The latest front in the culture wars is corporate America. It’s hard to date precisely when the culture war came for big business, but the sources of it are clear. Protestors who filled the streets after the murder of George Floyd in 2020 demanded a response from major corporations, many of whom pledged money and lent their voices to the Black Lives Matter movement. And in recent years, climate activists finally got the ear of some major investors and business leaders when they called for action on carbon emissions.
But the apparently bright dawn of conscientious capitalism proved short lived. Corporate support for diversity measures and environmental, social, and corporate governance standards (ESG) has met an intense backlash. Last year, brands such as Target and Bud Light unexpectedly found themselves embroiled in costly boycotts for their LGBTQ marketing. 18 states have passed sweeping laws aimed at limiting ESG investing and House Republicans have subpoenaed activist groups and asset managers in their investigation into whether efforts to mitigate climate change violate US antitrust law.
Culture wars have a way of shaking up old coalitions, and the corporate culture war is no different. This election season, many prominent GOP politicians have struck a decidedly unconventional pose: advocating for regulations of business and calling out by name enemies on Wall Street and in corporate America. Isn’t this the kind of thing the left wing of the Democratic Party does? Critics can’t resist pointing out the hypocrisy. But, strangely enough, progressives find themselves in the similarly unusual position of defending executives and investors. From this perspective, corporate support for Pride Month or the green energy transition isn’t woke capitalism—it’s just how you do business in a world that is changing culturally and environmentally.
“It’s just business” is a tempting line of reasoning. For one thing, it offers a strategic retreat from the culture war game to safer, apparently fact-based territory. For that reason, it is also a familiar gambit in a political culture shaped by the rise of fact-checking journalism. But as we know, there are limits to the effectiveness of fact-checking. For similar reasons—and in the face of powerful political and moral backlash—appeals to the neutrality of profit-seeking are likely to come up short.
This isn’t the first time that business leaders have found themselves caught between different and opposed visions of how to balance public good and private profit. In my book, Taming the Octopus: The Long Battle for the Soul of the Corporation, I write about the corporate protests of the late 1960s and 1970s. And this history is important for understanding our own moment.
Propelled by civil rights activists and a growing chorus of social movements, the corporate protests targeted primarily annual shareholders’ meetings—those annual meetings that corporations have in the spring that are usually boring and predictable, except when they’re not. Time reported in 1970 that the protests “shattered the old tranquility” of the annual meetings. They became dramatic sites of conflict between activists and management over matters of civil rights, gender equality, consumer safety, environmental pollution, workers’ rights, and many other things. AT&T, Boeing, Bank of America, and many others were besieged. Activists used a range of tactics: not only disruptions at annual meetings and the use of shareholder resolutions for purposes of social and political interests but also picketing, sit-ins, and demonstrations at corporate offices.
As management groups fought to keep control of their companies, they began to make concessions. Large corporations created formal organizational structures for dealing with environmental, consumer safety, and social issues. One study in 1975 found that 60 percent of more than 200 of the largest firms had a high-level executive or committee whose job was to direct social programs such as the employment and training of disadvantaged workers or the mitigation of air and water pollution. Just a few years after the corporate protests began, 90 percent of publicly traded companies included social responsibility disclosures in their annual reports.
The rise of modern corporate social responsibility provoked opposition from conservatives. In 1970, economist Milton Friedman wrote a now-famous essay in New York Times Magazine called “A Friedman Doctrine—The Social Responsibility of Business Is to Increase Its Profits.” Although Friedman did not mention the corporate protests specifically, the context was made clear by the editors, who framed the article with photos of activists and executives at the annual meeting of General Motors that year. According to Friedman, corporate social responsibility was a fundamentally flawed project because it conflated economic action with political action, leading the way to conflicts and, worse, to socialism. In short, it forced business leaders to choose social responsibility over profits. Friedman reserved his greatest opprobrium for liberal business leaders who failed to stand firm against the corporate protesters and who gave heartfelt speeches on corporate citizenship. “This may gain them kudos in the short run,” he wrote, “but it helps to strengthen the already too prevalent view that the pursuit of profits is wicked and immoral and must be curbed and controlled by external forces.”
Many of the activists who pressured big business to become more socially responsible tended to agree with Friedman, at least in one respect: sometimes there are genuine tradeoffs between seeking profit and doing what is right. Not always, but sometimes. And if the choice is between seeking profit and hiring disadvantaged workers or cleaning up pollution, the choice was clear to them. They appealed to the moral language of democracy and justice—and, sometimes, righteousness—in their demands to business leaders and investors.
But as the heat of movement organizing waned, this moral answer to the profitability problem faded to the background. Idealistic young activists with expertise in finance believed that social responsibility would be more successful if more plainly wedded to profit-seeking. The basic idea was that socially responsible investments could and would naturally be profitable—even more profitable than conventional stocks. “Public accountability on the part of corporations,” said Alice Tepper, a young securities analyst and pioneer of social investing, “will lead to an increased awareness of the need to be socially responsible for the simple reason that it will be good business.” Socially responsible investing offered a tantalizing way out of the profitability problem: clearing away questions of political power and moral judgment with market solutions.
Like today’s ESG investing, the social investing of the 1970s was particularly vulnerable to conservative critics: a promise that ethical business and socially responsible leadership would consistently be profitable—capitalism without tradeoffs, in short. And similar to today’s strategies, these commitments proved difficult to sustain. While some “peace portfolios” and social issues-focused funds survived as a niche form of investing, corporate America’s interest in social responsibility collapsed. Social disclosures in annual reports declined in the 1980s. And one 1990 study of 250 of the largest American corporations showed that not a single one had published a report on their social activities in the previous decade.
Are we watching a similar collapse? With American public opinion about big business at an all-time low, executives are distancing themselves from controversial issues and trying to figure out how to be social leaders without saying anything in public that will get them into trouble. But in a world facing overlapping environmental and social crises, “it’s just business” sidesteps the insight of the civil rights movement. In their own moment of crisis those activists did not call for deferrals to Wall Street but for genuine leadership and accountability to workers, consumers, and other stakeholders. That is the sort of moral realism that can help us see what’s at stake in the latest front of the culture war.
