owned, responsibility is diffuse.

Public Corporation Lobbying

A CEO has token power over the company, but he doesn’t own it. He can be replaced. Ownership, and the responsibility it entails, is diffuse throughout all the stockholders. Many of these stockholders are people with retirement accounts who don’t have a great deal of their assets tied up in a single company, so they don’t care all that much about individual corporations’ actions. They just want the value of their retirement accounts to increase. So, then, these publicly-owned corporations tend toward acting, in a sense, in their own self-interest, toward increasing their own value and profits without much regard to anything else. Furthermore, these corporations tend to prize short-term profits over increasing value in the long-term. This can be most readily by the difficulty humans in general have with delaying gratification.

As a result corporations tend to always place profits over any set of values, even if following those values would benefit the corporation in the long run. While the economic costs of climate change are believed to be enormous, companies like Exxon have been happy to lobby against taking action to stop it, even while they have known since the 1980s that it was a problem. Like climate change itself, this is a problem of collective action with individuals carrying little blame and having minor incentives to act against the group interest. And so, like climate change, it is a difficult problem to solve. It is difficult to expect the millions of Americans who invest in the stock market through retirement accounts to have intimate familiarity with the ethics of every company their account has investments in.

So it seems the really bad sort of lobbying is when large, public corporations lobby the government so as to maximize their short-term profits without regard for any set of values or the general interest. But, this is also exactly the sort of lobbying that we cannot blame on any one individual. It is a systemic issue. Removing individual CEOs who advocate lobbying will do us no good. Like the ancient hydra, cutting off the company’s head will cause more to grow in its place. If that’s true, we need a systemic solution; we need the government to pass laws to limit this sort of corporate behavior. However, this solution too is difficult to accomplish. Elected representatives have strong incentives to tolerate corporate lobbying. And, unlike amoral public corporations, these congresspeople can have good reasons for their actions.

Imagine being a congressperson. You just won your first election and already people are talking to you about your next election. You promised a lot of groups a lot of things to get the money to finance your campaign. You’ve got big ideas for serious changes you think you can make for the better in this country. You want to make people’s lives better! And if you lose your election, well, who knows if those changes will ever get done? Plus, you’ve not worked a non-political job in quite a while. And being a congressperson pays very well, especially if you stick around long enough and become popular enough to become a party leader. Of course, you’d rather be totally independent of those nasty “special interests” but it’s a lot harder to build your political war chest from small-dollar donations. You want to be certain of your reelection so you can get your goals accomplished, all of them in service of your constituents. So when that lobbyist from Exxon calls you up and offers a huge campaign donation in exchange for a promise that you vote down that upcoming bill. It’s something about opening up some remote part of Alaska for oil drilling. And you’re just a Senator from Iowa. Your constituents don’t care. You’re dedicated to serving them! So you promise Exxon whatever they want. You’re not a bad guy, just someone trying to change the world for the better.

In this admittedly charitable view of the relationship between politicians and lobbying, the congressperson is not deliberately doing wrong out of his own self-interest. Self-interest plays a role, and it will always play a role in politics so long as being a congressperson is a paid job (which it is for good reason) and so long as there are personal benefits to having power. People can desire to remain in office purely out of self-interest even without any more explicit bribes going on. However, it’s not hard to believe most politicians accept lobbyists’ money for good reasons as I’ve described above, at least some of the time.

Politicians do frequently care about their constituents. And so the desire to do good in one domain (whatever a politician’s personal policy goals are) can inhibit their ability to make decisions in the sort of unbiased, unmotivated way we expect good leaders to follow. Parochialism is an important factor in these decisions too. We ask congresspeople to make decisions whose consequences may not fall on them or their constituents. As with the Exxon example, it’s all gain, no pain, so-to-speak. And yet our process of having local elections incentivizes congresspeople to act only in that local interest, not in the general interest. Importantly, then, the fault isn’t so much on the congresspeople for individual acts of deferring to the will of lobbyists. Rather, the fault lies on those who created and who perpetuate the institutions which provide the incentives for these acts.

The question of blame often poisons discussions about lobbying. Some place blame on corporations for lobbying, but the businesses leaders who make decisions are beholden to their shareholders. Others blame the congresspeople and think of them as greedy and self-serving when they listen to lobbyists. But as we’ve discussed, this need not be true either. The blame is very diffuse. It’s the fault of disinterested 401k holders. It’s the fault of parochial constituents who will vote out a congressperson who puts the national interest ahead of the local one. Some blame lies on congresspeople and business leaders, but their decisions are a reflection of competing obligations. A corporate executive may recognize the harm of lobbying, but still want to provide for his family and lobbying is a fantastically effective way to help the business which pays his salary. A congressperson, too, would be naive to think lobbying did not corrupt his decision-making, but he wants to provide for his constituents and without corporate money it’s very difficult to win elections. I want to be clear: some corporate employees and some congresspeople are corrupt. They act to benefit one another, not the citizenry. However, even if every executive and every congressperson acted in good faith, lobbying would still exert a corrupting influence. Such is the nature of a corrupt system. As the saying goes, don’t hate the players, hate the game.

