This article originally appeared on Fortune.com [https://fortune.com/2022/02/25/corporations-more-likely-to-create-a-better-world-than-governments-international-leadership-war-peace-business-trade-world-esg-corporate-culture-alex-veytsel].” By Alex Veytsel
(NOTE: this is an expanded version of the article that originally appeared on Fortune.com)
I’m finally ready to share my deepest darkest secret – in the eternal power struggle between corporations and governments, I’m rooting for the bad guys. Yes, the greedy sociopaths run by automatons in business suits who are stealing our sovereignty.
This is not because of some Reaganite fetishization of enterprise and not because I believe the hagiographies of business tycoons. Instead, it’s because over time corporations and their investors are becoming more accountable to building a better tomorrow. Concurrently governments are paralyzed and unable to deal even with their existing existential challenges, much less those of humanity writ large – and will tip over into authoritarian extremism long before they ever foster reasonable collective progress.
It’s easily the most countercultural position I’ve taken – in fact, when FiveThirtyEight asked their readers about political beliefs we’re scared to share in 2019, that statement was my (unpublished) submission. This is not because I’m particularly reticent about my beliefs. I’ve never been shy about advocating for the controversial – whether it’s open borders or full legalization of all consensual activities of adults or dozens of other thoughts that were always esoteric or have become so in the course of our recent culture wars.
But even two years ago, the idea that in building a better future we should back big business over the leaders anointed by the democratic process was even more out there than the usual grey tribe fare. Corporations are one of the most reviled institutions in America and a favorite punching bag of the populist left and the populist right alike. “Corporate” has become a pejorative in itself. No one likes big business—so much so that when people want to say they’d never root for the Yankees, they compare them to US Steel.
Of course, this is not completely undeserved. Many corporations have major faults. They contributed to climate change and addiction and health crises. Their negligence and greed has killed people and will do so again. They have supplied despots and war machines and sponsored coups. They have been ruthless to their employees, customers, and communities. For every sin brought up by anti-corporate activists, I’m happy to plead guilty on their behalf.
And yet when I think of how the biggest problems for my kids’ generation – climate change, pandemics, hunger, inequality, etc. – can realistically be addressed, I see corporations, not governments (or NGOs for that matter), as the agents of change for three reasons:
- Increasing accountability – Whether a business sells products to consumers, hires millennial / Gen Z talent or tries to attract capital, its success is increasingly constrained by a need to create positive social impact, and to prove it through better data. The data is getting better, greenwashing is getting harder, and impact is moving from marketing to operations. We at RampRate are on the frontlines of this for companies large and small, and the change in the last few years has been massive, with 2020 as a real tipping point.
- Adaptability – If corporate security was breached in 2016, would they give the hackers a stern talking-to but continue on having the same vulnerability? If a business saw an existential crisis looming in 3 years, would it do absolutely nothing about it and instead spend its board meetings deciding whether to pay its bills? Of course not – but that’s exactly what increasingly paralyzed and ineffective governments are doing.
- Constraints on harm – As easy a punching bag as corporations are, their pursuit of their goals has always had less collateral damage. The body count difference between purely private sector sins and government-led malfeasance is several orders of magnitude. This will only continue to diverge in an impact-driven world. An unjust firing is bad – but it’s not unjust imprisonment. Cringeworthy training sessions are not a fun way to spend your day, but they’re not reeducation camps. The path to a better world through corporate action will be less disruptive and painful than other possible paths
It’s time to reclaim the word “corporate.” Today, it stands for greedy, short-sighted, and sociopathic. But in a generation, it may well stand in for enlightened, responsive, and responsible – but only if we grow the seeds of change with better data and higher standards of accountability in all our roles – as consumers, investors, and employees.
The biggest reason that my biggest political secret in 2019 became a published article in 2021 is that the intervening year finally showed a public breakthrough in corporate accountability amidst a background of governments that are increasingly unresponsive to our needs. More and more we have the tools, the data, and most importantly, the motivation to use them. And last year showed that when we use these tools, corporations respond – as long as we keep the heat on.
