Amid the political ads with which we are bombarded during every election, one theme emphasized by progressive candidates concerns the evils of business. Corporate America is especially singled out for allegedly not paying enough taxes, underpaying employees, underserving customers, and exploiting ordinary Americans.

Yet the same political candidates are among the biggest recipients of financial support from those who lead and manage the corporate sector. Take, for instance, Wall Street. In the third quarter of 2020, Joe Biden and a Democratic Party whose base has shifted to the left crushed Donald Trump and the Republicans in fundraising from Wall Street executives. This is despite the Trump administration’s lowering corporate taxes and Biden’s stated intention to raise taxes on high earners and to increase corporate tax rates.

This isn’t a new phenomenon. Back in 2008, Barack Obama comprehensively outraised John McCain among the same demographic. Mitt Romney reversed this somewhat in 2012. But the money dramatically shifted back to the left in 2016 when Hillary Clinton easily won the bulk of donors from the financial sector.

Some of this is attributable to circumstances. Senator McCain’s evident unease when discussing economic issues just as a major financial crisis was engulfing America in 2008, for instance, did not inspire confidence among business leaders. There are, however, other reasons why much of America’s business community has politically moved leftward. While some of these concern economic and demographic calculations made by many CEOs, others reflect pressures that have little do with markets.

Start your day with Public Discourse

Sign up and get our daily essays sent straight to your inbox.

The Economics of Wokeness

One explanation for many company executives’ public embrace of progressive causes is that they want to preserve and expand their customer base. Younger Americans are more socially liberal, we’re told, and want their buying choices to reflect their politics. Economic self-interest, the logic goes, compels businesses to adapt to these realities by sounding as progressive as possible.

Sometimes this takes the form of organizational changes, such as creating positions like “Vice President for Diversity and Inclusion.” Few individuals with such jobs seem especially interested in promoting a plurality of political views within their companies. On other occasions, it involves vocally and financially supporting various progressive causes, or signaling that you disdain customers with more conservative views.

There’s little doubt that many Americans want their buying choices to reflect their politics. One reputable consumer survey, for example, indicated that 66 percent of respondents believed that it was important for companies to take political stands. Breaking this down further, it turned out that this view was held by 78 percent of liberals but also by 52 percent of conservatives.

This means that companies that portray themselves as committed to progressive activism risk losing their more conservative customers. The fact that more Americans consistently identify as conservative rather than liberal should cause company executives to pause before imagining that being assertively progressive is the gateway to greater profits.

In fact, there is evidence that promoting progressive ideas doesn’t increase (or, for that matter, undermine) profits. Study of the economics of wokeness is relatively new, but in his carefully framed analysis of several prominent cases, Vincent Harinam concluded that:

woke corporate policies do little to positively or negatively impact a company’s bottom line. While financial gains are possible, they are minimal. In other words, woke capitalism is, for the most part, financially inconsequential relative to other higher-order factors, be they store closures or increased production costs. The market is the market. It is unpredictable, volatile, and based on trillions of hard-to-model data points. As such, woke capitalism doesn’t move the needle. Going woke won’t make you broke, but it won’t line your pockets either.

Demography Isn’t Destiny

If this is the case, why do businesses get woke?

Promoting progressive ideas doesn’t increase profits. So why do businesses get woke?


Harinam suggests it’s at least partly about demographics, an area to which executives and managers pay close attention. Millennials, Harinam notes, are (at least according to Pew Research) the only more or less consistently liberal generational demographic. For some companies, this matters because millennials are or will be one of their major consumer markets.

More generally, Harinam maintains that going woke is a relatively cost-effective way of placating the activist left and reassuring consumers that the company is socially responsible. Sometimes, he points out, this spectacularly backfires, as businesses like Gillette and Pepsi have discovered. The general calculus, however, is that corporate wokeness is one way of getting ahead of the demographic curve.

The flaw with this strategy is that demography isn’t always destiny. Looking at the 2020 election results, for example, some progressives have observed that the left is losing its grip on specific groups, such as black and Hispanic Americans, as younger members of these groups question and turn away from their parents’ political leanings. Once upon a time, most American Catholics regularly voted Democratic, while Episcopalian was a synonym for Republican. Neither has been the case for decades.

