Deep in the Brazilian section of the Amazon rainforest lie the ruins of a lost settlement: Fordlandia. Ostensibly set up as a rubber production plant in the late 1920s, Henry Ford, founder of the Ford Motor Company, intended for the site to become a symbol of his mission civilisatrice, a utopia that embodied the social ideals of his enterprise. The spirit, life, and organization of the settlement were supposed to reflect higher, moral aspirations. A water tower was erected in 1930 to highlight progress and modernity; managers were instructed to keep the site alcohol-free. Social progress, not business, was the settlement’s larger goal. Ford would proudly proclaim: “We are not going to South America to make money, but to help develop that wonderful and fertile land.”
Few today look back at Henry Ford as a man to emulate. Fordlandia was a failure—the site was abandoned by the 1940s and the project discontinued by Henry Ford’s grandson and successor, Henry Ford II—demonstrating the incompatibility of good business and good governance. And although he revolutionized the automobile industry and was famous for his comparatively generous wages, many of the man’s social ideals were revolting at best. His anti-Semitism is on full display in The International Jew, a series of pamphlets touting a Jewish conspiracy infecting America that inspired the likes of Adolf Hitler.
Fordlandia may be lost to time, and Ford’s social thought considered a mere unfortunate episode in the history of ideas, but the paragon of the “corporate statesman” lives on today. More and more corporations are assuming a political and social mandate, shifting the primary goal of business from producing long-term profit for its shareholders—a doctrine popularized by Nobel-winning economist Milton Friedman—toward an inclusive form of capitalism encompassing the values of “stakeholders,” defined as the interests of society, workers, and community. Far from being exiled to the pages of history, the corporate statesman makes an emphatic return in 21st century America. Though businesses pledging to respect workers and consumers is undoubtedly good, corporations pursuing social ends risks meddling businesses and politics to a worrying extent.
That the corporate statesman should make a return today may come as a surprise. After all, the paternalistic capitalism evoked by the “stakeholder” approach seems long gone, a product of the 1940s and 1950s. The rise in deregulation, the dominance of finance, and the vigor of neoliberalism in both left and right wing circles in the 1980s and 1990s seemed to signal the triumph of Friedman’s shareholder primacy theory. In many ways, however, the old theory never disappeared. In tech, for example, superstars such as Google and Apple started massive campus headquarters coupled with food and housing, recalling the company towns of industrial behemoths like DuPont and Ford. Healthcare and other social benefits remain tied to employment ever since the 1940s. Few entrepreneurs, even in the time of so-called shareholder primacy, declared that the sole purpose of business was to make profit no matter the cost. But leaders of major corporations after the 1980s never sought a political mantle. CEOs such as Steve Jobs may have claimed to transform the world, but the ideal of the businessperson as a guardian of society’s interests was relegated to a bygone era, the days of Henry Ford. That is, until now.
Today’s corporate statesman extends their influence beyond mere employment toward political activism. The Business Roundtable, an association of prominent CEOs, issued a statement in 2019 on the purpose of the corporation, which argued that corporations have a duty to support workers and their communities in addition to shareholders. Major companies from Amazon to JPMorgan Chase made public remarks on police brutality following the murder of George Floyd, an African American man, at the hands of a white police officer last May. Social media platforms such as Twitter, YouTube, and Facebook are starting to police political speech deemed offensive or harmful. On the topic of a worrying new set of laws making it harder to vote passed by Georgia’s Republican state assembly, Coca Cola and Delta Air Lines released statements criticizing the legislation.
Speaking in favor of voting rights and condemning police violence are laudable acts; it is also true that corporations must pay attention to the needs of their workers and the community that surrounds them to do good business. Nevertheless, there is a difference between supporting these measures individually and taking on the collective role of interpretating and enforcing society’s perceived needs. A good example of the former was Coca-Cola’s organization of a dinner for Martin Luther King after his Nobel peace-prize victory in 1964. Following the ceremony in Oslo, Norway, the civil rights leader returned to his hometown of Atlanta for a celebratory dinner organized by a group of progressive intellectuals and sponsored by the town’s mayor. The city’s white aristocracy, however, spurned the offer to show up. It was only Coca-Cola’s subtle messaging—the company issued a statement calling it an “embarrassment for Coca-Cola to be located in a city that refuses to honor its Nobel prize winner”—that the event was saved and attendance skyrocketed.