Conversely, governments have been losing accountability for decades. For 15 years, the world has trended towards authoritarianism rather than freedom. Even in ostensibly democratic countries, responsiveness is getting worse. You’ve probably heard that it’s getting harder for many people to vote, as 2021 brought the highest number of voting restrictions in history. And in places where we can still vote, increasingly most of our votes don’t really change the outcome (and I don’t mean because of space lasers operated by the ghost of Hugo Chavez). Only 18% of US congressional districts were competitive in the 2020 election (down from 38% in 1997) – and our electoral college relic means voting in presidential elections is mostly performative and meaningless unless you live in the (at most) half-dozen true swing states.
Over time, these barriers to accountability have been compounded by gerrymandering and self-sorting into partisan geographic enclaves. The US system of first-past-the-post non-proportional representation has finally settled on its untenable equilibrium: negative partisanship, extremism in safe districts where being primaried is far more likely than losing a general election, and an increasing illiberalism, especially from MAGA nation, that prioritizes winning by any means necessary over any democratic principle.
Amidst all of this, millions of people can do nothing about it. I could have voted for Mickey Mouse in every election I participated in for 20 years and nothing would have changed. I could have sent all my carefully hoarded pennies to support quixotic campaigns to unseat Mitch McConnell and Ted Cruz and nothing would have changed. The entry fee for even trying to enforce any form of political accountability is higher than the net worth of 99% of Americans.
But while we vote for politicians only every few years, we vote with our wallets on a daily basis. The sugar in your coffee, the shoes on your feet, the phone in your hand, every one is a signal of approval or disapproval. You can make a different choice tomorrow. Companies listen. Intently. And they react. They react even more when you’re a talented employee they’re trying to recruit or a venture capitalist who will invest in them.
This was always the case – even going back to the Civil Rights era, you could hear conservative and libertarian voices saying that markets will fix injustices if you wait long enough. But for decades this hypothetical invisible hand didn’t result in practical action. In practice, companies could behave badly and toss a few pennies of their obscene profits to charity to greenwash away their sins. More importantly, neither consumers nor employees nor investors really cared – at least not enough to spend a bit more or to forgo an extra $10K in salary or an extra 1% investment return.
Corporations haven’t changed that much yet. But we have. Over the last decade, but especially in the last 2 trying and turbulent years, people have started to show they care, and corporations have reached the tipping point where not being impact-focused has become the “man bites dog” story. We’ll cover why that has become the case in the next installment of the series, but in short, there are 3 primary constituencies that are contributing to the change:
- Conscious consumerism spiked amidst the pandemic as people pulled together to support local businesses and marginalized communities. They have been boosted by a host of new technologies assisting the process such as our friends at GoodHuman a. And more than half of consumers now see these actions as making a big difference – quite impressive compared to the widespread cynicism about government action.
- Impact is also increasingly part of the path to funding. Per TechCrunch “Tech solutions for such pressing issues as the climate crisis and social inequality have seen a 280 percent increase in global VC investment from 2015 to 2020.” According to Deloitte, half of all managed assets will be ESG (Environment, Social, Governance) mandated by 2025, comprising more than $34 trillion. And this is not just a long-term projection, as one-third of assets under management were already operating under these guidelines in 2020 – 4 times the amount from only 8 years earlier.
- Finally, the workforce – especially, but not exclusively, the next generation of corporate leaders, is overwhelmingly devoted to working for places that make a difference. The stats are staggering:
|Percentage of respondents who would:||Millennials||All US Workers|
|Refuse to work for a company that doesn’t have strong CSR (corporate social responsibility) commitments||64%||51%|
|Consider CSR commitments when choosing employer||76%||58%|
|Choose to work for a responsible company for less money||75%||55%|
Source: Cone Communications
Together, all of these factors have turned a wave of CSR into a tsunami. This is something that we at RampRate saw building up behind the scenes for 15 years as we pushed to get corporate social responsibility embedded in sourcing and aimed to reduce the environmental impact of data centers. We saw chief impact officers that were no longer part of marketing, but part of operations; carbon reduction pledges that deeply informed tech strategy; corporate-wide dashboards of energy efficiency that we helped bring to reality.
