If Wall Street is the beating heart of American capitalism, the life-sustaining financing it pumps through the economy long served the sole purpose of maximizing shareholder value.
Greed, for lack of a better word, was good for the country.
Yet after decades during which other governance issues were secondary, an increasing number of boardrooms are discovering that being a good corporate citizen can be its own reward, and it has some lawmakers steaming under the collar.
Now Jamie Dimon, the public face of investment banking, refuted on Wednesday any notion that a greater focus on customers, employees, and local communities—known as stakeholder capitalism in corporate governance lingo—was a misguided attempt at appeasing a perceived leftist agenda.
“I’m not woke,” countered the JPMorgan CEO during an Autonomous Research conference held on the inaugural day of Pride Month. “And I think people are mistaking the stakeholder capitalism thing for being woke.”
Attacks on “woke” investing
Last week Sen. Ted Cruz accused BlackRock CEO Larry Fink of renouncing capitalism in favor of “woke” investments, and proposed the money manager be barred from voting on behalf of its investors to prevent it from advancing its own political interests.
In particular, Cruz took issue with applying environmental, social, and governance (ESG) criteria to its screening, a practice that has become so pervasive some fund managers are being investigated for greenwashing.
JPMorgan’s Dimon, who suffered a rare rebuke last month when shareholders shot down a proposed $53 million bonus, described himself on Wednesday as a “red-blooded, free market capitalist.”
He nevertheless appeared to support arguments extolling the benefits of stakeholder capitalism for investors. Advocates claim it leads to higher workforce morale with lower levels of absenteeism, helps recruiters attract a much more diverse group of top talent, and can bind customers to their brand for longer.
“Any senator or congressman who says that’s woke, they’re not thinking clearly because I want to win in the marketplace,” Dimon said.
“Woke mind virus”
Even “Neutron” Jack Welch, the legendary former CEO of General Electric credited for popularizing the primacy of maximizing shareholder value, later broke with the notion. In early 2009, he famously called concentrating solely on shareholder value “the dumbest idea in the world,” just months after Wall Street’s high-risk bets on the U.S. Mortgage market triggered the global financial crisis.
The move away from the Reagan era of unfettered free markets toward an emphasis on prudent and proportionate regulation has, however, spooked prominent Republicans, who are now retaliating by labeling the shift “woke.”
It’s part of a broader national trend in which many facets of life are framed in terms of identity politics and the culture wars.
The latest billionaire to swell the ranks of the Republican Party, Elon Musk, has himself liberally used the perjorative to protect his business interests, including Tesla and SpaceX.
Last month, the polarizing CEO impugned the motives of a prominent vaccine advocate because he taught at Yale University—“the epicenter of the woke mind virus attempting to destroy civilization,” according to Musk.
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