The sudden burst of ‘wokeness’ by corporate mucky-mucks is timely but still mostly symbolic at this point.

Photo by Jerry Bowles

The news that 181 of the most powerful Americans CEOs in the influential Business Roundtable (BRT) have acknowledged that corporations have obligations that go beyond simply making money for stockholders is the latest sign that free-market capitalism of the winner-take-all kind practiced in America is losing some of its allure.

In a statement issued Monday, the BRT — which has long hewed to the Milton Friedman notion that maximization of profits is the only driving force that matters when a company is making a decision — issued a new statement that changed “the Purpose of a Corporation” from simply providing value to shareholders to benefiting many stakeholders including customers, employees, suppliers, and communities.

Founded in 1972, the BRT is an association of roughly 200 CEOs (including current stars like Jeff Bezos, Tim Cook, and Jamie Dimon), that lobbies for public policy that favors corporations — such as limiting consumer protections, cutting corporate taxes, keeping a lid on labor costs, and opening US markets to foreign investment.

But, the times they are, indeed, changing’. Now, the BRT sounds like its members were locked in an overheated sauna for 18 hours with Elizabeth Warren explaining her theory of enlightened commerce and came out spouting the sayings of Chairman Mao.

The reasons for the decline in faith are obvious and real. Even Tom Wilson, CEO of the Allstate Corporation and chairman of the executive committee of the United States Chamber of Commerce, which has three million members, says the time has come for companies to embrace an agenda of creating more high-paying jobs for workers, In an op-ed called Save Capitalism by Paying People More, in the New York Times, he writes:

Sure, the unemployment rate is near a record low, but that figure masks the fact that many families are not financially secure. A 2017 survey by the Federal Reserve Board showed that 40 percent of Americans do not have $400 for an emergency. We all have relatives, friends and acquaintances who are struggling to keep up. Being broke while working is not an American value. Poor financial health creates stress, reduces hope and undermines capitalism. It is a cancer waiting to metastasize.

The capitalism discontent movement has been coming for a while. A 2018 Gallup Survey revealed that Democrats have a more positive image of socialism than they do of capitalism, with 57% having a positive view. Their attitude toward capitalism dropped to 47% positive — lower than in any of the three previous measures.

There are many reasons. Thomas Piketty’s searing indictment of global wealth inequality in Capital in the Twenty-First Century published 2013 started a discussion that is still resonating today. Stagnant wages for unskilled and lightly skilled workers is a lingering problem. The collapse of trust in big tech companies like Facebook and Google has left millions feeling like pawns in a giant ponzi scheme. The huge tax break given to corporations under the illusion that it would lead to wage increases for workers rather than stock buybacks was a betrayal in real-time and in plain sight. The disappearance of strong labor unions has eroded salaries and benefits at the lower end of the economic spectrum. The unrelenting march of automation eliminates far more jobs than immigrants could ever destroy.

Young people, who actually know the difference between “socialist” and “social democrat,” are less willing to work for or buy products from companies that don’t have well-defined corporate responsibility practices.

On top of all that, social media has made it easy for consumers to punish businesses they feel not doing the right things.

Will the change in emphasis help? Probably not right away. We’ll have to see whether next year’s spending plans reflect a wider, more balanced set of priorities and what happens when some of these needs conflict with each other. On the whole, the move is a great first step, even if it’s largely symbolic at this point.

Thoughtful businessmen and economists have urged corporations for years to rethink their responsibility to their workers and society at large. Most have resisted pleas to tackle issues like income equality, climate change, and affordable housing by claiming those things are “not in our lane.’ The BRT statement blows that argument away. That is a good thing.

Follow my personal blog Postcards From a Life.