In 2020 and 2021, the whole world saw it as well. After the murder of George Floyd sent shockwaves through the US, Google, Facebook and Amazon pledged more than $10 million each to groups that fight racial injustice. Apple and Walmart each committed an astronomical $100 million to their own initiatives. Software, gaming, and retail stores pledged millions more. They almost had to. A poll found 60 percent of consumers would buy or boycott a brand based on how they reacted to Black Lives Matter.
This was not a one-time flurry. When Georgia’s state legislature passed a new election law that President Joe Biden called “Jim Crow on steroids,” Major League Baseball moved the All Star game from Atlanta to Colorado. Southern politicians grumbled about “woke capitalism” and talked about baseball boycotts. In a bit of rank hypocrisy from someone who has systematically dismantled campaign finance reforms, Mitch McConnell threatened, “Corporations will invite serious consequences if they become a vehicle for far-left mobs to hijack our country from outside the constitutional order.” But regular people approved.
Nor was this activism self-contained. Corporations still have the power to influence governments and communities that they have always used to get themselves tax breaks and capture regulatory bodies. But now they sometimes use it for the public good as well. When North Carolina passed a deeply regressive bill about transgender people and bathrooms, the NBA moved its 2017 All-Star game from Charlotte to New Orleans. North Carolina rescinded its transgender bathroom law, and the NBA awarded the 2019 All-Star game to the Tarheel state.
During the pandemic, business groups lobbied and urged for mask mandates and got their staff vaccinated even in areas where it was by no means a given. Outside of a few glaring exceptions and the usual suspects pandering to a decidedly different audience, the contribution of business to controlling the spread of Covid-19 was overwhelmingly positive – in glaring contrast to the political grandstanding that has cost the US hundreds of thousands of lives.
As with every story, there are a lot of nuances and exceptions and backsliding. Corporations didn’t always follow through on diversity initiatives. The Black Lives Matter funding didn’t always materialize; in fact, only a fraction of the amount pledged on racial justice has been spent. For every dollar spent by businesses on advocating for net neutrality or gun control, $5 in corporate money is spent by the other side.
But when lapses happen, more and more of the time, we know. In some ways, corporate balance sheets are easier to read and more accessible than government ledgers. (It’s basically impossible to audit the U.S. military.) There is growing public pressure to compel action, and enough transparency to seed the process of accountability. Now we just need to refine the data on corporate impact and keep it in the public eye.
There’s a lot still to do there – in a forthcoming article, we’ll be saying more about the data problems of social impact, and how we can tackle it. But the path is clear and achievable – which can’t be said for the US government.
Most of the preceding section focused on the extrinsic factors that changed the conditions under which companies operate – more data, more consumers, workers, and investors who care. But it shouldn’t be taken for granted how quickly corporations have adapted when these circumstances arose. When it comes to business, it doesn’t take much of a nudge to make change happen.
Forty-one percent of food in the supermarket is Kosher, even though only 2 percent of Americans are Jewish and probably even fewer keep Kosher. So even if only 5 percent of consumers are deeply impact-conscious and another 10 to 20 percent are somewhat interested, that will already be enough to change a lot of behavior. And when half of the capital and half of the workforce is motivated by impact, the urgency to do something grows in a hurry.
In contrast, governments have been far slower to respond to critical needs – and 2020 has shown the rot at its core in the US especially, as it has fallen far behind those of the rest of the developed world in responding to the pandemic. But even setting the self-inflicted failures of late-stage Trumpism aside, on a range of priorities, from racial justice to climate change, to health care, the time between a social consensus and actual government action can take decades – if it happens at all. There’s truly an overwhelming majority needed to get the government moving in the face of inertia, culture wars, and lobbying.
