“Woke Capitalism is a growing and troubling dimension of contemporary economic and political life, especially among the mammoth multinational corporations that dominate so many aspects of our lives.” Such laments have become omnipresent in conservative circles. It has become hard to keep up with the Outrage of the Day. Woke Corporations have adopted the norms of the Left’s pet programs, both in advertising and public declarations, as well as in adopting ESG (Environmental, Social, and Governance) and DEI (Diversity, Equity, and Inclusion) guidelines, leaving conservatives fuming.

What is surprising is that the opening quotation was not written by a conservative. It is the assessment of Carl Rhodes in Woke Capitalism: How Corporate Morality is Sabotaging Democracy. Rhodes, a Professor of Organization Studies at the University of Technology Sydney, is a very proud progressive. While he hates Woke Capitalism every bit as much as all those “right-wing reactionaries,” he goes to great lengths to reassure the reader on nearly every page that he is not one of them.

Have we finally found a place where conservatives and progressives can agree? Is this the beginning of the end of the Culture War? Consider the following pair of quotations. The first is from Mark Hemingway in Law and Liberty. The second is Rhodes.

[It] seems obvious that capitalism, and the necessary regulation of it, works best when we’re all clear where self-interest ends and social responsibility begins. “Woke capitalism” is clearly blurring that line. If you think obscenely rich CEOs can be trusted to tell the average voter what’s in their best interest on toxic masculinity, gay rights, religious freedom, or any almost any other controversial issue, well, you’ll probably buy anything else they happen to be selling.

[T]he real danger of woke capitalism is not that it will weaken the capitalist system, but rather that it will further cement the concentration of political power among a corporate elite …[which is] a threat to a progressive politics that dares to retain hope in the possibility of equality, liberty, and social solidarity.

Note that while the language is different, both passages are criticizing exactly the same thing. What right do wealthy CEOs have to aggrandize themselves beyond the economic sphere into being the leading voices in addressing social ills?

In one sense, Rhodes’ analysis of the problem could come straight out of Robert Novak’s The Spirit of Democratic Capitalism, which perceptively described a tripartite division of power. First, there is the political order, a democratically elected set of representatives; second, the economic order, a free-market system with profit-seeking businesses; and third, the moral-cultural order, with churches, universities, and media outlets vying for influence in the marketplace of ideas. Novak argues forcefully that this division of power results in a healthier society than one in which there is a unitary source of power.

Framed in Novak’s terms, the problem with Woke Capitalism is that it causes the system itself to break down. As Rhodes puts it:

Woke capitalism does not respect the boundaries. It involves second-sector organizations taking over the responsibilities of the other two. The issue with this is that while the state and the third sector are not motivated by profit, the second sector, by definition, is. When this profit motive bleeds into the activities of the other two sectors, things change.

Rhodes has little patience for progressives who are happy to see corporate leaders embracing their favored causes. Those who celebrate Woke Capitalism are “naive, if not gullible.”

Why is Woke Capitalism a Problem?

On the criterion of rhetorical ferocity directed at corporations adopting progressive political causes, Rhodes yields nothing to the conservative critics he so clearly despises. He fully agrees with conservatives that corporations are exceeding their proper bounds in society. But, before we celebrate this unification of the Left and the Right, we should note there is a fundamental difference in the critiques. In the two-word phrase “Woke Capitalism,” which word is the problematic one?

For conservatives, the problem is “Woke.” As Milton Friedman famously put it, “The Social Responsibility of Business is to Increase its Profits.” It is the manager’s job to act in accordance with the wishes of the shareholders, whose desires “generally will be to make as much money as possible while conforming to their basic rules of society, both those embodied in law and those embodied in ethical custom.” The problem with Woke Capitalism is CEOs who have decided to pursue other goals, regardless of, or in some cases to the detriment of, the profitability of the company. Particularly galling to conservatives is that corporations seem to be embracing every obsession of the Left.

Rhodes, on the other hand, believes the problem with Woke Capitalism is “Capitalism.” The problem is not that corporations are voicing agreement with causes Rhodes embraces. The real problem is that corporations have not yet committed themselves to a suicide pact.

Consider some of the examples Rhodes discusses at length. Jeff Bezos committed $10 billion to fight climate change. He also battled with Trump over immigration. He won a Human Rights Campaign award for his support of same-sex marriage. After noting all these things, Rhodes then excoriates Bezos. The foremost problem: Amazon, the firm which generated so much wealth for Bezos, actively manages its financial affairs to minimize the taxes it pays. As Rhodes notes, they are not doing anything illegal in avoiding taxes. They are just being immoral. “We need to remember here that paying tax is the main way that corporations can contribute to society.” You might have thought that corporations contributed to society by paying employees and providing goods and services to customers, but those contributions are nothing compared to providing tax revenue to the government.

