Editor’s note: The following is an edited version of the Capital Letter published on June 20, 2021.

The, well, woke nature of “woke capitalism” — a phenomenon intertwined with “socially responsible” investment (SRI), with stakeholder capitalism at its base — has obscured that the way in which this combination works owes far more to fascism than to socialism. Nearly 90 years ago, the progressive writer Roger Shaw described the New Deal as “employing Fascist means to gain liberal ends.” Overwrought, perhaps, but not without some truth. He would recognize what is going on now for what it is.

Underpinning the notion of “stakeholder capitalism,” a concept that has taken the C-suites of some of America’s largest companies by storm, is the idea that a company should be run for the benefit of all its “stakeholders,” a conveniently hazy term that can be defined to include (among others) workers, customers, and “the community,” as well as the shareholders who, you know, own the business. It’s a form of expropriation based on the myth that a corporation that puts its shareholders first must necessarily put everyone else last. In reality, an enterprise that, to a greater or lesser extent, fails to consider the needs of various — to use that word — stakeholders in mind, customers, most obviously (but certainly not only) is unlikely to flourish, and nor, therefore, will its owners.

Stakeholder capitalism is not only a threat to private property, but also, by not much of a stretch of the imagination, to individual freedom. To understand why, take a step back.

As I wrote last July:

The wider vision underlying stakeholder capitalism is one in which different interest groups such as employers, employees, and consumers collaborate in pursuit of mutually (if sometimes mysteriously) agreed objectives under the supervision of the state. It would never be quite post-democratic, not quite, in any likely American form, but what it would be is a variety of corporatism.
Corporatism takes many, many forms. It can range from the relatively (relatively) benign — it runs through European Christian Democracy, and it can be detected in early-20th-century American Progressivism — to the infinitely more heavy-handed. It has been an important element in the theory, if not the practice, of some variants of fascism, most notably in Mussolini’s Italy, but not only there.

As choices go, that’s quite a range, but in The Rise of Corporate-State Tyranny, a fascinating, lengthy (and must-read) article for the Claremont Institute, Joel Kotkin argues that much of this country’s elite has, in essence, embarked down a route that will take us closer to pre-war Benito than to post-war Bonn. He writes of “a new alliance between large corporate powers, Wall Street, and the progressive clerisy in government and media”:

Its agenda consists of several goals. On the corporate front we have the emergence of “stakeholder” capitalism, which embraces the state’s priorities implicitly and those of the progressives generally, as a way to please regulators, the woke among their employers, and, to some extent, their own consciences. In this they resemble companies in authoritarian states—like Mussolini’s Italy, Hitler’s Germany, and today’s China—where private capital accumulation is permitted but dissent from the agreed norms of the media-government-academy, once the privilege of individuals and corporations, is now largely verboten.

Kotkin relates how:

Fascist corporatism, by rejecting the autonomy of private interests, parallels today’s fashionable theories like “stakeholder capitalism” and the environmental “Great Reset.” As in the fascist state, corporations [perhaps it’s worth adding that the word corporatism does not refer to business corporations, but is derived from the notion of society as a single ‘body’—corpus in Latin] now take it on themselves to be conscious change agents for particular political and moral agendas. Two doctrines guide these actions. First, “stakeholder capitalism,” which holds that corporations must push onto society doctrines concerning gender, “systemic racism,” and other elements of the woke agenda. Second, the “Great Reset,” which seeks to have companies essentially “save” the planet by slowing material growth for the working and middle classes while maintaining rich profit opportunities through “disruption” of energy and other industries. Both doctrines currently guide the majority of America’s major corporations.

The “Great Reset” is being promoted by the World Economic Forum (“Davos” to you and me). Kotkin:

Seizing on the opportunity presented by the COVID-19 pandemic, the “Great Reset,” introduced by the World Economic Forum’s Klaus Schwab, proposes that large corporations reject their traditional goals and market capitalism in favor of serving racial and gender “equity” or saving the planet. The “Great Reset” advocates the reevaluation of the principles of democracy, particularly if they are perceived as not meeting the values embraced in the “reset.” Eric Heymann, a senior executive at Deutsche Bank, suggests that to reach the climate goals of Davos, corporations will have to embrace “a certain degree of eco-dictatorship. Corporations must explicitly embrace top-down authoritarianism.

Ah yes, climate. Much of the activity of the emerging corporatist state both revolves around and is empowered by an apocalyptic vision of climate change. Limiting greenhouse-gas emissions can be used as an excuse to restrict how we travel, where we travel, how we heat our houses, what we eat, and so on — the list is endless.