The US government can’t even adapt to crises that undermine its own functioning. We’re already in a constitutional crisis – the slow moving coup that we cannot stop. Our democracy has been hacked by foreign interference and propaganda to the point that I’m hearing the blue collar folks at our town’s garbage dump talking about how RT (that would be Russia Today, notable for journalistic standards on par with Goebbels and Baghdad Bob) is giving them the real story that even Fox won’t tell them.
Can you imagine a corporation that would be as complacent in the face of threats to its own future? I can’t. And they haven’t been. Companies affected by Covid turned on a dime to lay off workers and then rehire them. Corporations affected by climate change have started developing plans to address the impact – even when their leaders call it a hoax. Security breaches get patched up. Corrupt executives get caught and fired. The mob can’t shake down a corporation anymore – but politicians get blackmailed into rank hypocrisy every day.
In fact, corporations are even reinventing themselves. There are new forms of governance that move beyond shareholder theory that governed the corporate raids of the 1980s to stakeholder theory that gives a voice to other constituencies besides investors. We’ve seen the rise of new corporate structure such as the Public Benefit Corporation (PBC) and even the Distributed Autonomous Organization (DAO) that dispenses with management in favor of smart contracts. something I talked about even before that direction of decentralization coalesced under the term. DAOs in particular are a promising venue for upgrading accountability and transparency through decentralized governance as they blur the line between market and democracy by using direct stakeholder votes to make decisions.
The combination of external pressure created by external accountability and the internal strength of adaptability creates a truly potent recipe for change. Maybe public pressure by itself can be hacked and subverted. But combining it with changes in governance will ensure that the core orientation of business will change, and the corporate psychopath can finally be rehabilitated.
As corporations evolve to serve the public benefit, the NGO becomes less and less important as well – the corporation with the same benefit mission, but unable to self-sustain. There will always be a place for them of course – if nothing else, to be vessels of impact dollars that corporations are not mature enough to manage themselves (more on the maturity scale of impact later as well). But as multinational multi-billion dollar organizations mobilize for change, the mission of the NGO will have to evolve as well – and I’m not sure they have adapted to change nearly as much as their for-profit brethren.
Breaking Fewer Eggs
Finally, I want to address the risk inherent in change. As with any government paralyzed with inertia and gridlock, when government change happens, it’s sudden, violent, and not always in the direction you expect. Deeply autocratic Tsarist Russia exploded into Red Terror a bit over a century ago. On the other hand, the attempted communist takeover in Spain 20 years later resulted in a brutal right-wing dictatorship that lasted into the 70s.
I don’t want to be alarmist and say we’re on the verge of revolution and civil war. But we are a well armed society that, contrary to Heinlein’s expectations, is not a particularly polite one. We had armed people in our Capitol just this January, and while that dress rehearsal insurrection was comical with its horned shamans and gleeful looters, so was the Beer Hall Putsch. Nor was it all peace and love in the CHOP zone and other protest hotspots a few months earlier. Change of government and change by government is always messy and always backed by force. No matter what you think, the revolution won’t be cinematic.
On the other hand, corporate excesses are constrained by a more narrow scope of power. Misery caused by companies pales in comparison to the violence inflicted by governments. The worst incidences of deaths caused by corporations are measured in the thousands. Deaths caused by governments are in the tens of millions – and not just in long-ago history and far-away dictatorships.
People like to complain about Walmart and Amazon and fatcat bankers. But in the great scheme of things, most of their purported sins are prototypical first world problems of being unable to buy arugula from a local family-owned shop. Did Walmart ever kneel on anyone’s neck? Did Amazon ever rip kids away from their parents and house them in cages? Did Goldman Sachs ever jail or execute innocent people? As someone whose grandparents experienced government-caused starvation, war, and prison camps, I’m acutely aware of just how petty many of our complaints against big business really are.