The book is filled with examples in the same vein. Sure, Nike embraced Colin Kaepernick after his kneeling during the national anthem at NFL games. This was not an isolated event. Nike embraced the women’s movement in the 1970s and Rhodes notes, “Connecting their brand with socially conscious causes has been a motif for Nike ever since.” But, do not be fooled. Nike uses sweatshops forcing people into “inhumane living conditions” to make their products.

Why is Rhodes so critical of these corporations publicly supporting causes in which he believes? His chapter on Gillette makes it clear. In 2019, Gillette released a new TV ad, directly attacking toxic masculinity, thereby attaching itself to the #MeToo movement. By this point in the book, the reader is conditioned to expect a litany of corporate horrors committed by Gillette. But Rhodes provides no such list. Gillette’s sole sin: they ran this advertisement because they thought it would be good for their sales. Their goal was “influencing public opinion and improving consumer attitudes towards the company.” That second goal, like original sin, taints the whole effort. “No longer content to just influence our spending habits and lifestyles, with woke capitalism big businesses enroll the very heart of our moral beliefs into their commercial strategies.”

Rhodes clearly misses the Good Old Days:

There was a time where corporations were inextricably associated with right-wing conservatism. Woke capitalism changed all of that with corporations directly and unequivocally touting themselves as progressive and politically active, often with a billionaire CEO as the conspicuous spokesperson cum (political) action hero.

Gone are the days when the Left knew that corporations were blood-sucking monsters out to destroy all that is good. Those evil masterminds running large corporations have learned to put on a mask, duping the unwary in their attempt to “seize political power.”

Even Bill Gates’ effort to convince billionaires to devote half their wealth to charitable causes is part of this evil conspiracy. “In the end, modern billionaire philanthropy is an exercise of capitalist power, effectively an extension of that power beyond the confines of the economy. It diverts private assets to public purposes, yet without any public accountability. It is profoundly undemocratic and serves to shore up the power and influence of contemporary society’s billionaire protagonists.” Want an example? The Mellon Foundation gave $5.3 million to provide books to prisons. Rhodes complains that the gift just masks the problem of mass incarceration. Rhodes is ever quick to look a gift horse in the mouth.

Embracing Milton Friedman

While it is amusing to watch the ways Rhodes turns every act of Corporate Progressivism against itself in his quest to show that the only cure for Woke Capitalism is the end of capitalism, the book does raise a rather provocative question for conservative critics of Woke Capitalism. When you draw the battle lines over the desirability of progressive political causes, then it is quite natural for conservatives to see corporate leaders as becoming mere shills for the other side. Rhodes, however, thinks that battle line is misdrawn. He argues the divide is over the desirability of profit-maximizing businesses. As Rhodes sees it, Woke Capitalism is a problem because it deceives people into thinking corporate leaders are focused on something other than profits.

Here is the troubling question: what if Rhodes is right about the real goal of Woke Capitalists? Using Friedman’s formulation, the responsibility of business leaders is to make profits. To make profits, it is necessary to persuade people to buy your product. Suppose for a moment that embracing progressive causes results in higher profits for a company. Suppose the customer base for a company likes progressive causes and is more inclined to buy products from companies that share their values. If that is true, then what should a firm do if it wants to follow Friedman’s mandate that the sole responsibility of the business is to make profits?

Before thinking about the implications of that question, we should first examine the presupposition. In popular cadence, if a firm gets woke, does it really go broke? Both opponents and proponents of corporations adopting progressive causes will happily provide you with lots of anecdotal evidence. Nike’s sales rose after the Kaepernick ad; Bud Light’s sales fell after the Mulvaney promotion. Finding anecdotes that confirm your initial bias on the matter is easy; finding dispassionate studies which are persuasive to people who disagree is impossible.

But, set aside the question about whether wokeness is or is not profitable; that is not actually the right question. Imagine that a CEO believes that a woke advertising campaign will be profitable. After all, advertising is not an exact science; if it was, there would never be failed ad campaigns. If a business leader believes it will be good for profits to embrace wokeness, then what should the business leader do? It seems a bit odd for people to argue that businesses should focus on profits, but that a business should not adopt progressive causes when the managers believe it will be profitable to do so.

Thought about in this way, a curious conclusion arises. If you are convinced that a firm that gets woke will go broke, then what is the problem with Woke Capitalism? Won’t the firms adopting progressive positions die out? The real problem for conservatives occurs if wokeness is profitable. The real problem is if Rhodes is right, that Woke Capitalism is just a cynical form of profit-maximizing behavior. If it is profitable, then shouldn’t Woke Capitalism be encouraged?

Thinking about the implications of these questions makes it obvious that the debate over Woke Corporations is just a proxy war for the debate over the best set of cultural norms. In a society that is deeply divided on this question, is it any surprise that businesses have realized that joining the Culture War in selective ways may be a means of attracting new sales? Such a strategy might fail, but it also might work. In a free market, every business decision comes with risk; if you want to avoid risk altogether, stay out of the marketplace. If you want to win the Culture War, though, instead of complaining about firms trying to maximize profits, it would be better to focus on the moral-cultural institutions.