(Michael Rectenwald, Mises Institute) In 2018, Ross Douthat of theĀ New York TimesĀ introducedĀ the phrase āwoke capital.ā Essentially, Douthat suggested that woke capitalism works by substitutĀing symbolic value for economic value.
Under woke capitalism, corporations offer workers rhetorical plaĀcebos in lieu of costlier economic concessions, such as higher wages and better benefits. The same gestures of wokeĀness also appease the liberal political elite, promoting their agendas of identity politics, gender pluralism, transgender rights, lax immigration standards, climate change mitigation, and so on. In reĀturn, woke corporations hope to be spared higher taxes, inĀcreased regulations, and antitrust legislation aimed at monopĀolies.
Although woke capitalism alienates cultural conservatives, the Republican Party remains procorporate, making woke capitalism a win-win strategy for corporations.
Business Insider columnist Josh Barro suggested that woke capitalism provides a form of parapolitical representation for workers and corporate consumers. Given their perceived political disĀenfranchisement, woke capitalism offers them representation in the public sphere, as they see their values reflected in corporate pronouncements.
Others have suggested that corporations have gone woke only to be spared cancellation by Twitter mobs and other activists, that wokeness is a good ābranding tool,ā or that progressive shareholders also demand corporate activism.
But woke capitalism cannot be sufficiently explained in terms of placating coastal leftists, ingratiating left-liberal legislators, or avoiding the wrath of activists. Rather, as wokeness has escalated and taken hold of corporations and states, it has become a demarcation device, a shibboleth for cartel members to identify and distinguish themselves from their nonwoke competitors, who are to be starved of capital investments. Woke capitalism has become a monopoly game.
Just as nonwoke individuals are cancelled from civic life, so too are nonwoke companies cancelled from the economy, leaving the spoils to the woke. Corporate cancellations are not merely the result of political fallout. They are being institutionalized and carried out through the stock market. The Environmental, Social, and Governance (ESG) Index is a Chinese-style social credit score for rating corporations. Woke planners wield the ESG Index to reward the in-group and to squeeze nonwoke players out of the market. Woke investment drives ownership and control of production away from the noncompliant. The ESG Index serves as an admission ticket for entry into the woke cartels.
Research suggests that ESG investing favors large over small companies. Woke capitalism vests as much control over production and distribution in these large, favored corporations as possible while eliminating industries and producers deemed either unnecessary or inimical.
The investment approach of BlackRock Inc., the worldās largest asset manager; Vanguard, the second largest; and others lends credence to this interpretation. BlackRock and Vanguard are solidly behind stakeholder capitalismāthe corporate ethos of benefiting āstakeholdersā in addition to or in lieu of shareholders.
In his ā2021 Letter to CEOs,ā BlackRockās CEO, Larry Fink, made his position on investment decisions clear, declaring that āclimate risk is investment riskā and āthe creation of sustainable index investments has enabled a massive acceleration of capital towards companies better prepared to address climate risk.ā Fink promised a ātectonic shiftā in investment behavior, an increasing acceleration of investments going to āsustainability-focusedā companies.
Fink warned CEOs: āAnd because this will have such a dramatic impact on how capital is allocated, every management team and board will need to consider howĀ this will impact their companyās stock.ā In thus throwing down the stakeholder gauntlet, Fink echoedĀ the menacing wordsĀ of World Economic Forum (WEF) founder and chairman Klaus Schwab, who wrote in June 2020: āEvery country, from the United States to China, must participate, and every industry, from oil and gas to tech, must be transformed. In short, we need a āGreat Resetā of capitalism.ā
But unlike Schwabās rhetorical gesturing, Finkās dictum of āgo woke or go brokeā should not be dismissed as the conspiratorial rantings of Dr. Evil. It has the direct force of capital behind it. Fink carries out what Schwab can only promote with propaganda.
Finkās ā2022 Letter to CEOs: The Power of CapitalismāĀ continues the promotion of stakeholder capitalism, suggesting that stakeholder capitalism has always been the modus operandi of successful capitalist corporations:
Over the past three decades, Iāve had the opportunity to talk with countless CEOs and to learn what distinguishes truly great companies. Time and again, what they all share is that they have a clear sense of purpose; consistent values;Ā and, crucially, they recognize the importance of engaging with and delivering for their key stakeholders. This is the foundation of stakeholder capitalism.
According to Fink, stakeholder capitalism is a not an aberration. He goes on to declare, rather defensively: āIt is not a social or ideological agenda. It is not āwoke.ā It is capitalism.ā
Klaus Schwab erects the straw man of āneoliberalismāāwhich he equates with the free marketāas the source of economic and social woes for the masses. But corporatism, corporate and state favoritism differentially benefitting chosen industries and players within industriesāand not fair and free competitionāhas been the real source of what Fink, Schwab, and their ilk decry.
Corporatism, otherwise known as āeconomic fascism,ā involves the coordinated production and the running of society by a consortium of dominant interest groups. If anything, stakeholder capitalism is a form of corporatism. Furthermore, despite Finkās assertion to the contrary, the corporatism he promotes exercises corporate power and relies on state sanctions to achieve a particular ideological and political agenda.
That agenda is wokeness. Woke capitalism is thus more accurately calledĀ woke corporatism…
In addition to building parallel cultural, economic, and social structures, in the short term, woke corporatism can be challenged by divestment from ESG-abiding corporations and by opposition to the politicians who promote these corporations through legislative favoritism.
Michael Rectenwald is the author of eleven books, includingĀ Thought Criminal,Ā Beyond Woke,Ā Google Archipelago, andĀ Springtime for Snowflakes.