The Woke Hegemony: The ESG Index and The Woke Cartels
General Motors’ (GM) 2022 Super Bowl advert ‘Dr. EV-il’ summons viewers to ponder the issue of climate change. The ad introduces the company’s electric vehicles, stylised as ‘EVs’, before apparently committing the corporation to a “net-zero” future. In the same breath, GM subtly admits that it will use what is purported to be a looming catastrophe to its advantage.
The ad reprises the theme of the Austin Powers series. Mike Myers, Seth Green, Rob Lowe, and Mindy Sterling play Dr Evil, Dr Evil’s son Scott, Number Two, and Frau Farbissina, respectively. As his cohorts inform him, despite having taken over GM, Dr Evil has been displaced by climate change from his position as the world’s number one threat. Not to be outdone, nor to have his plans for world domination thwarted, Dr Evil co-opts Frau Farbissina’s words, vowing to regain his Number One status while becoming part of the climate solution.
The irony of GM’s Dr Evil appropriation is not lost on Gizmodo columnist Molly Taft, for whom GM is a real-life supervillain openly pretending to be a superhero: “GM’s long history of climate denial makes this ad painfully literal — and is a warning about how polluting companies are now trying to greenwash their own reputations.” For Taft, GM is Dr Evil himself; marshalling this iconic character is too clever by half and cuts matters too close to the bone.
The ad strikes me as ironic too, but GM’s playful Dr Evil ad is a joke on such observers as Taft. The company suggests that it is not the criminal force that Taft and others make it out to be; Dr Evil is, after all, a fictional villain, and not the real CEO of GM.
But even more ironic is GM’s (perhaps unintentional) representation of “woke capitalism.” Just as GM appropriates Dr Evil and Dr Evil appropriates Frau Farbissina, the ad seems to reappropriate the mien and ethos of Herr Klaus Schwab, the chairman and founder of the World Economic Forum (WEF), who has been popularly likened to Myers’s villain.
Schwab may be the world’s leading corporate mouthpiece of climate change catastrophism. He, and the corporate ‘stakeholders’ signed onto the WEF’s agenda, also stand to gain outsized economic and political influence as the ‘Great Reset’ is enacted via Schwab’s brainchild, “stakeholder capitalism.” Its environmental, social, and governance (ESG) Index already measures corporate compliance with the agenda. Stakeholder capitalism makes partners of corporations in the world’s governance system while advancing their monopolistic economic ambitions.
Does GM mean to suggest that Klaus Schwab is Dr Evil? After all, Dr Evil echoes Schwab and the WEF’s Great Reset agenda: “I will help save the world first, then take over the world."
Given the prevalence of the comparison on the internet, it’s highly unlikely that the creative team was unaware of it. But whether the invocation of Klaus Schwab is intentional or not, the ad nevertheless issues a tongue-in-cheek criticism of the woke agenda that GM has been compelled to abide by.
The phrase “woke capitalism” was coined by New York Times editorialist Ross Douthat to describe corporate activism in line with the woke agenda: the promotion by for-profit corporations of identity politics, gender pluralism, transgender rights, lax immigration standards, voting ‘reform’, climate change mitigation, and so on. Upon coining the term, Douthat ventured to explain the phenomenon, essentially suggesting that woke capitalism works by substituting symbolic value for economic value. Under woke capitalism, corporations offer workers rhetorical placebos in lieu of costlier economic concessions, such as higher wages and better benefits. The same gestures of wokeness also appease the liberal political elite, whom the woke corporations hope will spare them higher taxes, increased regulations, and antitrust legislation aimed at monopolies.
Business Insider columnist Josh Barro offered another, closely related explanation, suggesting that woke capitalism provides a form of parapolitical representation for workers and corporate consumers. Given their perceived political disenfranchisement, woke capitalism offers consumers representation in the public sphere, as they see their values reflected in corporate pronouncements.
Still, others have suggested that corporations have gone woke only to be spared cancellation by Twitter mobs and other activists, that wokeness is a good “branding tool,” or that progressive shareholders also demand corporate activism.
