In 2020, at the World Economic Forum, David Solomon, the CEO of Goldman Sachs, proclaimed that the investment firm wouldn’t take corporations public unless they had at least one “diverse” member on their board. The ostensible logic: a diverse leadership performs better by avoiding groupthink. But the proclamation came too late. Six months before, the last S&P 500 company with an all-male board had inducted a woman. Goldman was actually virtue-signaling to divert attention from its role in the 1Malaysia Development Berhad scandal, described in 2016 as the “largest kleptocracy case to date.” Goldman had paid $1 billion in bribes to win work raising money for 1MBD, a slush fund linked to then-Malaysian prime minister Najib Razak and corrupt officials. Fined $5 billion for its machinations, Goldman was embracing “woke” to burnish its credentials.
It’s not just Goldman. Corporate America has learned to invoke buzzwords like ‘stakeholder capitalism’ and ‘social justice’ to boost its profile, cachet, and profits. In Woke, Inc.: Inside Corporate America’s Social Justice Scam, biotech entrepreneur Vivek Ramaswamy lays bare this duplicitous con. He writes in the introduction, “Here’s how it works: pretend like you care about something other than profit and power, precisely to gain more of each.” Worryingly, this deception is subverting democracy.
Like most American capitalists, Ramaswamy believes that the job of business is to provide products, maximize profit, and deliver value to shareholders. It’s not the realm of business to impose one particular vision of “social responsibility” on society. Corporate law limits boards’ focus to the financial interests of shareholders. This protects democracy from corporate overreach, for with financial power, businesses can easily crowd out dissent, whether from employees or from ordinary Americans.
On the other hand, corporations are granted the privilege of limited liability — protection from being pursued for business failure — so that they can innovate without fear. The business judgment rule (BJR) also protects CEOs and boards from being sued for bad decisions. But when corporations engage in social activism, they use the power of that immunity against democracy. They are able to work from behind shields denied to genuine activists, who may have a different social vision. They are also able to go unquestioned for funding fashionable but unprofitable causes in conflict with the interests of shareholders, who may not subscribe to those causes. In both ways, as Ramaswamy writes, this concentrates “the power to determine American values in the hands of a small group of capitalists rather than the hands of the American citizenry at large, which is where the dialogue about social values belongs.”
The newfangled “stakeholder model,” which dilutes corporate accountability to shareholders, gives corporations a virtual carte blanche as long as they pretend to have everyone’s best interest in mind. Therefore, they can claim to have pursued “policies with conscience” to explain away bad performances. Or cheat, as Volkswagen did, when it claimed it was the most “climate conscious” automaker while using defeat devices on emission tests.
Ramaswamy exposes how top government officials leverage corporate ties to accomplish what they can’t get done in Congress. By allying with major woke companies, woke politicians get a megaphone for their message, while the corporates get to project moral superiority. There’s even a certification system for corporate wokeness — the environment, social, and corporate (ESG) index — devised, not surprisingly, by the U.N. Economist Milton Friedman viewed such regulations as big government interference, adversely affecting a company’s performance and ultimately damaging the economy. Instead, executives committed to a particular cause should make products in consonance with their ideologies.
The author declares that he’s a defector from corporate America. He’s fed up with its pretense of caring about justice, all the while wreaking havoc on democracy and robbing people not only of their money but also their identity and voice. Wokenomics allows corporations to provide influence and money to “woke” people and gain a cloak of moral superiority to hide wrongdoing. When companies are sued, part of the settlement money typically goes to left-wing nonprofits as tax-deductible “donations” that can result in a huge discount of the original “fine.” The Department of Justice thus deprives taxpayers of the benefits from a class-action suit; it also deprives the treasury of taxes.
The book describes scenarios in which dictators — even the Chinese Communist Party (CCP) — can become stakeholders. First, the BLM and environmental and feminist activists front for American companies to win consumer approval. The companies monetize the trust, generating clicks, selling ads, charging fees, and thus gathering huge amounts of personalized data. When they do business in China, the CCP demands access to that data. The companies comply, ignoring gross human rights abuse in China while hyperventilating about systemic racism and transphobia in America.
Disney happily filmed in China, where Uighurs are forcibly sterilized or aborted, but demurred about filming in Georgia when the “heartbeat” abortion ban was implemented. With wokenomics, corporations arbitrarily decide who should speak and who should be censored as a hater or hate group. Support for BLM is de rigueur; criticism of China is verboten. The American government can be condemned, not the CCP.
So-called woke corporations have also become propaganda machines and censors for the government, doing for it what the Constitution forbids. Big Tech, especially firms controlling social media, interferes in elections by restricting debate and deciding in advance what information the electorate gets to access. In effect, they legislate a value system, ban alternative narratives, and render the democratic process irrelevant. In the past, monopolies fixed prices; now they fix ideas. Congress gave Big Tech immunity (Section 230 of the Communications Decency Act) from any liability for censoring or regulating content; in exchange for the protection, Big Tech makes massive one-sided campaign contributions.
Woke idea-fixing has also changed corporate America into a dogma-bound Church of Diversity — not of thought but of skin-deep factors like race and sex. Employees who don’t share a particular worldview are fired. A particular skin color is absurdly conflated with one particular left-wing opinion. A black person who espouses a conservative viewpoint is “not black.” And it’s impossible to be racist towards whites. The utterly racist implication of wokeness — race and gender being the only woke diversity metrics — is that genetics alone reveals how a person thinks.
As a solution, Ramaswamy advocates critical diversity theory. The idea is that organizations should screen for diversity of thought and experience. They should define their purpose, demarcating areas where they would prefer alignment with the organizational view rather than diversity of opinion and where the latter is valued more.
He concludes that the underlying issue is the lack of a shared American identity, rather than lingering racism or sexism. Woke diversity, without an all-American communality, divides people into tribes in conflict. Woke capitalism arrogates to corporations what should be adjudicated through our democracy — racial justice, gender equality, climate change, and beyond. Two things, he says, define us as a nation: the American Dream, and E Pluribus Unum. The first is best achieved through capitalism; the second through democracy. Wokeism is noxious because it destroys democracy.