THR Web Features   /   March 21, 2018

The Limits of Corporate Activism

The longer history of businesses navigating their extra-economic responsibilities brings to light the true nature of corporate activism today.

Andrew Lynn

“The work that religion, government, and war have failed in must be done by business.” This proclamation appears in the 1928 book Business as Civilizer, written by an enthusiastic advertising executive, Earnest Elmo Calkins. Calkins saw in the success of early twentieth century corporations signs of a new era commencing: America’s “business millennium.” It is not difficult to see the relevance of Calkin’s proclamation today. While Florida’s state legislature has now passed a gun control bill in the wake of the February 14th Parkland High School shooting, the most tangible preventative measures have so far been undertaken by businesses.

As Derek Thompson notes in The Atlantic, more than twenty companies have now cut ties with the National Rifle Association. Two national retailers—Walmart and Dick’s Sporting Goods—elected not to wait out new gun control legislation but announced they would voluntarily be ending gun sales to customers under 21. “We don’t want to be part of this story any longer,” explained Dick’s Sporting Goods CEO Edward Stack in an interview on CNN. Anti-gun activists have now turned their pressure toward new corporate targets, trying to get Apple, Amazon, and FedEx to break ties with NRA.

These forms of corporate activism have become familiar political stories in the age of Trump. Established corporate leaders and Silicon Valley entrepreneurs have found themselves moving off the political sidelines and weighing in on highly contentious social issues. As several political commentators observed, President Trump’s economic advisory councils have lost far more members to principled and openly dissenting resignations than his “Evangelical advisory board,” which has remained remarkably intact. The prophetic moral authority previously resting on clergy—particularly amidst the Civil Rights Movement of the 1960s—may now rest on our corporate leaders.

Yet this isn’t completely new. Calkins, in Business as Civilizer, was already in 1928 cheering on corporations’ expansion of power into other realms. The efficiency of business, he argued, is sufficient evidence that the “despised business man” can be entrusted to do what government and other institutions have failed at. But this marriage of power, profits, and politics raised as many questions then as it does now. Who ultimately controls a politically “woke” corporate sector? And whose interests are ultimately served?

Here one finds unusual unity among otherwise opposed political perspectives. From the left, Branko Marcetic in Jacobin Magazine and Stephen Thrasher in The Guardian criticized the inconsistencies of companies publicly cashing in on popular progressive causes while simultaneously backing legislation and causes that work against progressive interests. From the right, Patrick Deneen in First Things lamented the left’s unquestioning acceptance of corporation-backed pressures that shaped the legislative process of Indiana’s controversial Religious Freedom Restoration Act. More recently, conservative writer Ross Douthat in the New York Times essentially recreated Jacobin’s argument in characterizing “corporate wokeness” as an attempt to pre-emptively pacify the left’s economic agenda by signaling support for progressive social values. There is healthy cross-partisan concern that “corporate woke” is a corporate joke.

Are these critics right? The longer history of businesses navigating their extra-economic responsibilities brings to light the true nature of corporate activism today. Writing in the Journal of Economic Literature in 1975, Lee Preston noted a widespread discrediting of “nineteenth century concepts and rhetoric” regarding the merits of capitalism. Preston then attempted to map out the twentieth-century efforts to “search for a paradigm” for corporations’ responsibilities to social welfare. We might call this business’ “social paradigm.” Surveying a wide range of organizational, managerial, economic, and political thinkers, Preston observed that twentieth-century efforts lack a “central theoretical conception or methodological base” for navigating social questions. Going further, he judged that most of those efforts “fared poorly” or, were just “bad.” There was no social paradigm to be found in 1975.

The remarkable thing about reading Preston today is how little progress has been made in the four decades since his writing. As Preston’s co-author affirmed in a 2015 piece marking the fortieth anniversary of Preston’s article, we are without question “still searching for a paradigm.” Other managerial thinkers have reached similar conclusions. Several summers ago I attended a paper presentation at a management conference that took the unusual step of putting us into groups to “brainstorm a solution to a problem.” The problem to be solved? Fill in the blank of this sentence: “Law is to justice, as medicine is to health, as business is to _________.” What is the higher end, beyond profit-generation? After an hour of brainstorming, it was not clear anyone knew.

This absence of a social paradigm might seem to contradict the hyper-moralized and now politicized vision what businesses do today. One only has to scratch the surface of this conversation to encounter a flood of socially focused terms: corporate social responsibility, conscious capitalism, sustainable development, triple bottom line, corporate citizenship. But it seems rather questionable that any of these modes of thinking offer what is required of the contemporary political environment. Most were designed to guide annual reporting efforts and philanthropic activity, not draw up responses to travel bans, gridlocked legislative processes, or the rise of “fake news.”

Without a social paradigm guiding their actions, businesses today reach for their broader managerial paradigms to guide social activism. Managerial paradigms are not rooted in commitments to inviolable principles, duties, or rights, much less a coherent political agenda. At least since the 1970s, they have typically evaluated ethical questions in relation to strategy, performance, and outcomes. Ethical courses of action are frequently justified as “strategic,” “opportunist,” or even “instrumental,” a means to ends rather than ends themselves. Scholars label this the “responsiveness” orientation to social responsibilities.

Rooting corporate activism in a managerial rather than a social paradigm does nothing to diminish the power of businesses in relation to political or social issues. They can still apply pressure to other institutions, shape public opinion, and make life fairly miserable for those who disagree with them. Political causes almost always benefit from from alliances with business, conscripting such forces as allies, particularly in cases where government responses are convoluted, slow, or inadequate. But managerial paradigms ensure these alliances take on consistent features. Contradictory and short-lived political commitments will likely be common occurrences. Fast-acting responses to events will be both an asset and a liability, helpfully outpacing slow-moving legislative processes but also offering little resistance to moral panics and hysteria. And responsive actions generally align with the will of the majority—provided the business’s own interests are not threatened—but  can’t prevent the tyranny of the majority over rights of those in the minority.

In the 1970s, the story goes, a CEO met with environmental activists only to tell them: “I agree with you. Now go out and make me do it.” Businesses operating from a responsive mindset require relentless outside pressures to do the right thing. What is needed in the present moment is not uncritical celebration of “woke” companies working to ingratiate themselves into certain political constituencies, which would likely expand the current us-versus-them political divides into the private sector. Recognizing the dominance of the responsive mindset means all businesses, woke and un-woke alike, will need a healthy degree of “vigilant belligerence” from wider society as they navigate a politically contentious era. But perhaps at a more basic level, concerned citizens need to continually evaluate the degree to which profit-seeking, market-responsive entities should be tasked with preserving the social and political goods necessary for a flourishing society.