Business is a fair weather friend of social justice
The Bolsheviks took power in Russia during the October Revolution of 1917. They were a Marxist movement led by Vladimir Lenin, an upper middle class man from western Russia. At the heart of Leninist philosophy was the idea that the Bolsheviks would bring a communist paradise to the working class. We now know that Lenin’s vision failed miserably. However, you can buy a bust or mug with Trotsky on eBay if you want to show your support.
Lenin and the Bolsheviks were anti-capitalist movements that sought free access to capital, products and services. “From each according to his ability, to each according to his need”.
The Bolsheviks would have vomited at the notion of corporations fighting for equity, because they were money-making entities run by profit-seeking capitalists. They probably won’t appreciate that communist memorabilia is also a money spinner these days.
Equity is primarily about ensuring equality of outcomes, but structurally businesses are organized to create better outcomes for some (i.e. owners/shareholders), and not others. The hypocrisy is lost, or ignored, marketers use equity as a tool to increase market share.
What happened to the 99%?
Occupy Wall St is a powerful movement by way of acknowledging the problems of systemic capitalism and addressing the 1%. It is a war against corruption, inequality and corporate greed. “We are the 99%”.
Occupy is dangerous for the rich because it pitted them directly against business from a class perspective. If the company supports Occupy significantly, it will compromise its model. This is because they have to sacrifice profits to boost low wages and support low-cost consumers
In the 10 years or so since Occupy, the socially conscious have focused more on civil rights than class divisions. That’s okay – both civil rights and class issues are at the heart of equity. However, businesses can breathe a sigh of relief. Civil rights are something that can be done.
This shift is very convenient for businesses and the rich because it allows them to share social values while protecting their profits because they are not focused on the distribution of income and wealth. It’s not like we’ll see businesses supporting higher corporate tax rates in the name of equity.
In some sense, a social movement that more closely integrates the thinking of Occupy Wall St with civil rights would be better able to achieve change – but that is a larger discussion than this article.
Equity co-opt business for profit
It is good business to choose social movements for profit. A common example – Hugo Boss created uniform for the Nazis.
There is a lot of evidence that businesses choose equity to benefit. McKinsey Consultants get a big salary for giving advice. You can buy a Rosa Parks Barbie doll from Ebay, or a portrait of Lenin. Hugo Boss now promotes diversity and inclusion – zebras are allowed to change their lines. However, businesses often lower or hi-jack what they touch.
There may be money to be made doing good things – but it’s not in the DNA of a business to take genuine risks in the name of equity. You also suspect that some who fight for equity have gone too far, and have made the industry out of social problems.
A capitalist economy, where business thrives, is not interested in equity per se. It is interested in efforts for profit. People in the company may be interested in equity, but they are in a capitalist paradigm with capitalist incentives, and a matter of paradigm.
The dominant capitalist paradigm is private ownership and profit-seeking. How can businesses support equity while operating profitably for the benefit of shareholders who are more likely to be in the top 1%? Just mild.
It is not really a business to tell people what values they should adopt
Businesses that choose equity often don’t take real risks – they won’t stand in front of a tank in the name of equity. Furthermore, some equity initiatives appear to be diversionary tactics to demonstrate value without significant change or investment.
Goldman Sachs has a policy of just opening initial public offering for companies in the S&P 500 with various board members. When Goldman announced the policy on board diversity is something to be embroiled in corruption scandal. Furthermore, only a handful of S&P500 companies have yet to meet these requirements. Not exactly a big risk.
Nike invests significantly in advertising to show its equity value when running sweatshops. How do they feel? Where should Nike spend its money? Probably by raising wages in sweatshops.
A recent example from Samsung in Malaysia gets to the heart of the matter. Samsung recently pulled ads featuring a mother supporting her drag queen son following a religious backlash. Yes, Samsung took a risk, but is not ready to stand behind the value in the face of scrutiny.
Business is not the right entity to tell people what values to adopt – corporate values are too flippant. Business is a friend to social movements as long as it does not mean taking real risks and compromising profits.
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