If climate change (full disclosure: I am a “lukewarmer” myself) can be portrayed as endangering our future, then it can be used to justify, in Heymann’s formulation, “a certain degree of eco-dictatorship” in “the form of regulatory law” — an elucidation which obfuscates more than it clarifies. And the worse the potential harm attributed, accurately or otherwise, to a changing climate, the more drastic the measures that must be taken to deal with it, measures that would leave little of our current behavior untouched. Heymann:

We take key consumption decisions, for example whether we travel at all, how much we travel and which means of transport we use, whether we live in a large house or a small apartment and how we heat our homes, how many electronic devices we have and how intensely we use them or how much meat and exotic fruit we eat. These decisions tend to be made on the basis of our income, not on climate considerations.
If we really want to achieve climate neutrality, we need to change our behaviour in all these areas of life.

It is no coincidence that more and more of the denizens of the burgeoning climate ecosystem now refer to a climate “crisis” or “emergency.” Nor is it a coincidence that the climate warriors’ preferred solutions involve coercion rather than pragmatic adaptation, practical technological transformation, and uninterrupted wealth creation — three approaches that between them ought to generate the best prospects (and the necessary resources) for dealing with whatever the climate may throw at us. Coercion, by contrast — banning this and rationing that — is a device to transfer power and the perquisites that flow from it to a relatively small elite, and, in less generous portions, to a nomenklatura below it. That such enforced asceticism, which would be mainly confined to the West, would have little or no effect on the climate is irrelevant. Indeed, that may be a feature, not a bug: A permanent “emergency” would come in very handy for those looking to control society (for its own good, of course).

In a perceptive and wide-ranging review (another must-read) for Canada’s National Post, Peter Foster treats Mark Carney’s Value(s): Building a Better World for All as a manifesto for austerity imposed by a technocracy and justified, naturally, by the battle against climate change:

Carney’s Brave New World will be one of severely constrained choice, less flying, less meat, more inconvenience and more poverty: “Assets will be stranded, used gasoline powered cars will be unsaleable, inefficient properties will be unrentable,” he promises.

If you were wondering why Carney’s opinions should matter, well, he is a former governor both of the Bank of England and the Bank of Canada, as well as a U.N. special envoy on climate action and finance. He is also an adviser to British prime minister Boris Johnson, the host of COP-26, the next major climate conference, and, informally, to Canadian prime minister Justin Trudeau.

Oh yes, Carney is also vice chairman of Brookfield Asset Management, an investment group with over $600 billion under management, where he is head of ESG and impact fund investing. “In this role,” maintains Brookfield, Carney “is focused on the development of products for investors that will combine positive social and environmental outcomes with strong risk-adjusted returns.”

Carney believes in a “partnership” with the private sector (or, in practice, those who run it — far from the same thing) to advance an agenda with aims that may sound somewhat familiar. Foster:

The agenda’s objectives are in fact already being enforced, not primarily by legislation but by the application of non-governmental — that is, non-democratic — pressure on the corporate sector via the ever-expanding dictates of ESG (environmental, social and corporate governance) and by “sustainable finance,” which is designed to starve non-compliant companies of funds, thus rendering them, as Carney puts it, “climate roadkill.” What ESG [an increasingly dominant variant of SRI] actually represents is corporate ideological compulsion. It is a key instrument of “stakeholder capitalism.”

That again.

All this is part of a process that won’t replace democracy, but will bypass it, whether by corporate fiat, or by regulators, private and public — from accountancy’s standard-setters to the SEC to central banks — taking their mandates to places where they should never go to pursue objectives principally designed by and for an unsavory coterie of unelected corporate managements, unelected activists, unelected investment groups, unelected foundations, unelected judges, unelected media, unelected bureaucrats, unelected academics, and elements within the state. Voters, however, haven’t been given too much of a say. Kotkin observes that “a recent poll questioning respondents’ policy preferences for the first one hundred days of the Biden administration showed that only 13 percent prioritized about climate change, that only 11 percent desired social justice reform. . . .”

That hasn’t mattered greatly so far, but in time, much of the electorate will realize that their interests are not only being ignored or reviled by the emerging corporatist state but are also being materially damaged by it. For what’s coming is a major assault on living standards in the name of heading off an apocalypse which, in the way that it is being depicted, bears a disconcerting resemblance to the myriad other supposedly imminent apocalypses that have terrified (and excited) humanity over the centuries.

