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October 22, 2024 - 4:10pm
In the Financial Times last week, John Burn-Murdoch argued that the continuing centrality of ESG and DEI in Western businesses owes more to the rise of “stakeholder capitalism” than “woke capitalism.” The term “woke capitalism” here refers to the theory that ESG and DEI are ruses perpetrated by businesses to get government regulators and progressive customers off their backs and into their corners. By “stakeholder capitalism”, Burn-Murdoch means the fashionable idea popularised by Klaus Schwab and the World Economic Forum that businesses must provide value not only for their shareholders but for an amoebic universe of other interested parties, including customers, employees, government regulators, the local community, the environment, and the whole world.
Burn-Murdoch’s evidence that the corporate shifts over the last few years are due to stakeholder capitalism is a recent study by a professor at Columbia Law School, which used data on political contributions to analyse changes in business leaders’ average political views over time. The study showed that over the last 20 years, business leaders have moved dramatically Leftward. It further broke the results down into CEOs, C-suiters, board members, and upper-level managers, and found three things: that higher-ranking managers were more conservative than lower-ranking ones, that all four groups had moved Leftward, and that lower-ranking managers had moved Leftward at the fastest pace. Between 2002 and 2022, board members and senior managers had both moved from being Right-of-centre to Left-of-centre.
Burn-Murdoch describes this study as a “strong indication that the shift in corporate culture and behaviour is more accurately viewed as a sincere step, reflecting the demands or desires of key stakeholders, than as a cynical strategic play”. But this is the wrong lesson to take away from the research.
Why? Because the only “key stakeholders” who have shown a clear desire for businesses to move in a Leftward direction are the upper-level managers this study represented. Embedded in Burn-Murdoch’s analysis is an assumption that if the average views of managers change, that must reflect a change in what the market — mediated through manifold “stakeholders” — is demanding. That if businesses are hiring Left-leaning managers, they must be responding to market forces in doing so.
But for this to be true, we would need to see another piece of evidence: namely, that over the last two decades businesses that have moved to the political Left have done better financially than those which haven’t. We have been presented with no such evidence. Rather, we have seen leading businesses across many industries move Leftward as cartels, even as the larger economy has stagnated. The corporate progressive turn has provided no measurable business advantage at all, and the only benefit it has provided has been social — to the managers themselves.
What’s really going on here? A persuasive theory would be that the “woke capitalism” thesis remains mostly correct, but that it’s no longer the whole story. For decades, on-average politically conservative and ambivalent CEOs and managers paid lip service to Leftist goals to score points with regulators, media, and a small but highly vocal subset of customers. In the process of pretending, they had to make some new hires — the lower-ranking managers in the Columbia study. As they sought to demonstrate through those hires their commitment to the fashionable causes of the day, the corporate waters became warmer for the young ideologues who elite universities and business schools were only too happy to turn out.
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SubscribeGreat article. But “this is the wrong lesson to take away from the research” is one hell of an understatement. Only someone as steeped in academia Lefty groupthink as this Burn-Murdoch could be as obtuse as that…..so unable to get past their wishful thinking and actually notice reality. I always come back to Saul Bellow: “A great deal of intelligence can be invested in ignorance when the need for illusion is deep“.
It has nothing to do with money, It’s all about status and vanity. Being woke confers moral authority and social legitimacy in certain social elite circles, It gives excuses for the power and privileges they have, and It’s enabled by the fact that much of corporate America consist of monopolies which allows them to avoid the consequences of their actions. It also provides justification for employment and excess pay and benefits for the managerial types who run corporations by creating problems justifying their employment by explaining the problems, It’s big and middle management and thus they tend to be the most fanatical because they get the most out of it. It also helps the maintain things because it in gratiates themselves with a certain political interest on the left, and thus can manipulate government to maintain their dominance in their industry.
‘Corporations’ Leftward drift isn’t boosting profits’
It seems to have taken America mega Corp land a while to understand the obvious again. We can but hope they come to their senses soon. Rather quickly would be good.
‘centrality of ESG and DEI in Western businesses owes more to the rise of “stakeholder capitalism” than “woke capitalism.”’
The main thing holding back western businesses are the leaders of the mega Corp world, because they don’t actually understand business too well. The irony.
America has serious issues. Maybe they could put down the idealogy and actually do business again. Lift the sanctions regimes. Stop weaponising the dollar. Let business do business and not politics. Stop politicians interfering in the global economy as and when they please. It’s really messing it up.
“For decades, on-average politically conservative and ambivalent CEOs and managers paid lip service to Leftist goals….In the process of pretending, they had to make some new hires.”
In other words they opened the door and invited the wolves in. Surprise. They’ve been consumed.
Also, “woke capitalism” and “stakeholder capitalism” are the same thing by different names.
The Woke Disney Company (formerly the Walt Disney Company) is a prime example of this trend to insanity. The previously wholesome, fun, and good-natured content, which inspired people and made them feel better about themselves, morphed into something which drains society of its moral luster, saps strength from our shared consciousness, and leaches light from the universe (to use a few apt poetic phrases).
Compare its fortunes today with how it was in the 90s and prior. No comparison. The amount of goodwill (which shows up on accounting spreadsheets) lost is staggering. Parents who once let their kids watch Disney without question now either check carefully or discount it entirely.
A parasite, by definition, does not produce, but sucks energy from its parent host. So is the woke crew that constantly befuddles us. They make nothing, they distort everything. Like a fungus which overtakes and eventually kills the host, so are they.
Bang on.
I am amazed that business/ economic studies these days such as this Burn-Murdoch always seem to concentrate on the process of the firm; never the outcomes. It’s almost as if dying the firm’s business is secondary in the minds of its executives. Almost as if the single talent of those who get ahead in large organisations is the ability to get ahead in large organisations.
Intelligent, educated people will always skew left due to their greater understanding of how the world, including business, works.
Since the MAGA movement has taken over whatever conservatism used to be this has become more pronounced. You have put yourself under the leadership of an aging moron who is clearly losing his marbles and declared him infallible.
Pretty dumb.
The left is fundamentally aligned with the neocons. Why do you think someone like d**k Cheney endorses a california bred radical liberal like Harris ? The left stands for covid authoritarianism, forever wars, us imperialism at the cost of millions of lives abroad alons in the past 2 years, and if not stopped, climate authoritarianism in form of social crediting and global government.
But that’s nothing new. The left has always had a soft spot for authoritarianism 😉
I’m going to give you your craved dopamine hit, CS.
“You lefty scum !”
There. I’m fuuuuuurious. You certainly got me.
Happy now ?
It is the characteristic of people like Champagne Socialist that they are never happy. They are the moral descendants of H.L. Mencken’s Puritans, who were consumed by “the haunting fear that someone, somewhere, may be having a good time.”
You always make me laugh, CS. Thanks! 🙂
Well, well; It’s our fizzy little friend again! Now, Fizzlet, we did have a little talk, didn’t we, about troubling the good and intelligent people on these pages with your jejune opinions. So be a good lad and behave otherwise it’ll be back off to the guardian with you.
So, the people who can’t tell a man from a woman, and think there are 24 genders, are the “intelligent” and “educated” ones? Has Titania McGrath taken over Champagne Socialists’ account?
All I can do here is laugh
Since you admit in your comment that you don’t really understand what conservatism is, why don’t you bone up on its core principles? If only out of intellectual curiosity.