Carl Rhodes is the Principal and Lecturer at the School of Management at the University of Technology in Sydney. He recently wrote Woke Capitalism (Bristol University Press), a book on management bordering politics. For those who believe in the usual narratives about social responsibility and corporate activism, the book is (almost) a bucket of cold […]
Carl Rhodes is the Principal and Lecturer at the School of Management at the University of Technology in Sydney. He recently wrote Woke Capitalism (Bristol University Press), a book on management bordering politics. For those who believe in the usual narratives about social responsibility and corporate activism, the book is (almost) a bucket of cold water on these beliefs. For those who believe that it is ideas that, transposed into action, change the world – the book is a provocative compendium of evidence on the instrumental goals that often lurk behind many apparently virtuous and genuinely altruistic activisms. The book is therefore an invitation to action. Few readers will be indifferent to Rhodes’ argumentative clarity. And even fewer will keep their convictions intact about the intrinsic goodness versus the instrumental nature of many corporate activist actions. Reading this interview can be a starting point for reflection around (more or less) ready-made ideas. In a polarized world, discussing ideas – whether we agree with them or not – is an urgent necessity. Here is an interview about ideas.
In your book “Woke Capitalism”, you defend a third perspective against the two that have prevailed until now. The first perspective is the one of the liberal-left: corporations should genuinely support the board interests of society, rather than just focusing on maximizing the shareholders’ interests. The second perspective, form the right-wing, is that corporations should be purely economic entities and not interfere in social or political matters. The third position, yours, is that corporate engagement with “progressive politics” harms democracy and prevents actual progress in those social or political matters. Could you explain your position, please?
Thanks, this is really the central argument of the book. Right wing critics of woke capitalism are worried about corporations being corrupted by progressive politics. The fear that their own reactionary politics is at risk because corporations are somehow being swayed by leftist agitators. Think of US Senator Marco Rubio who just last year proclaimed that “instead of the patriotic leaders that capitalism needs, today America’s corporate elite kowtow to the woke, Marxist mobs that dominate the internet and Hollywood.” This is really a facile position that plays to populist sentiments, but is disconnected from the reality of the situation. It assumes that once proud capitalists have become s weak-willed and puny in their inability to resist left-wing con artists peddling the likes of climate activism, political correctness and identity politics. That criticism is implausible, if not feeble-minded – the belief that weak-willed CEOs and push-over billionaires have been bullied into woke submission by the naughty boys, girls and gender-fluid persons on the left.
As you say, those who support woke capitalism agree that corporations should genuinely support the broad interests of society rather than just focusing on shareholders. But what both supporters and critics share is a belief that we are witnessing what might be a genuine underlying change to the primary purpose of capitalist corporations. The difference between them is just about whether you believe that this is a good thing or not. To my way of thinking woke capitalism does not represent a fundamental change to capitalism, but rather an extension of the trajectory that it has been on since at least the 1980s. Corporations going woke is about ensuring that market capitalism can continue on the neoliberal trajectory that it has been on for the past 40 years. Despite the machinations of the reactionary right, it is worth considering the anti-progressive effects of both the rhetoric and practices of stakeholder-based corporate social purpose, especially when they are successful. While early neoliberalism saw a shift in power from government to the private sector on a global scale, the late neoliberalism of woke capitalism is seeing an even more worrying phenomena: a shift in political power to the private sector. This is not about progress but about undermining the democratic system of government and the democratic way of life that can allow progress to happen.
You state that woke capitalism is deeply self-interested in that it aims to ensure that “there is no fundamental reform of the dominant neoliberal world order that has exacerbated inequality, fueled fascist populism, and stood by as the climate crisis escalates”. From your view, which would be the best way to deal effectively with those social, political, and climate problems?
Ultimately, I believe that we need to see renewed commitment to democracy and a rebuilding of trust in government. That’s not easy and much of this has eroded in recent decades. Woke capitalism is as much a failure of government as it is a success of the corporation. Whatever the case we need public solutions to public problems, both within states and between them. The world’s response to COVID-19 is an interesting counterpoint, in that dealing with a global pandemic was something that clearly needed to be managed by governments. Managing public health, making decisions on lock downs, funding the development of vaccines, supporting those who lost jobs, and propping up whole economies required government. The form of economic self-interest that drives the private sector is entirely at odds with being responsible for addressing massive public problems.
Let’s not forget that while small businesses were shutting their doors, and working people the world over suffered at the hands of the employment market, big end of town capitalists did just fine. Oxfam called them ‘pandemic profiteers’ with for example, more than half of the United States major corporations seeing their profits grow during the pandemic. The same pattern was witnessed elsewhere in the world. Billionaires have done even better. While COVID meant that 99% of the world’s population ended up financially worse off, the top ten wealthiest people – all men – doubled their wealth. Is that woke? If anything, woke capitalism buttresses a self-satisfied ruling elite who believe that their wealth is deserved. With woke capitalism you can be filthy rich at the expense of others and still feel good about yourself.
We can debate as to whether some governments were better than others at managing the pandemic, but that it was a government responsibility is much harder to question. There are important lessons here about the role and function of government in dealing with matters of public interest, and one’s we should not forget. Corporations are created through acts of law, and are and should be positioned as subordinate to the society that grants them license. I fear we have turned the world upside down when corporations increasingly call the shots. To your question, dealing with the world’s problems requires, fundamentally, reinstating a system, and a set of beliefs, that sees business as secondary and the will of the people and the people’s political representatives. Business has a part to play, to be sure, that part does not involve being the boss. It is fundamental to democracy that we separate the pursuit of private interests from the pursuit of public interests.