Citizens United

So, like we’ve concluded in many other pieces, the system itself is to blame. How did it get this way? I mentioned before how the Gilded Age was the high point for corruption in politics. And one would hope that every new day would be a lower and lower point as we continually reform the system for the better. But of course, the news isn’t that cheerful. The amount spent on Congressional elections increased by 600 percent from 1980 to 2012 while the amount spent on presidential elections has increased by over 1,200 percent in the same period, adjusted for inflation. Now those of you who would blame this increase on just ordinary population growth, consider this: the population has only grown 25 percent from about 247 million in 1980 to about 308 million in 2010, when the most recent census was conducted.

There is an enormous, complex history to the state of campaign finance and lobbying regulation. The battle between regulators and those who would seek to influence elections with money have raged since near the beginning. However, in this section we are going to focus only on a single piece of this history. It’s a Supreme Court decision that you have probably heard of. It was controversial from the very beginning when the court voted 5-4, sharply along ideological lines, to remove all limits on independent expenditures by corporations toward political campaigns. This was, of course, the Citizens United vs. FEC decision, Citizens United for short.

Wow, that sounds boring. It’s hard to imagine something as boring-sounding as “independent expenditures by corporations toward political campaigns” was a “controversial” decision. I suppose we should begin then by considering what these expenditures are. After that, we can consider why there were limits on them and how the removal of those limits has affected our elections. In doing so, we will predominantly focus on the arguments made by Justices on the Supreme Court since both sides made arguments for their side not based just on the law, but on the morals and values they believed to underpin the laws. In other words, this was a decision based on conflicting interpretations not on the letter but on the spirit of the law.

Also important to remember is that this was an example of judicial activism by the conservative bloc of the court. Long-standing precedent was overturned. Chief Justice Roberts compared the decision to the overturning of Plessy v. Ferguson with Brown v. Board of Education of Topeka, saying that, “stare decisis,” that is, the idea that precedent should be left alone, is not an “inexorable command,” and that “If it were, segregation would be legal.” He also lists a few other instances of precedent being overturned. However, Brown v. Board was a unanimous decision, another he mentions was decided 7-1 and only one was contentiously decided 5-4 along ideological lines like Citizens United. Thus, there is some reason to be suspicious of the esteemed Chief Justice Roberts’ claim. That being said, we will be charitable to the majority’s arguments and will get to them in due time. But first, let’s begin with trying to understand what Citizens United actually did before we consider whether what it did was justified.

Suppose you are a wealthy individual. It’s 2007 and it’s time to elect the president. You’re not a big fan of that Senator from Illinois but you like that maverick from Arizona. He really seems to get you. So, you want to help him get elected. This is prior to the Citizens United decision in 2010, so your options are somewhat limited. You can donate to what is called a PAC (Political Action Committee), 527 group (its name coming from the section of the tax code under which it is regulated), and directly to a campaign.

There are benefits and drawbacks to each of these. You can only donate $2,300 directly per candidate (feel free to donate to as many candidates for Congress as you want), but the campaign can then use that money to “expressly advocate” for your preferred candidate. Express advocacy includes statements like “Vote Sheev for Supreme Chancellor” or “Defeat Macbeth at the ballot box or you’ll be next!” This is in contrast to “issue” advocacy which can only provide information about a candidate. It cannot direct those who are exposed to it to act in one way or another. PACs are also allowed to coordinate with candidate’s campaigns to maximize the effectiveness of their advocacy.

If you’ve still got some money left, you might try donating to a 527 organization. Technically, PACs are 527s too, but the term is usually used to refer to organizations that do not engage in express advocacy. 527s’ issue advocacy simply provides “information,” either about a general issue (“abortion is murder and here’s why…”) that might be a point of contention during the election, or about a candidate. For example, you might run an ad that says “Abortion is murder and Democratic candidate Soranus is a big fan! But Republican candidate Severus wants to make it strictly illegal!” They have to stop short of actually saying “Vote Severus!” This can still be very effective, and prior to the advent of Super PACs, it was the most popular way to make a big difference in elections. 527s are also not allowed to coordinate with candidates.

You can make some other donations, mainly to party committees on the local, state, and national level, and the limits on these are much higher. But that’s not going to be as effective at getting that lovable Vietnam veteran into the Oval Office. If you happen to run a business, your corporation will unfortunately not be able to contribute to any campaign or 527 group (you can actually thank McCain for that), but some of your employees can contribute to PACs associated with your corporation which can contribute to campaigns. However, there is a fairly strict limit on the total contributions these PACs can make. Whether your business has one PAC or ten, the limit is the same.

