Patagonia produces bespoke fleece vests emblazoned with the names of America’s great financial houses, but now money isn't enough to procure them.
That all cultural institutions in America have been taken over by the Left is beyond question. The media, the academy, Hollywood—all are now in its clutches. Conservatives still cling to talk radio, just as tightly as they do to their guns and bibles, as President Obama so dismissively put it, but that is about the only redoubt of the “sense-making” institutions they still have.
This was no accident. Those who have studied the genesis of this annexation know that it was a deliberate “long march through the institutions.” That campaign was conceived in the late 1960s by the violent German activist Rudi Dutschke, a disciple of the non-violent but much more dangerous Frankfurt School academic Herbert Marcuse, who approved of Dutschke’s plan.
Today, this strategy manifests in the demand that institutions be “woke.” The term, borrowed from African-American slang for being awake, has come to mean not just any type of liberalism, but one denoted by an obsequious obsession with social issues, denunciations of “whiteness,” the insistence that the freest and most prosperous society today is hopelessly racist and in need of deep change, and the intolerant resolve to censor any deviation from any of these concepts through cancel culture. Other American institutions are teetering on the verge of a woke takeover.
The Churches—as in the institutionalized Abrahamic faiths—have long been bastions of conservatism by their very nature, but they are now in danger of seeing their commitment to true justice and the care for the poor and the stranger hijacked in the name of Social Justice, a concept that undermines religion. Social Justice abandons forgiveness and concentrates on punishment—especially, but not only, through forced redistribution of resources according to membership in categories of the supposedly oppressed and marginalized. Forgetting past sins, which the Bible repeatedly tells us is what God routinely does, is verboten.
Professional sports, too, have turned into pageants for ritualistic woke denunciations of the country and its history, the white race, etc. Despite being one of the most integrated areas of American life, the NBA, the NFL, and now MLB constantly remind viewers in need of escapism that our country is uniquely, structurally, institutionally, and systemically racist, sexist, and homophobic.
Still, all these areas—the media, the academy, the churches, sports—are basically volitional. You don’t have to watch Monday Night Football; you can cancel your newspaper subscription; if your rabbi is too much of a social justice warrior, you simply switch synagogues. Most of us, however, have to do one thing every weekday: go to work. Ever since Adam bit the apple and God told him that henceforth “by the sweat of your brow you shall eat bread,” we have gotten up almost daily, put on overalls, a uniform, or a tie, and set forth to make a living.
Moreover, no American today is a self-contained individual who grows his own food, erects his own house, and makes his own clothes. We must buy goods and services from businesses that produce them to satisfy our Maslowian basic needs. Therefore, no area of American life would be more devastating if it were to be taken over by the woke.
The bad news is that business is the new battlefield: the woke have set their sights on corporate America. The good news is that the woke have so overplayed their hand that they have awakened “a nascent but nonetheless furious resistance.”
Those are the words of Stephen R. Soukup, who has written a delightful book on this battlefront, The Dictatorship of Woke Capital. Though it is a delight to read, full of facts and stimulating insights into the nature of our society and its religious and philosophical underpinnings, the book is also downright scary. The woke have indeed made great strides in their campaign to take over American businesses and the capital markets that fund them. Whether it is too late to mount a counterattack is not clear. But, as is the case when battling all ills, from disease to threats to our way of life, the first step is awareness of the problem and an understanding of its nature. This much Soukup’s compact book does in spades.
The book is divided into two sections: the first is a history of the evolution of the left, and the second documents the effects of this change on capital markets and businesses. Those who, like me, love the history of ideas, will be fascinated with the first part; those who like business and deconstructing how ideas impact actual human systems, will prefer the second. Those who want to prevent this from happening will need to understand both. Soukup explains near the middle of the book (and it’s so fundamental that he might have put it earlier) that woke capital is not a left-right issue, but a battle between those who would politicize all areas of life, and those who believe that there must be a line between the public and private spheres.
The Road to Wokeness
Soukup begins his history of ideas with a key observation: that the left has struggled to deal with the promise of earthly utopia made by its intellectual godfather, Jean-Jacques Rousseau, in the mid-18th century. Soukup here blames the Enlightenment, which he calls a “three-century long attempt to construct a reason-based moral system to replace the Judeo-Christian framework.” This project “was doomed from the beginning by its refusal to recognize the premise upon which the Christian moral system was based: that man is flawed and neither reason nor science could fix him.” The failure to deliver utopia led directly to nihilism and relativism. It “exacerbated a crisis of belief and elevated the epistemological skepticism of Nietzsche to new heights. In response to socialism’s disappointments, the left abandoned reason, abandoned ‘reality’ and in the end rejected the Enlightenment itself in favor of relativism,” writes Soukup.
