Saturday 1 May 2021

I am (financial) legend

They all stood looking up at him with their white faces. He stared back. And suddenly he thought, I’m the abnormal one now. Normalcy was a majority concept, the standard of many and not the standard of just one man. Abruptly that realization joined with what he saw on their faces—awe, fear, shrinking horror—and he knew that they were afraid of him. 

Most people know I Am Legend as the Will Smith movie from about 15 years ago. This was actually the third film version of the story I Am Legend, the previous two being The Omega Man (starring Charlton Heston) and The Last Man On Earth (starring Vincent Price). Both of the previous versions were closer to the original story, particularly the Vincent Price version. 

The title - I Am Legend - is the last line of the original story. It is the point at which the central (human) character realises that while he perceived himself as fighting to protect what was 'good' he is now seen (and is literally legendary) as an evil force in a world that has dramatically changed. The same sort of thing is going on in the similarly apocalyptic The Girl With All The Gifts, where again 'normal' humanity becomes seen as a threat to a new population. 

While these types of movies are primarily seen as being concerned with biological threat, particularly the risk of those that are like us to be turned against us/into our enemies*, what I find interesting about them is the shift in perspective. What was taken to be obviously 'good' or 'right' becomes de-centred. Which is a reminder that loads of good ideas are sitting there in sci-fi/horror movies. 

For some reason, these radical changes in perspective make me think about the way that corporations are positioning themselves on social and environmental issues and in politics more generally. When I was a much younger lefty, it was quite obvious that Multinational Corporations Are Bad. They were involved in all sorts of practices that I thought were wrong, their advertising reproduced stereotypes that underpinned racial and sexual inequality, they funded organisations that I disagreed with and involved themselves in politics in a way that I thought was inappropriate. I would have seen people who defended this behaviour as corporate shills. Much of this remains true.

However, with the growth of corporate responsibility, responsible investment and societal expectations of companies (particularly younger consumers) now we see corporations making commitments that many of us on the Left would consider to be welcome. Their advertising stresses diversity and inclusion. There is even some pressure on corporations to involve themselves more in politics, but in support of progressive aims. 

There is now a corresponding backlash from people on the Right against "woke capitalism". From this perspective, corporations are inappropriately adopting social and political positions and even involving themselves directly in politics, with no mandate to do so. There's particular fury amongst US Republicans at corporates weighing in on their gerrymandering in Georgia. But you can also see the backlash in their attitude towards Big Tech, where they accuse Google, Facebook, Twitter etc of abusing their position to limit free speech. To take another particularly weird example Marco Rubio backed the unionisation drive at Amazon on the basis that this would be one in the eye for woke capitalists.

Now a lot of this is gibberish. On the one hand, many of the corporate commitments are paper thin. It's easy to stick a Pride flag on your Facebook page or the #BLM hashtag on your tweets. Just in the last couple of days I've been getting promoted tweets from Centrica on its People and Planet Plan. Given that it has famously just fired several hundred engineers for refusing a significant reduction in pay I can only assume the 'People' bit of the 'Plan' is 'have less of them'.

Similarly a lot of the Right critique is overstated. Corporate objectives are - obviously - still more aligned with political parties that want to keep corporation taxes and labour costs low. A few right-on tweets and ads representing modern day demographics do not outweigh lobbying for more obviously commercial objectives, for example through regulatory changes. In the US it does not look like the spigots of corporate political spending are being closed any time soon, or that the Republicans won't continue to benefit from it.

And it is obviously a good thing that corporates now employ people to think about their social and environmental impact, and ways to improve it. There is no clamour, beyond the real cranks, for a return of advertising that reinforced racial and sexual stereotypes.   

BUT... I do think it's important to tread carefully, and to consider to what extent we really want corporations to play a political role, even if, currently, they may support some positions that we might agree with. 

Corporations as currently structured are not democratic institutions. The directors have considerable leeway to steer them in the direction they choose. The primary countervailing forces are customers and investors. I think a lot of the ESG commitments made by public-facing companies are driven by the demographics of their customer base. I'm sure the same is part of the story of the ESG demands made by investors.

One result is that the progressive positions that corporations adopt are limited to how far directors want to go, tempered by what customers want to see, and what BlackRock and others think is OK. While this might deliver some results, it also has the limitations of philanthro-capitalism. It will be shot through with all the biases of people who come from and work in that strata of society. It is no surprise really, then, that labour-related issues don't get much attention, or that Amazon can talk loftily about climate change while aggressively fighting unionisation.

[There's something else here that I'll come back to another day about the privatisation of political problems. If a position adopted by a company - say to employ workers as independent contractors rather than employees - is tacitly accepted by its customers and its investors (on the basis that customers still buy its products/services and investors still invest), does that mean it's OK? And if collectively we *don't* think it's OK do we really believe it's down to customers and investors to try to solve the problem, say by exiting?]

Another result is that a legitimised political role for corporations makes it hard to argue that they should only adopt certain political positions and not others, particularly if expressed as 'values'. Unless we can demonstrate that 'our' values are better than 'theirs', why is it OK to adopt one stance and not another? 

To reuse a quote from Hayek that I've blogged before: 

"To allow management to be guided in the use of funds... by what they regard as their social responsibility, would create centres of uncontrollable power never intended by those who provided the capital. It seems to me therefore clearly not desirable that generally higher education or research should be regarded as legitimate purposes of corporation expenditure, because this would not only vest powers over cultural decisions in men selected for capacities in an entirely different field, but would also establish a principle which, if generally applied, would enormously enhance the actual powers of corporations."

To go back to the beginning, if you're a not very political member of the public, but there are certain things you believe in - say Brexit for example - and you see corporations weighing in against your position, how do you view it? Would it be any different to how I saw corporations back in the 80s and 90s? And how would you perceive those who defend the political role adopted by corporations?

Personally I do not feel comfortable calling on corporations to weigh in on political issues on its own terms. I can also see how easy it is for the populist Right to turn this into an advantage - 'look at these powerful corporations trying to block things you believe in'. I think that resonates. At some point over the past year I saw some statement from Ben & Jerry's on Twitter about something that Trump had done. Some angry bloke responded to the tweet along the lines, simply: "What the f*** has this got to do with ice cream?" To be honest, even though I obviously agreed with the anti-Trump position, I had sympathy with the response. 

Yet by going along with the 'Get Corporation X to endorse political objective Y' we end up looking like we're on the side of the corporations exerting political power with no mandate to do so. Urgh. 

I chuck all this out there because I feel uneasy about the direction of travel, but I am not sure why or where we go, and I am interested in whether others feel the same. 

* I feel a bit like this about the way some people on the Left seem to view ideas from different viewpoints - they're dangerous, and thus we must limit people's exposure to them, in case they 'turn'.