These explanations are hardly sufficient to explain woke capitalism, mostly because they fail to acknowledge its enormous scope and penetration. Woke capitalism extends well beyond the rhetoric of public relations campaigns. It consists of much more than merely placating coastal leftists, ingratiating left-liberal legislators, or avoiding the wrath of activists. Rather, woke capitalism includes substantial changes to corporate behaviour. As wokeness has escalated and taken hold of corporations and states, it has become a demarcation device, a shibboleth for cartel members to identify and distinguish themselves from their non-woke competitors, who are to be starved of capital investments.
Wokeness is a selection mechanism for dividing the compliant from the non-compliant — for businesses in addition to individuals. Just as non-woke individuals are cancelled from civic life, so too are non-woke companies cancelled from the economy, leaving the spoils to the woke. Corporate cancellations are not merely the result of political fallout. They are being institutionalised and carried out through the stock market. Woke planners wield the ESG Index to reward the in-group and to squeeze non-woke players out of business. The ESG Index is a Chinese-style social credit score for rating corporations. Woke investment drives capital away from the noncompliant, while the ESG Index serves as an admission ticket for entry into the woke cartels.
Research suggests that ESG investing favours large over small companies. Woke capitalism vests as much control over production and distribution in these large, favoured corporations as possible. Woke capitalism has become a monopoly game—and not only the board game of woke Monopoly.
In this discussion, I will examine what I am calling the “woke cartels.” Woke cartels are organised not primarily in terms of industry type but rather in terms of political and ideological alignment—in terms of conformity to woke dictates. While I am not the only one to coin the phrase ‘woke cartel’, I do believe that I am the first to discuss it in terms of the ESG Index and other forms of coercive pressure, all of which which are designed to capitalise some producers and to de-capitalise and even de-bank others.
The ESG Index and Stakeholder Capitalism
Many commentators have figured wokeness as a local, bottom-up phenomenon stemming from workers, consumers, activists, and small shareholders. But the woke cartels are noteworthy for being the coordinated, top-down constructions of international bodies and the global elite. As Nathan Worcester of the Epoch Times notes:
“The internationalist, or globalist, nature of ESG is nothing new. In fact, the term ‘ESG’ originated through a collaboration between the United Nations, the Swiss government, and a group of major banks that included Morgan Stanley, Deutsche Bank, Credit Suisse Group, and Goldman Sachs.” [See also Elliot Wilson, ‘The United Nations Free-Thinkers Who Coined the Term 'ESG' and Changed the World’.]
The ESG Index is a feature and development of stakeholder capitalism, the idea that businesses should not be run strictly for profit but also for the benefit of ‘stakeholders’. Stakeholders may include employees, customers, suppliers, creditors, the local community, society, and the environment. Stakeholder capitalism addresses the supposed ‘equitable’ distribution of benefits and externalities produced by the corporation, and the ESG Index is a rubric for analysing corporate performance along these lines. Promoters of stakeholder capitalism claim that business practices that take stakeholders into consideration lead to better financial returns in the long term.
But ESGs have been outperformed by non-ESG funds. Improved performance, if or when it exists, may be a function of the ESG Index itself.
Debates about the efficacy, politics, and morality of shareholder versus what is now called stakeholder capitalism date at least to the 1970s. They were stirred up by Milton Friedman’s famous essay The Social Responsibility of Business is to Increase its Profits, published by The New York Times Magazine in 1970. In this seminal piece, Friedman voiced his rejection of the “soulful corporation” which came into focus with Carl Kaysen’s essay The Social Significance of the Modern Corporation in 1957. Kaysen had figured the corporation as a social institution that must weigh profitability against a broad and growing array of social responsibilities. For the modern corporation, Kaysen argued, “there is no display of greed or graspingness; there is no attempt to push off onto the workers or the community at large part of the social costs of the enterprise. The modern corporation is a soulful corporation.” In Kaysen’s “corporate social responsibility” claims, we can descry the roots of stakeholder capitalism.
