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When Commerce Is Not Enough

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Why is anger a large part of your customer base? That’s the question we should ask when we look at what “woke capitalism” is doing in America. The answer lies in the shifting nature of America’s basic values. In many ways, what the corporations are doing is as American as mom and apple pie, yet it may still prove to be a mistake that damages both corporations and American unity.

For many years, students of what is called cultural cognition have recognized that what underpins many of our decisions, whether commercial or political, are our most basic values. According to the late political theorist Aaron Wildavsky, there are three such groups in America—egalitarians, libertarians, and “hierarchists.” The basic motivators of these three groups are, respectively, fairness, freedom, and order or stability.

Politicians have long recognized that to get majority support for a policy, they need to appeal to more than their core value group. So, a politician who advocates for, say, a wholesale restructuring of the health care system could argue that her plan would not just lead to fairer health outcomes, it would increase individual agency by reducing the burden of health care costs and heal communities devastated by opioid addiction.

Corporations recognize this, too. As my old boss Fred Smith used to say, they need to reach not only Joan Consumer, but also Joan Citizen. A company that advertises simply on the basis of cost is only speaking to Joan Consumer. One that signals “we share your values” is speaking to Joan Citizen. A car dealer who flies a gigantic American flag is speaking to the hierarchists. It’s a technique as old as the hills. Combine all three, and you’ve got a winning formula.

Yet, large modern corporations have discovered they can go further. They have at their fingertips vast networks they can use not just to appeal to Joan Citizen, but to influence her politically as well, thereby creating a feedback loop of political action in favor of both the corporation and the consumer’s values. They have built up vast amounts of knowledge about consumers thanks to loyalty programs and tracking data from ads. They know if their customers are politically active and they know what issues motivate them. Some of today’s largest corporations are networks themselves.

At the same time, America’s value groups are shifting. Egalitarians used to be typified by the union household, which valued highly both the local community and freedoms regarding such things as gun rights. Today’s egalitarians are, well, much more egalitarian. They are also far wealthier. College-educated young people who are not on the property ladder have large amounts of disposable income and tend to be transient, which reduces the importance they place on community stability as a value. As polls tell us, they are likely to be progressives or even democratic socialists, whose politics informs their every action.

If these are your networks, “woke capitalism” is a no-brainer. Mozilla’s firing of Brendan Eich for giving money to a campaign against gay marriage was a legitimate business decision based on what the company knew about its consumers. Google’s firing of James Damore was justified because of the need to quell the outrage among one of its most important networks—the engineers who build its products.

Yet there is a danger here, too. As noted, real change is accomplished by uniting all the values groups together. Woke capitalism may be at risk, though, of intensifying a war between values groups. When Nike publicly backed Colin Kaepernick, they weren’t just playing to their networks, they were saying to the group that values the American flag that they don’t matter.

This isn’t unprecedented, of course. TV networks and movie studios that removed gay actors (or more likely helped gay actors conceal their sexuality) did the same thing, telling the egalitarians and libertarians that they weren’t important to them. They could do this because the hierarchists had the money and political power. Today, the boot is on the other foot.

Yet, the lesson of previous business decisions that set values groups against one another is that politicized decisions lead to political reactions. Anti-discrimination legislation stopped casual firings of actors based on their sexuality, but it also has prevented some cake shop owners from exercising their religion as they saw fit. There is a real threat that political views may soon become protected in the same way—or that politicians will use the sledgehammer of antitrust law to break up woke capitalist corporations to stop their “abuse of power.”

On the other hand, woke capitalist corporations may cease to be capitalist at all and look to use government’s power to squelch dissent – or government may see them as a conduit for increasing their control. In countries without a First Amendment equivalent, this is a particular threat. A woke corporatist world would be extremely hostile to both freedom and tradition.

Large corporations should instead realize that, like successful politicians, their best way forward is to unite the country behind them by appealing to all the value groups, even if some of them aren’t strongly represented in their current networks. This may be what Mark Zuckerberg was trying to do with his recent defense of free speech.

At the moment, however, it is more likely that today’s hyper-partisan environment will continue to influence business decisions. When politics is commercialized by the use of data, it should be no surprise when commerce becomes political.

Originally published at Law and Liberty.