It didn’t work out. Maybe if you had just been able to donate more and McCain could have won. Fortunately, it’s 2012 and you have another chance with the charming bloke from Maine. And now, thanks to the Citizens United decision, you can do a lot more. First of all, PACs have been superseded by super PACs. These PACs can engage in express advocacy and can accept unlimited donations from both individuals and corporations. You read that right: that’s not from employees contributing to a corporation-associated PAC. Corporations can contribute straight from their treasuries. The last remaining limit is that super PACs cannot coordinate directly with candidates’ campaigns. But, as would be confirmed in 2016, the FEC doesn’t much care to stop this communication and any attempt to stop it would have to go up against the First Amendment’s free speech protections.

Plus, if some of your more liberal friends were offended by your large campaign contributions toward McCain last time, just find or start a non-profit corporation, give your donations to it (your business can do this too!) and have that non-profit donate to a super PAC supporting Romney. Normally, any individual contributions over $200 and all contributions from organizations (corporations, super PACs, etc.) have to be publicly disclosed. However, non-profits aren’t legally obligated to reveal their donors to the public so no one but the government will know you or your company contributed. (Post-2018, these non-profits aren’t required to tell even the government). So, the super PAC will have to reveal that that non-profit made a donation but it’s completely untraceable to you! You can just tell your friends you’re not that interested in politics anymore. Coincidentally this also allows foreign nationals to bypass laws that ban them from contributing to US political campaigns.

That last sort of contribution is what is frequently referred to as “dark money” since it’s ultimately untraceable and oftentimes, non-profit corporations, “ghost companies,” are formed for the express purpose of hiding contributions. And these non-profits spend a lot of anonymous donations: about $1 billion since 2010. That’s part of a total of $3 billion spent by super PACs in general since 2010. This is the result of that boring little decision to remove limits on independent expenditures by corporations toward political campaigns.

So why did five Supreme Court Justices vote to allow all this to happen? Well, there are basically two arguments they made, one legal, one moral. We’ll cover these in turn. The legal argument is simple: as Justice Antonin Scalia writes about the 1st Amendment, “The Amendment is written in terms of ‘speech,’ not speakers.” In particular, the Freedom of the Press clause, they argued, protected the free speech of associations of speakers.

“Now wait,” you might be thinking, “this is about money, not speech.” However, it has been long recognized by the Court that a right to spend money is intimately connected with the right to speech and communication more broadly. If you want to have any sort of communication except literal spoken speech, you require a medium and that medium usually costs money. If you want to write a letter, that takes pen and paper. Speaking on the radio requires a radio station. Running a TV ad requires recording equipment. Money is speech. Rather than denying that, the Court has historically judged that certain types of this kind of “speech” are worth limiting. The typical standard has been that the influence of money is worth limiting when it is used for the purpose of corrupting candidates and elected officials or when its influence leads to the appearance by the public of corruption. It is in the interest of the government that the populace not believe their votes are worthless and that money rules when it comes to elections.

So Scalia is undoubtedly right about the First Amendment. And, strictly speaking, he’s right to say it’s difficult to interpret the First Amendment as limiting any sort of speech. But of course, all sorts of speech are restricted. The Court has found grounds to limit speech despite the lack of explicit restrictions in the text of the amendment itself. The more important argument, then, is the moral one.

The moral argument the conservative majority made has two parts: first, that the ability of businesses, especially small businesses, to engage in free political speech is important; and second, that independent expenditures never give rise to the sort of quid pro quo corruption that warrants limiting said political speech. That second piece, by the way, implies that only quid pro quo corruption warrants censorship.

In defense of that first claim, the majority utilized a classically liberal claim: “that there is no such thing as too much speech.” This idea goes all the way back at least to John Stuart Mill in the 1800s. The idea, familiar to us all, is that in the “marketplace of ideas,” the expression and discussion of all ideas is important. According to our power of reason, the true ideas will stick in our minds more readily than the false ones. And each new exposure to false ideas will only strengthen in us the confidence we have of the truth. It’s a noble idea, but one that has failed every test of human psychology in the modern era.