Friedman noted that the notion of corporate social responsibility imports “the political mechanism” into every human activity, allowing the majority, or a dictator, to force conformity to social (and essentially socialist) dictates through non-democratic means. The imperatives of “social responsibility”—or the running of a corporation for other than profit-making—amount to the undemocratic imposition of taxes on shareholders, customers, and even employees. Further, such rhetoric undermines the foundations of a free society and encourages the “iron fist of government bureaucrats” to impose “socially responsible” behaviour on otherwise free market players. Running corporations in terms of “social responsibility,” Friedman concluded, “does not differ in philosophy from the most explicitly collectivist doctrine,” although it professes to achieve “collectivist ends” without explicitly avowing “collectivist means.” Friedman’s words sum up the agenda of stakeholder capitalism and its measuring rod, the ESG, nicely.
The term “stakeholder capitalism” itself may be traced to the inception of the World Economic Forum (WEF), founded by Klaus Schwab as the European Management Forum in 1971. In that same year, Schwab, an engineer and economist by training, published his first book Modern Enterprise Management in Mechanical Engineering in his native German. Apparently responding to Friedman’s declaration of the previous year, Schwab introduced the stakeholder model, arguing, as the WEF website notes, “that the management of a modern enterprise must serve not only shareholders but all stakeholders to achieve long-term growth and prosperity.” Schwab and the WEF have promoted the stakeholder concept ever since. The WEF is a major source of the stakeholder rhetoric and policies embraced by governments, corporations, non-governmental organisations (NGOs), civil society organisations, and international governance bodies worldwide. Arguably, the United Nations adopted the stakeholder model from Schwab and the WEF. The stakeholder model is also the main organising principle of the WEF’s ‘Great Reset’ project.
Asset Managers, Stakeholder Capitalism, and the ESG Index
As Mark Ray Reavis and David W. Orr note, today “stakeholder proponents are seemingly everywhere in American society. They are seeking a higher minimum wage, diversity in the boardroom, increased corporate social responsibility, and higher corporate income taxes.” And just who are these proponents? According to Ashley E. Jaramillo, they are small shareholders: “... Retail investor demand for socially-conscious exchange-traded funds (ETFs) has skyrocketed—2020 saw a record $27.4 billion invested in US ETFs that indicate a focus on ESG-related practices.” Stakeholder capitalism, however, is not orchestrated by activists or retail investors. Rather, it is well-heeled, well-placed bureaucratic planners who are driving the demand for the ESG Index.
In 2019, BlackRock Inc.’s CEO, Larry Fink, led a US Business Roundtable, during which the CEOs from 181 major corporations redefined the common purpose of the corporation in terms of stakeholder capitalism, signalling the supposed end to shareholder-driven capitalism. The investment approach of BlackRock, the world’s largest asset manager, followed suit. In his ‘2021 Letter to CEOs’, Fink made his firm’s position on investment decisions clear, declaring that “climate risk is investment risk” and “the creation of sustainable index investments has enabled a massive acceleration of capital towards companies better prepared to address climate risk.” Fink promised a “tectonic shift” in investment behaviour, an increasing acceleration of investments going to “sustainability-focused” companies. Fink warned CEOs: “And because this will have such a dramatic impact on how capital is allocated, every management team and board will need to consider how this will impact their company’s stock.” Fink’s letter also urged every company to provide a net-zero plan.
In thus throwing down the stakeholder gauntlet, Fink echoed the menacing words of Klaus Schwab:
“Every country, from the United States to China, must participate,” wrote Schwab in June 2020. “Every industry, from oil and gas to tech, must be transformed. In short, we need a ‘Great Reset’ of capitalism.”
But unlike Schwab’s admonitions, Fink’s dictum of “go woke or go broke” should not be dismissed as the conspiratorial rantings of Dr Evil. It has the direct force of capital behind it. Fink and company carry out what Schwab and the WEF have mostly promoted with propaganda—although, as evidenced by Fink’s advocacy, that propaganda has been quite successful.
Fink’s ‘2022 Letter to CEOs: The Power of Capitalism’ continues the strong-armed advancement of stakeholder capitalism, suggesting that stakeholder capitalism has always been the modus operandi of successful capitalist corporations:
“Over the past three decades, I’ve had the opportunity to talk with countless CEOs and to learn what distinguishes truly great companies. Time and again, what they all share is that they have a clear sense of purpose; consistent values; and, crucially, they recognise the importance of engaging with and delivering for their key stakeholders. This is the foundation of stakeholder capitalism.”