What do you suggest, at the political/institutional level, that could prevent powerful corporations to capture the political/democratic process to serve their own interests at the expenses of the society and citizens?
There are no glib answers or easy solutions to this problem, especially given that it has taken decades of change to economics power structures globally to get us into this mess. Woke capitalism is a relatively new phenomenon, but it is a continuation of a much longer history that has seen the corporation become the world’s most powerful form of institution. A resurgence in the believe in democracy is essential. But this change will be generational rather than the result of a single idea or policy. I honestly believe that the new generation of young people who are leaving school now, in some cases entering University’s and starting their careers show signs of a renewed political consciousness and desire for change. The post Greta Thunberg generation see things differently and have the potential to demand and enact real change. I put my faith in them to address the problems that my generation have either created or stood by watching as the train run off the rails.
Could you give us a couple of examples of corporations that used progressive causes to simulate pursuing the collective interests while they were actually pursuing their own interests?
There are many examples, think of Nike’s support for the Black Lives Matter Movement, Gillette’s advocacy of the #MeToo movement, or the many companies who have started to engage in climate politics. These are all examples where companies have supported existing social and political movements, and done so in a way that aligns with or even enhances their own commercial success. But let’s remember here that the corporations are not the leaders. It is the real activists who took the real risks, often putting their lives on the line, to invoke real change for progress. Corporations get in on the act once the hard political work is done, and they do so in a way that benefits them. They are self-interest followers, or amplifiers at best.
Another problem is that because commercial self-interest will always be a leading factor in corporate decision making, the type of progressive issues that are supported by corporations are largely limited. Economic inequality, stratified across gendered, racial and geopolitical lines, is amongst the world’s biggest problems, and it is getting worse. Ok, but we don’t see woke corporations taking active positions that would seek to address aggressive corporate tax minimization, promote income and wealth redistribution, institute more progressive taxation, or put a stop to the scandalous escalation of executive remuneration. Basically, addressing economic inequality, perhaps the most core issue for progressive politics today, is almost entirely off limits to the woke corporation’s political agenda. A fundamental rule of woke capitalism is that politics that threaten the corporate bottom line are to be avoided at all costs. That is not democracy, it is an expansion of capitalist power into the public sphere.
Is it possible to distinguish the cases in which corporations are genuinely pursuing a virtuous social or political cause from cases in which “embracing” the progressive cause is a kind of hypocrisy’s show? Is it possible to make citizens, consumers and political actors and institutions more aware of that distinction and then adopt a protective, questioning, and mistrustful stance? If so, why?
It is possible. Think for example of Yvon Chouinard, owner of clothing company Patagonia, who only a few months ago transferred 98% of the company’s stock to a newly created not-for-profit organization dedicated to addressing the climate crisis. The “earth is now our only shareholder” he said. The upshot of this is that an estimated $100 million a year will go to climate philanthropy. There is no reason to believe that this is not an authentic gesture on Chouinard’s part. But think then that a report released during the recent COP27 event suggested that to meet the Paris agreement targets requires an additional $1 trillion per annum. Patagonia’s $100 million is not making much of a dent in that.
Your arguments discussed in the book are very compelling and you support your arguments with plenty of evidence. Are you aware of business schools in which the topic is discussed and taught? Have you had opportunities to discuss the topic in your classes? Or do you consider that the issue is out of fashion and that many corporate narratives are crafted in such a persuasive way that almost all of us are blind to the real dangerous implications of woke capitalism?
I have received great interest in the book from business school colleagues around the world, just as I have from people in business. Since the book was released I have had the opportunity to give numerous guest lectures on the topic in Business Schools in Europe, the United States and here in Australia. In all cases I found the students to be inquisitive, questioning and interested in the issues I have been raising. I have also heard from colleagues who have explicitly used the book’s ideas in their University classes in subjects ranging from management to marketing to finance. Having said that we do need to accept that business schools have been part of the problem, and that we need to fundamentally change is we are to be part of the solution. For too long we were cheerleaders for globalized shareholder primacy, feeding an ideology that has resulted in a new era of economic inequality, political populism and climate disaster. We need to take these things seriously if we are to educate a new generation of people who can lead us out of these problems. A naïve belief that the corporate leopard has changed its spots and is now unequivocally a ‘force for good’ is dangerous. As business schools I believe we need to refocus our primary attention to how education and research can support shared prosperity and public value. That is the task ahead, as I see it, but there is a long way to go if it is to be achieved.
From your view, is it, or isn’t acceptable or even desirable that CEOs embrace genuinely progressive causes? Are there dangers, for democracy, even in those cases? Why?
CEOs, as well as being extremely well-paid corporate employees, are also citizens, so in one sense it is their civil liberty to spruit what even political position they happen to believe in. But that doesn’t mean that it is not dangerous for democracy when CEOs start meddling in politics. Once we get past the click-bait headlines that too often determine the debates about work capitalism, those on both the left and the right of politics might just be able to agree that woke capitalism presents a real and present danger. It is not about whether you are flag-waving supporter of the unfettered free market or not. It comes down to whether you genuinely believe in the democratic system that allows us to develop and voice different political positions in the first place. The real danger is that woke capitalism breaks the fundamental democratic distinction between the private and the public spheres. Once upon a time, democracy may have required the separation of church and state to permit religious freedom. The preservation of democracy today comes down to the separation of state and corporation to permit political freedom, otherwise we retreat into the forms of feudalism and plutocracy that the democratic revolutions starting the 18th century.
By Arménio Rego, Miguel Pina e Cunha
This article was published in the winter edition of Líder magazine
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