Of course this needs a disclaimer as well. The further you get up the supply chain, especially in the global south, the more egregious abuses that trickle down to our everyday low prices can become. And there are companies intimately tied to violence, from the data analytics that power ICE raids, to what used to be called Blackwater, to arms manufacturers.
But if we’re living in a world of gray and grey morality, we have to remember that the worst sins both in history and today are deeply intertwined with governments. Even when the military industrial complex builds the gun, someone sponsored by the state usually pulls the trigger. And more and more these exploitative and violent business models become unsustainable under pressure from the public and employees, meaning that soon enough it will be simpler to separate the companies that enable violence from those that abjure it.
This relative innocuousness of corporate change is clear when we hear the discontent of those opposed to it. When it comes down to it, something like “I didn’t get a platform to air my highly controversial views” or “I didn’t get to keep my job while embarrassing my employer and/or endangering their clients” or “I had to sit through a corporate training that I disagreed with” is not real oppression.
With all due sympathy to the trauma of losing a job for reasons that you view as unjust, it’s not the same as the Gulag. Better to be fired than be disappeared. Better to be deplatformed than sent to a reeducation camp. Especially if complaining about being silenced becomes a full time job to replace the one you had.
So as we think about paths towards battling the problems of our children, corporations (and their DAO and PBC successors) are uniquely suited to making the change gradual, palatable to more constituencies, and ultimately smoother.
They’re far better at nudging people in the right direction with economic incentives rather than punitive ones, and far more likely to come up with innovations that circumvent problems – whether it’s hardy crops to battle starvation caused by ineffective and corrupt governments or mitigating the climate change that we haven’t been able to prevent.
Let’s assume that I’ve swayed someone against the knee-jerk reaction of “corporate = bad.” So what does it mean in practice to support corporations over governments? In large part, it means expecting more of them.
- Seek out and use the data that measures real impact and not just outputs, or worse, dollars spent. There will be more and more of it over time.
- Consider using that data when you have a choice and making that decision public – a bit of virtue signaling for you, a bit of market research for big business spying on you through your social media account to remind them to invest in impact
- When looking to address a big social problem, don’t just write your congressperson – write your latte vendor, because unlike our representatives, which 80%+ of us can’t meaningfully replace, coffee producers can be replaced if they underperform.
- When choosing your next job, assess the employer’s commitments to change and how honest they’ve been in following through. Doubly so if you’re a superstar getting recruited by a dozen companies (you know who you are).
And as this culture of change takes root and companies continue to surpass governments in meaningfully considering the public interest, we should also start thinking about government differently. Maybe it’s best suited to not be an engine of change in itself, but as the maintainer of a level playing field in terms of transparency and accountability. Maybe borders and nations become less meaningful to our identity and the brands we support become more so – when John Lennon said “imagine there’s no countries” he didn’t say the same for companies. Heck, maybe we’ll wind up in the Diamond Age one day, where we select our governments as easily as we select our employers or vendors, and for the same reasons – and that wouldn’t be the worst of futures in my book.
Alex Veytsel is Chief Strategy Officer at RampRate. Since 2004, he has helped top brands like Microsoft, eBay, Sony, and more than 100 others manage their technology budgets and develop product strategies. Recently he has been focused on helping impact-focused startups in tech, media, identity, and blockchain navigate the complex journey of growth – from viable business plan to operational boot camp to transformational relationships.
Alex’s core skill is optimizing complex decisions through research and data analysis. His expertise ranges across tech infrastructure such as data centers, networks, and cloud; digital media, the blockchain, and more broad topics like the future of business strategy and human potential. He has spoken at conferences including Defy-ing Expectations, Datacenter Dynamics, Critical Connections, and Humanity+ and quoted in publications such as NY Times, MIT Tech Review, CFO Magazine, among others.