According to Fink, stakeholder capitalism is not an aberration. He continues, rather defensively: “It is not a social or ideological agenda. It is not ‘woke.’ It is capitalism.” This definition of capitalism would certainly have come as news to the likes of Milton Friedman.
Fink’s letter makes clear what is at stake with stakeholder capitalism: “At the foundation of capitalism is the process of constant reinvention — how companies must continually evolve as the world around them changes or risk being replaced by new competitors [emphasis added].” The corporations that deserve capital and that will not be “replaced,” Fink makes clear, are those committed to the net-zero economy.
BlackRock is but one of hundreds of WEF corporate partners ideologically and politically aligned with Klaus Schwab, his stakeholder concept, and the ESG metric. The WEF stakeholder metrics represent ESG reporting and break down the environmental, social, and governance guidelines into a granularised guide for corporate behaviour. On January 26th, 2021, the WEF reported that a growing list of over eighty companies “announced their commitment to report on the Stakeholder Capitalism Metrics” specifically proposed by the WEF (fifty companies are already including the metric in their reporting materials). One of these companies, Bank of America, put the true number of companies agreeing to the WEF’s stakeholder model and ESG reporting at 61.
All the top-ten asset management firms are on board with the ESG. Curiously, nine of the top ten asset management companies are also WEF partners. The Vanguard Group, although not currently listed as an official WEF partner, is the world’s second-largest asset manager and promotes ESG indexing for investments, declaring on its website: “Most of our funds are indexed and follow an exclusionary strategy that omits companies that don't meet certain ESG criteria.” The WEF’s list of ESG-conscious companies is outstripped only by the United Nations Environment Program’s (UNEP) consortia of investment, banking, and insurance firms, all of which are aligned with its Principles for Responsible Investment and/or the subsidiary Principles for Responsible Banking and Principles for Sustainable Insurance. The six principles read as follows:
“Principle One: We will incorporate ESG issues into investment analysis and decision-making processes.
Principle Two: We will be active owners and incorporate ESG issues into our ownership policies and practices.
Principle Three: We will seek appropriate disclosure on ESG issues by the entities in which we invest.
Principle Four: We will promote acceptance and implementation of the Principles within the investment industry.
Principle Five: We will work together to enhance our effectiveness in implementing the Principles.
Principle Six: We will each report on our activities and progress towards implementing the Principles.”
Over 4,700 asset investment management firms, asset owners, and service providers have signed onto the UN’s six Principles for Responsible Investment. The list of signatories to the principles reads like a who’s who of financial companies and includes all the world’s largest investment firms, including BlackRock, Vanguard, UBS, State Street, and other notorious ESG-aligned asset managers.
ESG Double Standards Favour Communist China
While weakening the investment positions of non-ESG-compliant companies in the US and elsewhere, especially of oil and gas companies, some ESG-minded investors have strengthened the financial positions of companies in authoritarian countries. This has been particularly prevalent in China, where top-down governmental controls over corporate behaviour either force Chinese companies to nominally abide by ESG standards or else misrepresent their compliance. Indeed, Morgan Asset Management notes that ESG reporting from China is unreliable:
“The content of ESG reports in China is highly qualitative. Quantifiable metrics, which are vital for investment analysis, are limited. The transparency of the methodology and the consistency of disclosure are additional concerns for investors.”
Yet Wei Li, chief investment strategist at the BlackRock Investment Institute (BII), recommended that investors triple their exposure to Chinese equity and bond markets, given that “China is under-represented in global investors’ portfolios but also, in our view, in global benchmarks.” To the delight of Fink, BlackRock received Chinese approval for the first wholly-owned foreign asset management firm in the country:
“We are honoured to be in a position in which we can support more Chinese investors, access financial markets [sic] and build portfolios that can serve them throughout their lives,” he remarked.