Some companies today echo Coca-Cola’s approach. JP Morgan Chase, a bank, said it will contribute 30 billion dollars’ worth of loans toward Black and Latino communities to fix “banking’s systemic racism.” Such measures can help mitigate racial inequality and are a reflection of an open society where business considers it has a role to play in advancing social progress. However, corporate statesmanship—where businesses claim to speak for and direct their resources toward the “social good”—can backfire in three important ways. First, it risks looking like corporate grandstanding that trivializes real issues. Second, it shields corporations from scrutiny that should exist in a competitive market system. And finally, it intertwines business and government to a worrying extent, entrenching power.
Start with grandstanding. While JP Morgan Chase, Amazon, Delta, and a host of other companies claim to support, say, racial progress, their actions in reality often fail to live up to lofty ideals. Just as Amazon provided 10 million dollars to organizations supporting “justice and equity,” such as the NAACP, they now face a lawsuit for “systemic racism” in corporate offices. Google, another tech giant, faces disapproval following the resignation of a Black researcher, who was allegedly driven out due to criticism of the company’s AI hiring algorithm, which she claimed was biased against minorities. And even as Delta’s PR team issued eloquent statements on Georgia’s voter suppression bill, pointing out the harm done to Black communities especially, the corporation remains a member of an oligopolist industry that benefits from government subsidies yet restricts choices for consumers all while imposing high prices. A corporate stance on racial justice that is restricted to so-called “diversity training” for staff and thundering rhetoric that falls short of reality risks creating apathy about fundamental issues such as racism, sexism, and inequality. If racism is just another theme in a corporate ad campaign—think of the dreadful Kendall Jenner Pepsi advertisement that ran in 2017—does it not lose its gravity?
Another worrying side to the corporate statesman is the blurry language used to sell social activism—language that can be used to derail scrutiny. Take the term “stakeholder capitalism.” What does it mean that a business will help fulfill the needs of all its “stakeholders”? Does it mean they will provide job security for workers? Maybe—but Delta, a fervent champion of corporate statesmanship, fired close to 20% of its workforce during the pandemic. Does endorsing stakeholders mean companies will prioritize the needs of consumers over their own? Perhaps, but that seems hard to square with the recent lobbying blitz of the tech sector after Congress introduced new antitrust legislation—after all, if companies elevate the public good over their own, why do they still spend tens of millions of dollars more on lobbying than on social causes? Claims of supporting stakeholders over profits are more PR than substance—efforts to placate growing corporate criticism by emphasizing social activism.
Finally, corporate statesmanship dangerously consolidates power in the hands of the few by allowing corporations to define social progress and inviting them into the political sphere. Concentration of power—especially political power—is almost never desirable. This thinking underpins key elements of liberal democracy today, from constitutionalism to independent judiciaries. So why would we want a handful of CEOS to set the terms for social debate, and—even more worryingly—act as executives of the public will in social affairs? Corporations aiming to fight racial justice and advance voting rights will hardly perturb liberals. But letting corporations frame the social debate provides the legitimacy to take actions inimical to champions of freedom in the name of social progress. As an example, look at Facebook and Twitter, which grant themselves the freedom to police speech they deem socially “offensive” on their platforms, often with little due process or clear rules, posing a threat to free speech in what has become the new public sphere.
Giving entry to businesses in political and social debates might also lead to an uncomfortable alliance between business and politics, where legislation protects business against free market competition as long as it supports government policy. Before the 1979 Airline Deregulation Act, carriers were given virtual monopolies over certain routes as long as they stood as national champions; today, large chipmakers could secure legal support if they refuse to sell to American rivals. Mixing business and social issues could lead to a relationship that proves symbiotic for corporations and the state at the expense of competition and consumers.
Businesses often make our lives easier—sponsoring innovation, developing useful products, and pushing forward the boundaries of the possible. But setting the terms of social debate should be left to individuals and the door between politics and businesses must be firm, not revolving. After all, Fordlandia lies in ruins while today’s liberal democracies continue to demonstrate the advantages of keeping business out of politics.