Put another way, people change their minds. Sometimes the trigger is a major event like a pandemic, recession, terrorist attack, or Supreme Court decision. Consider how Roe v. Wade eventually turned millions of Catholics and Evangelicals against the Democratic Party, or the ways in which the 2008 financial crisis and Great Recession soured large numbers of millennials on capitalism. More mundanely, many once-liberal individuals get married, start families, begin regularly attending church or synagogue, see their taxes grow, read a little economics, or simply get tired of being told they should act and vote in particular ways because of their skin color, sex, religion, or ethnicity.

Taken together, this indicates that business executives should be careful before assuming the static nature of any group’s social, political, and economic preferences. Perpetually posing as more progressive than Alexandria Ocasio-Cortez may, at some point, result in companies’ losing touch with or even alienating significant segments of their markets.

Shifting the Goalposts

While economic and demographic assumptions (however mistaken) help explain the leftward shift of parts of the American business community, other less economic factors are also at work.

One is the cultural pressures to which all of us are subject. Like other Americans, many business leaders have studied at colleges that, for all their diversity-speak, are monolithically progressive in their outlook. CEOs and higher business managers also live in a media environment in which conservative voices are token or stigmatized. There is no reason to assume that business executives are any more resistant to intensifying progressive influences than anyone else.

That applies to the way they think about economic issues as much as about social questions. It’s an error to assume that all business leaders are gung-ho free-marketers. In fact, many prefer to seek favors from governments and regulators rather than trying to out-compete their rivals in the marketplace. Some of these executives have also surely worked out that PDWs (Public Displays of Wokeness) are one way of enhancing their ability to play the crony game. If a company wants to secure privileges from a heavily liberal legislature, it can’t hurt to emphasize the business’s commitment to woke causes.

If a company wants to secure privileges from a heavily liberal legislature, it can’t hurt to emphasize the business’s commitment to woke causes.


More generally, many people consistently prioritize their political beliefs over their economic self-interest. While incentives to focus on the economic bottom line may be greater in commerce, it’s not uncommon for business leaders to decide that supporting particular progressive political causes matters more than profit, whatever the consequences for shareholders and customers.

Lastly, there is the ongoing impact of the stakeholder movement on the business world. Few events symbolize how far such thinking has penetrated America than the Business Roundtable’s 2019 decision, endorsed by 181 CEOs, to commit itself to leading “their companies for the benefit of all stakeholders—customers, employees, suppliers, communities, and shareholders.” Six months later in December 2019, the World Economic Forum produced a manifesto stating that companies needed to shift away from “shareholder capitalism” and embrace “stakeholder capitalism.”

For many people, such words may seem innocuous, not least because stakeholderism reflects a certain truth about business. To the extent that stakeholderism holds that businesses should treat their employees and customers fairly, honor contracts, obey just laws, respect the environment, etc., it is unobjectionable. In such cases, it’s simply another way of articulating well-understood responsibilities of business. Business leaders meet these obligations every single day by facilitating choice in goods and services for consumers, providing wages and benefits to their employees, repaying loans to banks, providing returns to investors and shareholders, paying just taxes, and, above all, creating economic value that benefits the wider community in seen and unseen ways in the present and into the future.

That truth, however, has steadily been twisted in ways that distract business leaders from their core responsibilities, diminish the legitimate commercial liberties of the companies they run, and allow executives of publicly traded companies to insulate themselves from accountability to investors and shareholders. This is apparent in what is called “pluralistic stakeholderism.” Among other things, this school of thought holds that companies must consider the effects of their choices on potentially infinite numbers of stakeholders, even to the point of requiring businesses to consult with, if not receive approval from, numerous constituencies before making any significant decisions. In this scenario, shareholders and customers are just one of a plethora of entities to whom business executives must answer.

If followed through systematically, such forms of stakeholderism would marginalize attention to profit-making in many business leaders’ decision-making, thoroughly muddle lines of accountability within companies, and undermine a basic foundation of competitive market economies by prioritizing virtue-signaling over the workings of price signals. And this, I’d suggest, is precisely what that large segment of the political left that has never reconciled itself to free markets actually wants.

That is what is ultimately at stake with the leftward drift of so many American business leaders. Seeking to appease activist progressives might help alleviate some immediate pressures on companies. It may even seem like good public relations. But like all forms of appeasement, this is counterproductive over the long term insofar as it will significantly undermine the capacity of business executives to generate profits, create jobs, and build and invest the capital that fuels long-term growth for entire countries.

In such a world, all of us—not just business—will lose.