How or whether Chinese companies meet ESG criteria is a curiosity, given that China, it would seem, fails miserably in terms of all three ESG measures. As Marion Smith of the Common Sense Society notes, investment firms like BlackRock “tout their work to save the world while investing in perhaps the worst violator of environmental, social, and corporate-governance standards” in the world.
The economic, geopolitical, and humanitarian significance of investment strategies favouring Chinese companies cannot be overstated, especially given China’s military expansionism and BlackRock’s investment in companies whose military and surveillance technologies have been linked to human rights abuses, including efforts to target its ethnic minority populations in Xinjiang. Moreover, ESG investing in China threatens market capitalism itself by abetting companies that bolster an authoritarian-totalitarian regime, whose official political ideology is Communist.
Corporatism, or Corporate Socialism
To promote stakeholder capitalism, arch stakeholder proponent Klaus Schwab erects the straw man of “neoliberalism,” which he defines as “a corpus of ideas and policies … favouring competition over solidarity, creative destruction over government intervention and economic growth over social welfare”; that is, ‘neoliberalism’ refers to what is otherwise known as the free market. In their book, Covid-19: The Great Reset, Schwab and Thierry Malleret promote, as if it ever retreated, “the return of ‘big’ government”. If “the past five centuries in Europe and America” have taught us anything, they assert, it is that “acute crises contribute to boosting the power of the state. It’s always been the case and there is no reason why it should be different with the COVID-19 pandemic.”
But in blaming the free market, Schwab and company are complaining about the wrong thing. Corporatism, and not fair and free competition, is the real source of what Schwab and his ilk decry. Corporatism—otherwise known as “economic fascism”—involves the politicisation of the economy and the coordinated production and the running of society by a consortium of dominant interest groups of the kind that the WEF establishes. If anything, like the Chinese system, stakeholder capitalism is a form of corporatism. And, contrary to Fink’s assertion, the corporatism he promotes involves the exercise of corporate power and relies on state sanctions to achieve a particular ideological and political agenda. That agenda is wokeness. Woke capitalism is thus more accurately called woke corporatism.
Unsurprisingly, stakeholder capitalism has been seen by some conservatives—and even by a few socialists—as a new approach for advancing socialism. Yet, woke stakeholder capitalism does not necessarily advance socialism as such. It tends toward what has been called corporate socialism. It amounts to “capitalism with Chinese characteristics”—an authoritarian-totalitarian state ultimately directing the for-profit production of state-sanctioned corporate entities. The term “corporate socialism” has the advantage over “economic fascism” of leaving aside the implications normally associated with the latter term, and at least where the global West is concerned, corporate socialism is more apt for describing stakeholder capitalism because stakeholder capitalism has no allegiance to the nation-state.
Anthony C. Sutton, the late historian and later defrocked Hoover Institute scholar, described corporate socialism as follows:
“Old John D. Rockefeller and his 19th-century fellow capitalists were convinced of one absolute truth: that no great monetary wealth could be accumulated under the impartial rules of a competitive laissez-faire society. The only sure road to the acquisition of massive wealth was monopoly: drive out your competitors, reduce competition, eliminate laissez-faire, and above all get state protection for your industry through compliant politicians and government regulation. This last avenue yields a legal monopoly, and a legal monopoly always leads to wealth.
This robber baron schema is also … the socialist plan. The difference between a corporate state monopoly and a socialist state monopoly is essentially only the identity of the group controlling the power structure...We call this phenomenon of corporate legal monopoly—market control acquired by using political influence—by the name of corporate socialism.”
As we see, corporate socialism has a long history, dating back to the end of the nineteenth century. I’ve written about this history in connection with the monopolistic and socialist ideals of one King Camp Gillette, the founder of the Gillette Razor Company. Gillette authored and funded the writing of several books to promote a corporation-based socialism. He argued that socialism is best established by the corporation: incorporation, mergers, and acquisitions would continue until all production is finally subsumed under one ‘World Corporation’, with all “citizens” holding equal shares. While this is not exactly the vision of contemporary corporate socialists like Fink and Schwab, they are no less presumptuous or contemptuous of the free market, and they use the rhetoric of diversity, equity, inclusion as a cover for their corporatism or corporate socialism.