History teaches that it is foolish to underestimate the lure of the irrational, not least to elites who may benefit from the opportunities that it offers them. But, sooner or later, some of those footing the bill may start to object. Kotkin notes:

The attempts to curb companies in the fossil fuel, real estate, aviation, and automobile sectors for climate reasons may not appeal much to oil riggers, factory employees, or construction workers who drive old trucks. These workers also will find out that most Green jobs turn out to be mainly ephemeral, essentially positions that are already present and, where they actually exist, pay far lower salaries, are usually shorter-term, and are far less likely to be unionized, particularly as compared to the roughly 750,000 high-paying jobs in the fossil fuel sector . . .
Other parts of the elite agenda—for example, the notion of forcibly densifying suburbs and restricting single-family zoning—are also not likely to play well with the general public. Homeownership, the primary way middle- and working-class people achieve wealth, is often decried by progressives, while many on Wall Street look forward to a fully “rentership” society. Oligarchs, living in unimaginable splendor, may want the plebs to live in rented, small apartments in their “degrowth” universe, but this is not likely to be a popular stance.

The corporatist state will push back hard against opposition. Kotkin notes how Big Tech and the media can be used to distort the debate. Moreover:

The need to redirect people’s minds from above has been gaining adherents among the political cognoscenti. Jerry Brown, the former governor of California, openly favors applying “the coercive power of the state” to achieve environmental goals while promoting the “brainwashing” of the uncomprehending masses . . .

That said, there are occasional signs that even the Biden administration — despite the climate fundamentalists working within it — is aware of the domestic political problems that its policies may bring in their wake. Perhaps that will force a reconsideration before it is too late. Perhaps.

I would not agree with everything Kotkin asserts in his article, even if sometimes this is no more than a matter of emphasis. Thus, I’m much more troubled by the transformation in the use of corporate power (a concern Kotkin evidently shares) than by the simple fact of economic concentration. The latter preoccupies Kotkin, but may be both less of a problem and more fluid than he believes. Then again, it’s difficult not to be worried by the influence now wielded by giant investment groups which no longer appear to care that, except in the case of SRI products, their sole job is to concentrate on the return to their clients. Should BlackRock’s managers, to single out one obvious group, be using other people’s money to steer society on a course that those managers think it should take? Spoiler: No.

Kotkin’s comparison between the evolution of a corporatist China and an emerging corporatist America is, to say the least, provocative, if taken a bit too far (“We have not yet reached Huxley’s Brave New World or even China’s high-tech police state, though we are headed in that direction”). It ought to, but probably won’t, make some of the more well-intentioned supporters of stakeholder capitalism (there are a few) think again, not only to protect our democracy, but also, if they can extract themselves from the rehashed millenarianism into which so much of the climate movement has sunk, our prosperity. To revert, briefly, to Franklin Roosevelt, Kotkin observes that “FDR’s New Deal was about expanding ownership and productivity while the current version is more about constricting the population and depressing their standard of living.”

However repulsive the regime in Beijing may be, China’s elites have no interest in holding back, or even reversing, economic growth. The same cannot be said about their counterparts in America.

There are passages in Kotkin’s piece that are more tangentially related to stakeholder or woke capitalism than others. They are well worth discussing another time, but to conclude for now, events are taking a turn that Kotkin has already noticed:

Ultimately, the woke oligarchs may find that they have virtue signaled their way to a confiscatory form of socialism. Among grassroots Democrats in the plutocrat-funded Democratic Party there is now more support for socialism than capitalism.

The pace of that turn may be accelerating.

Kotkin’s article was published in late May, and includes this comment:

The Biden-led Democratic Party promises a fresh springtime for oligarchs. The prominence of corporate lobbyists in the new administration all but assures that Biden, like Barack Obama, will wink and nod as Microsoft, Amazon, Apple, Facebook, and Google acquire or crush competitors . . .

A more aggressive approach to antitrust is, by no means, the same as socialism, even if, to me, it can under certain circumstances, come far too close to central planning for comfort. Nevertheless, the recent appointment of Lina Khan as chairwoman of the FTC is as an interesting straw in the wind.

Writing for the Financial Times, James Politi and Dave Lee put it this way:

Biden’s decision to appoint Khan to chair the FTC . . . sends a signal of his administration’s intent to take a more aggressive stance towards Big Tech.
“This is the equivalent of an activist outsider suddenly becoming chairman of the board. And none of them saw it coming. None of them,” Kovacic added. “Their life just got much more difficult, and much more precarious.”

China is already reining in Big Tech (check out the travails of Jack Ma). And that should be no surprise. In a corporatist regime, the state has the last word.