CEOs’ Promise to Create a More Inclusive Economy Met with Skepticism
On Monday, many of the world’s CEOs got together to make an announcement that was immediately met with skepticism from critics: they pledged to support “an economy that serves all Americans.” The public statement was signed by 181 CEOs, including Amazon’s Jeff Bezos, Robert Dudley of BP, and James Hackett of Ford. The statement was made in recognition of the observation that “too often hard work is not rewarded, and not enough is being done for workers to adjust to the rapid pace of change in the economy,” and was founded on the belief that CEOs have a significant moral role to play in ensuring the economy works for more Americans. In doing so, the CEOs promised to move away from prioritizing the interests of shareholders towards favoring all stakeholders, including customers and employees.
The argument for moving in this direction is not only based in morality, but in business strategy as well: the long-term success of any business, Business Roundtable now claims, depends upon a consumer base that is financially empowered to spend freely and employees that are healthy and happy enough to provide real value to their employers. The implicit message of the Business Roundtable statement is a prioritization of long-term goals over short-term ones and a broader appreciation of the large-scale consequences of business conduct.
While it’s hard to find fault in the spirit of this message, the overall reaction to the statement online has been one of skepticism and derision. Bloomberg, for instance, responded with the headline Stakeholder Capitalism Will Fail if it’s Just Talk, and while they commend Business Roundtable’s decision to reverse its view of corporations as existing solely to benefit shareholders, they point out that as the organization has a long history of advocating for shareholders against the interests of others, it seems unlikely that this new change in direction will bear fruit. Historically, Bloomberg observes, Business Roundtable has fought labor unions, opposed increases in the minimum wage, and prevented the formation of a Consumer Protection Agency, among other anti-consumer stances.
It’s worth noting that the Business Roundtable announcement doesn’t set any strict goals or requirements for its signatories – rather, it is vague enough to allow participating CEOs to reap the PR benefits of claiming to help their communities without actually doing so.
Given the past and ongoing behavior of many of the statement’s signatories, it’s difficult to imagine CEOs fundamentally changing their policy to line up with the pledge. Famously, Amazon and Apple, among other large businesses, are able to virtually completely avoid paying any money at all in taxes by taking advantage of loopholes in increasingly lax legislation, which they help to create by funneling money towards law-makers. And Coca-Cola and Pepsi, two of the largest and most successful beverage manufacturers in the world, owe their success to harming their customers’ health with addictive and sugary drinks. It’s worth noting that the Business Roundtable announcement doesn’t set any strict goals or requirements for its signatories – rather, it is vague enough to allow participating CEOs to reap the PR benefits of claiming to help their communities without actually doing so. Real progress would involve CEOs holding themselves legally accountable to their commitments, as proposed by B Corp.
An empty promise, of course, would be nothing new for the businesses in question. Major oil companies such as BP, for instance, are trying to rebrand themselves as tackling the climate crisis while continuing to profit off of carbon emissions, while Purdue Pharma claimed for decades that OxyContin was safe and non-addictive, which they knew to be false. As always, there’s a lot of money to be made in making consumers sicker, less happy, and addicted to products that are bad for them, and the Business Roundtable statement doesn’t change this economic fact.
Historical and political context provides an explanation for Business Roundtable’s major shift in its perhaps nominal guiding philosophy. The statement serves both as a recognition of the ever-increasing power large corporations hold over everyday Americans and a strategy for dealing with the fundamental economic and political changes the country faces. Jacobin Magazine observes that Business Roundtable’s statement reveals a sense of worry among business elites for the health of capitalism as a basis for American life. Over the past 40 years, as has been widely observed, income inequality has exploded – the compensation of CEOs has risen by 940%, whereas the compensation of workers has risen only 12%. And the accelerating threat of climate change, caused primarily by the reckless exploitation of natural resources by major corporations, concerns not only global citizens, but business leaders who recognize the economic challenges of environmental collapse.
The pressure that big corporations face from an increasingly disaffected and iconoclastic consumer base is real.
The pessimistic view is that the Business Roundtable report is yet another example of the culture of contradiction and lies inherent to the new American life. In our current society, Americans are subjected to a constant barrage of blatant lies from our government, inconsistent and contradictory messaging from news outlets, and false promises of the benefits of consumerism from advertisements. Propaganda expert Kenneth Osgood notes that the most effective propaganda focuses on messaging the opposite of the truth that threatens the ruling class – in this case, corporations, fearful of the consequences of a populist political uprising, send the message that their intentions are in fact aligned with those of the people.
But the pressure that big corporations face from an increasingly disaffected and iconoclastic consumer base is real. The CEOs in question are likely sincere in their understanding that the health of the country impacts their long-term success, but it remains to be seen whether they will act upon this belief. As such, the onus remains on all of us, as consumers, to think critically about the messaging we consume and make smart decisions about how to maintain the welfare of ourselves and our communities.
Tyler Olhorst is a Contributing Editor at The National Digest based in New York. You can reach him at email@example.com.