For one, people have a confirmation bias, which leads them not to preference true ideas over false ones, but ideas they have over new ideas and new evidence they don’t agree with. People also accept and hold beliefs based on a heuristics which leads to an availability cascade where claims reiterated frequently enough in the public sphere are more readily accepted, even when demonstrably false. This holds especially true when the claims made fall outside of the listener’s area of expertise. If you don’t have much knowledge one way or the other concerning, say, climate change, and you haven’t done any research on the topic, but you more often hear that it’s fake than that it’s true, you will probably think it is fake. From this comes the famous saying, attributed to Nazi Joseph Goebbels, “Repeat a lie often enough and it becomes the truth.” The majority would have it that most political speech by corporations is meant to spread ideas in good faith. The more cynically minded, however, will readily accept that corporations are acting right in line with Goebbels. Indeed, Justice Stevens echoes this sentiment in his dissent:

“If individuals in our society had infinite free time to listen to and contemplate every last bit of speech uttered by anyone, anywhere; and if broadcast advertisements had no special ability to influence elections apart from the merits of their arguments (to the extent they make any); and if legislators always operated with nothing less than perfect virtue; then I suppose the majority’s premise would be sound. In the real world, we have seen, corporate domination of the airwaves prior to an election may decrease the average listener’s exposure to relevant viewpoints, and it may diminish citizens’ willingness and capacity to participate in the democratic process.”

In fact, this same practice has been applied to the validity of the Citizens United decision itself with many politicians who support it denouncing all opposition as being opposed to “free speech.” Senate Majority Leader McConnell commented on the decision saying that it constituted “an important step in the direction of restoring the First Amendment rights of these groups.” Importantly, he never specified that those groups are corporations. And, of course, being against free speech makes you un-American and renders your arguments invalid.

The second moral argument that the majority relied on is that there is corruption, or the appearance of corruption, damaging to the electoral process when there are or appear to be quid pro quo agreements between donors and candidates. Fortunately, since this is a question of appearances, we can rely on polls of Americans. We can ask Americans if they think the sorts of donations the Citizens United decision would allow would corrupt the electoral process. And in fact, in Justice Stevens’ dissent, he cites such a poll, writing that:

“a large majority of Americans (80%) are of the view that corporations and other organizations that engage in electioneering communications, which benefit specific elected officials, receive special consideration from those officials when matters arise that affect these corporations and organizations.”

And we can confirm this with more recent polling that suggest more than three-quarters of Americans, across both parties, want the Citizens United decision overturned.

Now there remain serious questions: perhaps the standard concerning the “appearance” of corruption should be thrown out. Shouldn’t it matter more whether there is actual corruption? And, as we have discussed in many previous pieces, unfortunate outcomes may be the result of a rational, morally justifiable act. The main role of the Supreme Court, many people agree, is not to exact their or any values on the law. Rather, their role is merely to interpret and apply the law. It may very well be that the conservative majority got this case right, that the Constitution really cannot allow limits on corporate independent expenditures. In obeying their duty, they may have enacted a terrible consequence upon the nation.

And here comes the classic question of civil disobedience: if the laws are unjust, should they be followed? Perhaps the Supreme Court is obligated to do what’s best for the nation, regardless of the Constitution or past laws. It’s a radical view but one that follows fairly naturally from a broad conception of civil disobedience. And according to one poll, most people think that the Supreme Court should at least “interpret the Constitution based upon changes in society, technology, and the U.S. role in the world” instead of allowing “ONLY what’s exactly spelled out in the Constitution.” The originalism of Scalia, it turns out, isn’t so popular.

Citizens United was a very complex case. We have barely scraped the surface of the history behind it and have considered only a few of the ramifications of it that will extend far into the future. Once again, it seems at least possible that a problem with our electoral system (corporate individual expenditures) is not the result of malice or stupidity but rationality and duty. Furthermore, while public opinion is pretty solidly against Citizens United, there are at least some legitimate arguments for it that are based in views of free speech that have shaped our nation’s history and the history of liberal government for centuries. One definite result, however, is this: we should not lose faith in democracy and submit to the idea that corporations run the show. Citizens United, love it or hate it, needs to be discussed despite its complexity. If we are in fact a democracy and not a corporatocracy, the rules around elections ought to be up to us. The Supreme Court certainly holds a great deal of knowledge and wisdom but it does not always accurately reflect the people’s will. If Scalia is even a little bit right about the value of speech, we ought to debate their decision and decide collectively whether to keep it or overturn it and we ought to elect Representatives who believe the same.

Continue to Part IV

 

Who Owns Climate Change?

Two days after the 2016 presidential election, John Abraham published an article on the Guardian titled “Conservatives elected Trump; Now They Own Climate Change.” In the article, Abraham claims that conservatives now “own” climate change due to Trump’s victory and the lack of action from conservative politicians, both in the United States and around the world. But is it fair to blame any person, group, or ideology for climate change? And if so, how can we determine who we should hold accountable?

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Green Energy or Global Markets?

On Wednesday, February 24th, the Huffington Post published an article calling attention to the World Trade Organization’s (WTO) objections to India’s “ambitious program to create homegrown solar energy.” The declaration was especially controversial due to the organization’s history of and capacity to squash other international efforts attempting to utilize local resources and businesses to build sustainable energy programs.

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