It is important to observe that Soukup here makes a typical error, though one that does not undermine the book’s analysis, in tarring all of the Enlightenment with this charge of secularism and belief in the perfectibility of man. Had he said “the Continental Enlightenment,” he would have been on entirely safe ground. The Anglo-Scottish Enlightenment, however, was not aimed at God, and in fact understood man’s flaws—for example his penchant to look after his self-interests. It worked with these flaws, in fact, to produce the greatest good for the greatest number.
These two schools of the left—the Enlightenment and the nihilistic reaction to its failures—are the origin of today’s assault on business and capital markets. “Our story—the story of the politicization of business and its funding sources—has two starting points,” writes Soukup. These two streams of contemporary liberalism “are diametrically opposite each other, one positing the belief that the entire world and all of man’s social behaviors can be analyzed through the lens of objective science and the other insisting that this scientifically observed surface reality represents the repression of man’s true nature.”
The first leads to the progressives of the late 19th and early 20th century, men like Herbert Croly, Richard Ely, and Woodrow Wilson—and to their cherished principle that an appointed, professionally trained bureaucracy of public administrators would be better at guiding the affairs of men than men themselves. This turns on its head the principle on which the Anglo-Scottish enlightenment was based—that those systems that take account of man’s self-interest are more benign and democratic and produce a greater good for a greater number than those based on coercion. Scientism, as Soukup explains, is based on the belief that man is too ignorant or selfish to be trusted.
The second stream of contemporary liberalism also spins on the key question of how man satisfies his needs. It taught that the senses misrepresented reality and were not to be trusted to relay the necessary information. This stream was born in Europe, with Antonio Gramsci, the Frankfurt School, and the Parisian postmodernists. Marcuse thought, for example, that the satisfaction of needs got in the way of the revolution needed to overthrow the bourgeoisie: “All liberation depends on the consciousness of servitude, and the emergence of this consciousness is always hampered by the predominance of needs and satisfactions.”
What this second stream tells us, Soukup explains, is that “if man was ever to be truly happy, ever able to be what nature intended him to be, he would first have to shed the false consciousness of capitalism’s self-interested civilization.”
These two trends, though contradictory, completely changed America. They “blended with one another to create a new American weltanschauung,” Soukup writes. Out of this cocktail come contradictory ideas such as the fetishization of scientific methods, the belief that American traditions blocked progress, and the belief that a trained permanent administrative state was superior to individual planning. “Only one thing now stood in the way of the emergence of the ‘New American Man,’ namely, the Old American Man” who was pretty happy and didn’t want to change.
This is invariably the problem with anything the left ever tries: Che Guevara’s Nuevo Hombre, the New Man, just never shows up. Human nature, it turns out repeatedly, is unchangeable.
What kept Old American Man grounded, says Soukup, was his job. That Old American Man’s ability to satisfy his needs kept him happy was something that drove Marcuse and his Frankfurt School cohort nuts. “They find their soul in their automobile, hi-fi set, split-level home, kitchen equipment,” Marcuse wrote dismissively in 1964. As Soukup described Old American Man, “he had a job, likely a good job. He got up in the morning, went to work, came home, had dinner with his family, went to bed, and got up to repeat the whole cycle afresh, five days a week. And it was all made possible by American business.” Soukup then gives us the famous Calvin Coolidge line about the business of America being business, but also adds what Coolidge then said about Americans: “They are profoundly concerned with producing, buying, selling, investing and prospering in the world.”
But American business was about to change, as the new love for the scientific method turned into the pursuit of “scientific” planning for businesses, including a new player, the “stakeholder”—the employees, the consumers, and the residents who may live near a plant—whose interests supposedly diverge from those of the “shareholder.” The eager supporters of stakeholder activism gave the idea a superior moral force—the narrative that what mattered was making profits was supplanted with the theory that stakeholders were ends in themselves. The stakeholder became superior to the shareholder and subject to the “planners” actions. And the superiority was not simply moral, but also in terms of the bottom line. Soukup quotes professors Thomas Donaldson and Lee Preston as writing in 1995 on the evolution of the stakeholder model that “whatever their methodologies, these studies have tended to generate ‘implications’ suggesting that adherence to stakeholder principles and practices achieves conventional corporate performance objectives as well or better than rival approaches.” Stakeholder analysis became, Soukup tells us, “a key concept in corporate strategic analysis and planning.”
The problem here, writes Soukup, is an old one: these planning theorists “applied purely systemic, scientific methods to phenomena that were not easily shoehorned into a scientific method,” i.e., human affairs. In one of the book’s best lines, Soukup writes that “the little human animal has a mind of his own and defies behaving in ways that fit the statistical model.”
