Why American capitalism went woke

For those accustomed to thinking of big business and banking as conservative, these are disorienting times. In the last generation, major American corporations and financial institutions have thrown the weight of their prestige, along with bags of money, in favor of causes of the left, from race-based affirmative action, now known as “diversity, equity, and inclusion” (DEI), to the ideology of gender fluidity and the rapid replacement of fossil fuels by wind, solar, and other renewable energy sources. In one area after another, the corporate suite and the left-wing university campus in America are now allies.

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This is an alliance of conviction, not just of convenience. In previous decades, companies paid lip service to various causes in the interest of good public relations. But when it comes to the fashionable causes of today’s center-left, there is no reason to doubt that America’s private sector leaders for the most part are sincere. Why wouldn’t they be? Woke ideology is the consensus of the new American ruling class: the managerial elite.

The term “managerial elite” was popularized by James Burnham in his 1941 book The Managerial Revolution. Burnham and other mid-20th century thinkers including Adolf Berle and Gardiner Means, Bruno Rizzi, and John Kenneth Galbraith argued that the bourgeois phase of capitalism, dominated by owner-operators, was giving way to a new system of national and multinational corporate capitalism in which corporate managers, not countless anonymous investors, were the real economic elite. In this view, the professional managers of large public corporations had more in common with the professional managers of large government agencies and large nonprofit organizations than they did with small business owners or capitalist investors. Instead of being replaced by socialism, as Marx had predicted, small-scale bourgeois capitalism was being replaced by public and private managerialism.

The managerial revolution was well underway in the US and similar western countries by World War II, when Burnham published his book. But the triumph of the managers—government and nonprofit, as well as corporate—was delayed for half a century in America for two reasons.

The first was regionalism. Until the end of the 20th century, the US had powerful regional economic and social elites, not a single, homogeneous national elite like Britain, France, or Japan. Not only did Northeastern, Midwestern, and Southern economic elites specialize in different industries, but they also had different subcultures and dialects, and viewed one another with suspicion. In the last generation or two, however, America’s regional upper classes have almost completely merged into a single national ruling class with the same tastes, the same values, the same politics—and even the same generic accents, replacing the distinct regional accents of yesteryear.

As a consolidated national managerial class has emerged, the institutions which formerly checked its power—local political parties, trade unions, and religious institutions—have lost members and declined. Today local political party machines are all but extinct, replaced by ad hoc coalitions of wealthy donors and consultants who sell politicians as though they were commercial products. Since the 1980s, a successful counter-offensive by American business has decimated organized labor in the private sector, where today only 6 percent of American workers belong to unions—a percentage that is lower now than it was in the 1920s. Meanwhile, in the US as in Europe, religious attendance and affiliation have also plummeted.

The decline of the church and synagogue and mosque has been accompanied by the rise of the university. No longer a neutral institution dedicated to impartial scholarship, the modern American university has become a quasi-religious institution dedicated to the secular creeds of wokeness and social justice. Fashions like the claim that gender is subjective and self-chosen, apocalyptic hysteria about climate change, and the demand for racial quotas in all institutions, movies, and books originate in left-wing university departments like gender studies or minority studies that are devoted to advocacy, not scholarship. These progressive fashions are then disseminated through the nonprofit world, thanks to the influence of big donor foundations like the Ford Foundation.

Students walk through the campus of the University of North Carolina at Chapel Hill, North Carolina, US. (Reuters)

In the business community, there are two mechanisms by which campus-based woke ideology is disseminated. One transmission mechanism consists of human resources (HR) departments, which in many firms now serve to indoctrinate managers and employees by means of mandatory “diversity training.”

An even more important transmission mechanism for wokeness consists of younger employees. The number of Americans with four-year-college degrees who are 25 and older has jumped to 4-in-10, up from around 10 percent in 1970. Thanks to credential inflation and grade inflation, many college graduates know no more than good high school graduates knew a few decades ago. But many American employers use bachelor’s degrees to screen applicants, and that choice has come with a price—and not only for parents.

Today the “college experience” in the US includes “diversity training” and indoctrination into left-wing identity politics. Some students resist, but many absorb the left-wing worldview of the American university and bring it with them to their jobs in the business world. It is no surprise that many older corporate managers pre-emptively capitulate to any and all leftist demands, for fear of internal rebellions by their “woke” college-educated 20- and 30-something employees.

One result of the fusion between campus and corporation at the top of American society has been growing political and social polarization by education, a good proxy for social class. At the same time, and notwithstanding mainstream media claims to the contrary, racial polarization in America is in decline. In the past few national elections, the Republicans have picked up ever more working-class black and Hispanic voters, while college-educated whites continue to migrate to the increasingly upscale Democratic Party. The divide in each party between its managerial overclass members and its working-class constituents is large and growing.

The outcome of all of these trends is an increasingly top-heavy American society, in which economic power, political influence, and cultural status alike are migrating upward to the college-educated managerial and professional group. In earlier eras, working-class Americans of all races could have channeled their discontent and exerted their influence through mass membership political parties, unions, and religions. Because those intermediate institutions have weakened or vanished, non-elite Americans tend to be alienated from politics in general. Now and then they will vote for anti-system protest candidates, like Bernie Sanders and Donald Trump.

The Sanders and Trump insurgencies badly frightened America’s national managerial elite. In the Democratic Party, the attempt by Sanders to replace woke identity politics with an older, class-based social democratic politics has been soundly defeated. In the country as a whole, much of the bipartisan establishment successfully united behind the effort to oust Trump from the presidency in the election of 2020.

For its part, the Republican Party is divided among three groups. One is an establishment wing, the heir to Bush Republicanism, which would like to revive its pre-Trump advocacy of foreign wars, tax cuts for the rich, and cuts in Social Security and Medicare spending. The second group consists of diehard followers of Donald Trump himself, for whom “MAGA” (Make America Great Again) is a cult of personality, not a coherent governing platform. A third group includes Republican governors like Ron DeSantis in Florida and Glenn Youngkin in Virginia, who try to appeal to Trumpian populist conservatives without alienating country-club Republicans who have not yet defected to become neoliberal Democrats.

With allowances for national differences, many of these trends can be observed in Canada and Western Europe as well as the US. On both sides of the Atlantic, the center-left has found a new home among college-educated managers and professionals, while the right has become increasingly working-class, populist, and nationalist. In both North America and Europe, demagogues have arisen to exploit the alienation of working-class voters from newly woke political establishments—Trump in the US, Boris Johnson in the UK, Berlusconi and Meloni in Italy.

In all western democracies, parties of the right, traditionally opposed to state power, have realized that they have lost control of most private sector and academic and media institutions, including major corporations and banks. This has led some rising conservative leaders like Governor DeSantis of Florida to engage in uses of public power against the woke capitalism of the Disney corporation, which the state of Florida has stripped of former privileges. The conservative state governments of Texas and Florida have threatened to exclude investment banks that follow ESG (Environmental, Social, and Governance) investment criteria devised by the left. At the same time, progressives have gone from denouncing capitalism to applauding the use of private social media platforms to censor conservatives and promoting private financial institutions that “demonetize” populists.

Now that woke capitalism is here, can anti-woke statism be far behind?

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