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Stakeholder Management As A Threat

For my second and final post on Vivek Ramaswamy’s Woke Inc. I want to discuss his view of stakeholder management. Especially, the idea of stakeholder management as a threat (specifically to democracy).

Stakeholder Management And Woke

As I mentioned in a prior post part of the challenge with definitions is that people aren’t clear what they mean. Within the term Woke Ramaswamy seems to include both hypocrisy and also genuine beliefs just in different things to those he believes in.

At points Ramaswamy suggests that stakeholder capitalism is all a scam.

… it would also reveal the true essence of stakeholder capitalism for the self-interested farce that it is…

Ramaswamy, 2021, page 78

…woke shareholders like Blackrock or other ESG investors….

Ramaswamy, 2021, page 78

Does he believe all ESG investors, including charities and religious groups, are part of a con job? If so, are they willing participants in the con he alleges on the American public?

Furthermore, Woke seems to include both 1) actions driven by profit maximization. i.e., simply following customer demand, and 2) deliberate societal changing attempts to lead the public, profits be damned.

Stakeholder Management As A Threat To Democracy

Woke definitely seems to include stakeholder management. Ramaswamy sees stakeholder management as a threat to US democracy. His argument seems to boil down to when firms say they are for stakeholders then the public is so gullible it just believes everything that is said by the firms.

[Corporate Social Irresponsibility — CSI, one of his terms for stakeholder management] …causes Americans and our government to vest too much trust in these corporations, only to later be scammed by them for an extra buck at a later date, in one form or another.

Ramaswamy, 2021, page 78

According to a recent PwC survey only 30% of consumers trust business, see here. (Partly for reasons such as the VW Dieselgate Fraud, see here — which, of course, was driven by Wokeness according to Ramaswamy. To me it looked like just old-fashioned greed). Survey evidence about negative views of business seems to suggest that we have some way to go before firms can automatically fleece us all because we all trust business too much.

Furthermore, would fleecing us be a bad thing in Ramaraswamy’s eyes? He believes that firms are only there to make money and not worry about any bigger social issues. If Woke is ultimately a money-making endeavor to benefit shareholders then why does he not like it?

He also plays fast and loose with the idea of stakeholder status. Apparently, US firms accept influence from China because China is a ‘stakeholder’. To him, Chinese influence on business seems to have little to do with firms wanting to make money from the Chinese market. Why the simple argument for firms bowing to Chinese influence, firms want to make money, is less compelling to Ramaswamy than a complex path involving firms doing some sort of stakeholder analysis is beyond me.

Interestingly Ramaswamy loves the idea of diverse objectives for non-profit organizations but for-profits all must do the same thing. Still, if consumers demand a firm does something Woke and the firm is there to make money it isn’t clear to me, using Ramaswamy’s logic, why the firm should not do it.

Is Influencing Democracy Okay If A Firm Makes Money From It?

Ramaswamy doesn’t like firms influencing democracy. He says his liberal friends want to cut money from business flowing into politics but he doesn’t seem interested in this. His idea is much more convoluted.

Apparently, Milton Friedman’s well-known argument that firms should focus on profits shouldn’t be thought of as about firms just making money as protecting democracy. To Ramaswamy, Friedman (see here) didn’t really know what he was advocating for when he suggested making money was a duty to shareholders. Instead, focusing firms solely on profit is about stopping firms from influencing politics.

To stop firms’ political influence Ramaswamy isn’t for the simple (and boringly obvious) solution of banning corporate donations. That would be too predictable. Instead, he wants to generate a business culture where money is all that matters.

Indeed, Ramaswamy’s argument seems even more extreme than Milton Frieman’s. Friedman allowed for the pursuit of profits to be limited by norms and ethics. Presumably, Ramaswamy would see following a manager’s ethics to be morally wrong because it might cost the shareholders money. Ramaswamy’s ethics, not the manager’s, are what matters in his theory.

What if firms want to subvert democracy in order to make money from it? That seems preferable to him than firms influencing democracy pro-socially to reduce pollution or raise workers’ wages. Why any group of voters would agree to his form of capitalism is beyond me. The voters would be likely to be poisoned by the first food company that can make a buck out of it.

Different Types Of Argument

Usually, arguments build to a conclusion. Good arguments muster powerful evidence which, when added together, form a point. Bad arguments take invalid points and stitch them together. Ramaswamy doesn’t really even bother to stitch stuff together. There is a valid point. There is an incoherent point next. Then something that might be reasonable. Next something that he clearly threw in to distance himself from Donald Trump. Then another thing he threw in to make sure he wasn’t too distant from Donald Trump. It doesn’t build to anything. It just exists. And then at the end, he screams ‘WOKE!’ as though that is an irrefutable point.

Stakeholder Management As A Threat: The Argument Needs More Linkages

Boycotts As Vicious Attacks on Business Owners

Ramaswamy likes markets. That said, he doesn’t seem to think consumers should make their own decisions as to who they buy from. To him boycotts are censorship. Those that engage in them have no sense of decency. They are like a million little Joe McCarthys. This is because they use the threat of “starvation and homelessness to silence a fellow citizen” (Ramaswamy, 2021, page 291).

I think this means that a business owner has a right to expect consumers to buy their goods, but workers have no right to a decent wage. Imagine you are a business owner and you starve because you cannot find anyone to buy from you. This starving business owner is suffering a boycott from all their customers, i.e., not just the Woke ones but all your customers. My question to this business owner: Is it possible you maybe should change the way that you do business as no one likes you?

Read: Vivek Ramaswamy (2021) Woke, Inc.: Inside Corporate America’s Social Justice Scam, Center Street

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