The supporters of stakeholder theory—and also of the obviously false idea that the interests of the stakeholder and the shareholder always diverge—needed a foil, and Soukup makes a good case that they set up a strawman opponent in the ideas of Milton Friedman, especially a 1970 essay he wrote for The New York Times Magazine.
In the essay, the monetarist economist, who would win a Nobel Prize six years later, explained that the corporate “manager is the agent of the individuals who own the corporation” and that his responsibility was to “conduct the business in accordance to their desires, which generally will be to make as much money as possible.” This somehow was traduced later as a “cult of shareholder value” which, to critics, meant short-termism and ignoring the interests of “stakeholders,” things Friedman didn’t say and wouldn’t have said because they’re nonsensical. “None of this matters,” writes Soukup. “The only thing that matters is the myth of Friedman, the myth of the greedy shareholder and the rapacious capitalists, the myth that shareholders and stakeholders must, always and everywhere, be opposed to one another.”
Tactics of a Culture War
To show how all of this is implemented to make business woke, Soukup offers a very useful rundown of how leftist activists (mis)use the process by which public (that is, publicly traded) corporations govern themselves. As he explains, the activists hijack the annual general meeting of shareholders, the “proxy statements” that companies file with the SEC to describe what will happen at the meeting, the “shareholder proposals” that shareholders make to corporate management, and the proxy advisory services that provide advice to large asset managers. “The shareholder proposal is the primary tool of the corporate activists,” writes Soukup. Activists often buy stock in a corporation in order to disrupt annual meetings through their proposals, and the asset managers and the proxy process help them in their endeavors.
Chapter 8, the chapter that gives a rundown of the players on the left that abuse this entire process, is 39 pages, by far the longest in the book, nearly one-fourth of it. In it, Soukup explains how large asset managers such as Black Rock and State Street have been taken over by CEOs (Larry Fink in the case of the first, Ronald O’Hanley in the second) that agree with the goals of the left. Because they must be passive investors—that is, they must invest in indexed funds and can’t sell a company simply because it does not conduct business with the values the asset manager CEO embraces—these CEOs feel they must become activists by pushing the companies they own ever leftward.
The same forces are at work with proxy advisory services, an industry that is basically a duopoly: Institutional Shareholder Services (ISS) and Glass Lewis account for 97 percent of the business. They are both pro-activism, and because they offer research services and then make recommendations to asset managers on how they should vote on shareholder proposals, they shape the perception of what investors’ interests should be “before telling those investors how to vote those interests.” Interestingly, among the players on the left that are tipping American business in that direction, Soukup names the Securities and Exchange Commission, whose career officials, he says, “are often taught, trained and encouraged to apply their own values to the execution of their duties.” (Full disclosure: this author was speechwriter to SEC Commissioner Christopher Cox in 2005-2006).
The chapter on players on the right is, not coincidentally, the shortest in the book at eight pages long, and names outside players, like the American Legislative Exchange Council (ALEC) and the Capital Research Center, indispensable organizations made up of hard-working Americans whom I know well, but who can hardly compete with Larry Fink, ISS, and the SEC.
Soukup, finally, also takes the country’s biggest and more important corporations, such as Apple and Disney, to task for trying to dictate “moral matters to the American people” when they don’t like what voters decide, while at the same time coddling the dictators in Beijing because they don’t want to lose out on 1.4 billion consumers.
But—and this is an important but—the “dictatorship of woke capital” is not inevitable. The book’s title is in fact taken from the title the editors of the journal First Things gave to a powerful speech that Arkansas Senator Tom Cotton gave in June 2019. “As liberal activists have lost control of the judiciary, they have turned to a different hub of power,” Cotton said. In a democracy, we resolve our differences through democratic debate; “what should never happen is a billion-dollar corporation trying to dictate these moral questions to us.” America has awakened, finally, to what the woke are doing.
The way back will have to involve, unfortunately, using the courts. Much of what corporations do now is illegal, or should be, especially the new emphasis on subdividing along racial lines. One man who has done much work in this area is Chris Rufo, the director of the Center for Wealth and Poverty at the Discovery Institute. Rufo is gathering lawyers who will take up cases pro-bono, instilling fear in corporate hearts as they do so. Conservatives, too, can take a page from what the woke have done by using shareholder meetings to get their ideas across. Repeating these dubious practices of the left is distasteful, I will admit, but the Marquess of Queensberry Rules have not done conservatives a lot of good. And still, there are no guarantees that we will be able to depoliticize the corporation.
Are there flaws in this book? Some, like its overbroad characterization of the Enlightenment, and an insufficient discussion of how Human Resources departments are used to introduce Critical Race Theory in “trainings” that amount to workplace harassment. But despite the occasional flaw, anyone who wants to understand how the woke are taking over our engines of growth would be well served to read Soukup’s manifesto.