The corporate-socialist tendency is toward a two-tiered economy. With monopolies and the state on top, ‘actually existing socialism’ is the reality for the majority below. ‘Actually existing socialism’ is socialism as it really is, as opposed to how Marx and his epigones claimed it would be. The ‘actually existing socialism’ of woke corporatism mirrors its Chinese counterpart under which the state and favoured private industries are in collusion and act in unison.
The phrase “capitalism with Chinese characteristics” is a play on the Chinese Communist Party's (CCP) description of its economic system. Several decades ago, as China's growing reliance on the for-profit sectors of its economy could no longer be credibly denied by the CCP, its leadership approved the slogan “socialism with Chinese characteristics” to describe its economic system. Formulated by Deng Xiaoping, the phrase became an essential component of the CCP's attempt to rationalise Chinese for-profit development under a socialist political system.
According to the party, the growing privatisation of the Chinese economy was to be a temporary phase—lasting a hundred years, if necessary(!)—on the way to a classless society of full socialism-communism. The party leaders claimed, and still maintain, that socialism with Chinese characteristics is necessary in China’s case because China was a “backward” agrarian country when socialism was introduced—too early, it was suggested. China needed a capitalist booster shot.
With the slogan, the party was able to suggest that China had been an exception to the orthodox Marxist position that socialism arrives only after the development of capitalism—although Marx himself deviated from his own formula later in life. At the same time, the slogan allowed the CCP to confirm the orthodox Marxist position. China’s socialist revolution had come before developed industrial capitalism—an exception to orthodox Marxism. Capitalism was thus introduced into China’s economic system later—a confirmation of orthodox Marxism.
Stripped of its socialist ideological pretensions, socialism with Chinese characteristics amounts to a socialist or communist state increasingly funded by ‘capitalist’ economic development. The difference between the former Soviet Union and contemporary China is that when it became obvious that a socialist economy had failed, the former gave up its socialist economic pretences, while the latter has not.
Stakeholder capitalism represents the development of the Chinese system in the West, only in reverse. Whereas the Chinese political class began with a socialist political system and introduced privately held for-profit production later, the West began with a degree of capitalism and is now implementing a socialist political system. It’s as if the Western oligarchy looked to the ‘socialism’ on display in China and said, yes, we want it. This Chinese-style system includes vastly increased state intervention in the economy on the one hand, and the kind of authoritarian measures that the Chinese government uses to control the population on the other.
Conclusion: Woke Corporatism and Global Governance
The stakeholder model spills into a governance and geopolitical model. Woke corporatism not only involves the interjection of government into business affairs; it also places corporations in decision-making positions within governments. The configuration yields a corporate-state hybrid largely unaccountable to the constituents of national governments, just as Friedman suggested it would. Terrence Corcoran of the Financial Post writes:
“The growing popularity of government-run industrial policy is one side of a bad economic coin that’s circulating through Canadian and American political circles. The other movement taking shape simultaneously in corporate circles proposes to install corporations as global arbiters and enforcers of environmental, social and governance (ESG) policies … With the first, via industrial policy, the state takes a heavy hand in running the private economy. With the other, ESG, corporations play a large role in setting and controlling policies usually assigned in a constitutional democracy to the state.”
Likewise, and contrary to “correct” opinion, it is not reactionary to oppose woke capitalism. Corporatism, in whatever form, is authoritarian and verges on totalitarianism. And, as Xi Jinping acknowledged in a recent address to the World Economic Forum, it is not “egalitarian.” It vests economic and political power in the hands of corporate and state elites, and it uses coercion and state power to concentrate the control of wealth in their hands—however much they promise to redistribute it through “social justice.” It represents a tax on shareholders, customers, and workers enacted without representation. It politicises the economy and shrinks civil society—or the space outside of the state—to next to nothing.
In addition to building parallel cultural, economic, and social structures, in the short term, woke corporatism can be challenged by divestment from ESG-abiding corporations and by opposition to the politicians and central planners who promote these corporations through legislative favouritism, the politicisation of the economy, and the eradication of civil society.