A self-proclaimed traitor to his class, Harvard and Yale Law School graduate and bioinformatics investor is tired of corporations pretending to care about the latest social justice causes in order to get rich. Vivek Ramaswamy examines various aspects of corporate hypocrisy, details its corrosive effects on society and democracy, and illuminates a path from what he sees as a defining corporate-political scandal in American society.

The phrase “stay woke” had been a defining byword within black activist circles for decades before it ever hit the mainstream in the wake of the fatal shooting of Michael Brown in Ferguson, Missouri in 2014. It has more recently become a catch-cry for progressive ideologies of all stripes, urging society to be alert to any and every identity-based grievance.

A precise definition is difficult for a culture in fast and furious flux, but “woke” has now come to mean staying vigilant to infractions and aggressions (micro or otherwise) believed to spring from opposition to race, gender, or sexual orientation.

There are problems with the tenets of this quasi-religious movement, but the bigger problem here is how corporate America is “getting woke” in order to cash in on social justice. Among many other problems, this game is dividing society and corroding democracy by involving big business in the political process—even though these corporate executives are not elected officials.

Just as a skilled magician masters the art of distraction in order to pull off his trick, the corporate leaders are getting rich through the mere appearances of being virtuous (which has become synonymous with “woke”) in order to extend their profit margins. They traffic in virtue signals and it pays off in financial returns and societal adulation.

The “woke-industrial complex” is powerful, but the winners are activists and big businesses—not democracies, not society, not even the groups that these corporations claim to champion. The pandering might pad bank accounts, but it has not enhanced trust between fellow citizens. The result has been an increasingly tribal America, and corporations have played a leading role in the formation of these tribes. They mold our social values, make a profit, and fracture the nation.

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In Davos, Switzerland, Goldman Sachs CEO David Solomon announced in January 2020 that Goldman would not take companies public without a “diverse member” on the board. Of course, the diversity described in grand pronouncements like this is never diversity of viewpoints, but diversity of fixed genetic traits. Even if we put that aside, Solomon was hardly a paragon of virtue for making this announcement. Well before Solomon spoke at Davos, every other board member elected to S&P 500 companies was female, and by the summer of 2019, every single S&P 500 board had at least one female member, a development Solomon was undoubtedly aware of. It was a virtue signal that caught media praise, but it was a low-to-no-risk move.

The timing of the diversity quota announcement was peculiar in another regard as well. At that same time, Goldman was being fined $5 billion for cheating the Malaysian people out of billions in development and infrastructure. Goldman had been paying bribes and looking the other way as crooked Malaysian officials padded their pockets and purchased frivolous luxuries. These are the kinds of contradictions the woke-industrial complex gives rise to: projecting an image of virtue by championing fashionable social justice causes while also engaging in shady, exploitative deals that flatly contradict the core causes they so enthusiastically endorse.

Even as an intern with Goldman Sachs, Ramaswamy encountered a cynical hypocrisy among his supervisors and colleagues. At one point, the team of which he was a member participated in a service day. Instead of crunching numbers and pushing papers, they would be planting trees in Harlem as a way to support the community. Everyone showed up in T-shirts and work boots, but instead of planting trees all day, they stood around for an hour and gossiped, posed for a promotional photo, and meandered into a nearby bar.

At the bar, one of the supervisors quipped that the Golden Rule is not to treat others as you’d like to be treated, but, “He who has the gold makes the rules.” As of 2020, Goldman Sachs is the “gold standard” of business that corporations look to and emulate. Goldman has the gold and thus is able to make (and break) the rules that corporations follow and society in turn champions, however duplicitous the rule makers may be. 

ESGs are companies that factor environmental, social, and governance markers into their business’ decisions. The US Security and Exchange Commission (SEC) has recently considered requiring more than the financial bottom line from companies; it would also want to know how a company was doing on metrics like diversity, equality, and carbon footprint. 

Investors in ESGs (environmental, social, and governance-oriented companies) should expect a lower return on investment than from investments in traditional stocks. If you are an investor genuinely concerned about the environment and social issues, then that should be its own reward. But for many, it is not. People want to invest in ESG stocks and expect their ROIs to be just as high or higher than those of traditional stocks. These same people are often sorely disappointed, especially given the hearty approbation that ESGs receive from some politicians, economists, and entrepreneurs.

The optimism surrounding returns from ESG stocks is unwarranted and misleading. Common sense can explain why. A company that makes profit the bottom line tends to reward investors with higher rates of return than ESGs that regularly factor social, environmental, and economic considerations into their decisions and their bottom lines. Traditional companies decided not to divide their energies and resources to accommodate fashionable social and environmental markers.

The contrast between ESGs and traditional stocks is very noticeable when we look at so-called “sin stocks”—those stocks related to sleazier, more stigmatized industries like alcohol, gambling, arms, and so on. Sin stocks tend to generate higher expected returns because they tend to sell low. ESG investors can make life harder for sin stocks by buying ESGs and sitting on their stocks because principled purchases means sin stocks have to offer further discounts, which raises the costs of capital for sin stocks. So sitting on ESGs can force sin stocks to tighten their belts and be more selective about the endeavors they launch. Fewer endeavors, less sin, right? But here is the problem: Investing in ESGs means you are purchasing and holding onto stocks that, however noble, will usually deliver smaller returns than traditional stocks. Moreover, even when ESGs succeed in pressuring sin stocks to sell at a lower cost, there are still plenty of sinners ready to make a buck off heavily discounted sleazy stocks. They will invest in sin stocks when the prices are low, regardless of the social impact those companies might have on society at large. 

As one successful investor put it, "It sucks that the virtuous have to accept a lower expected return to do good, and perhaps sucks even more that they have to accept the sinful getting a higher one.” In a word, ESGs are not worthless, but they are worth less.

ESGs are, however, an opportunity for a more genuine form of virtue, because it actually costs you something to invest in them, far more than a dime-a-dozen virtue-signaling post on social media. The post elicits likes and dopamine, but it doesn’t really cost.

In the 1980s, 1990s, and 2000s, politicians on both sides of the aisle accepted shareholder capitalism—which views profit as the sole concern of the corporation—as a given. Thus, debates about the economy were mostly contained within the realm of, well, economics. Taxation, regulations, and antitrust were some of the main topics, and the discussions did not impinge much on the social, cultural, or political consequences of corporate power.

So, during the late 20th century and into the 21st, there was no cause to which capitalism could wed itself. The market was seen as a separate entity, independent and happy to be so. No marriage was necessary or even possible.

The economic fallout of 2008 was a decisive turning point, in which people became disillusioned with capitalism and sneered at the rich and powerful making far more than most Americans while also receiving bailouts after grossly mismanaging people’s assets. While all this went on, many Americans lost their jobs and life savings. Big banks that the US Treasury Secretary liked were bailed out (e.g., Goldman Sachs, where he had worked previously). Meanwhile, the average citizen suffered enormous losses. Arguments seeking to differentiate capitalism from savage, crony capitalism struck many as thin and unsatisfying. It seemed like a distinction without a difference.

The ranks of Occupy Wall Street swelled in the years following the crash, and not just in Manhattan where the movement began, but in cities across the country. Abuse of corporate power created the cataclysm that galvanized and brought together frustrated citizens from all walks of life, but an interesting shift began to divide the protestors. The phrase “Step Up, Step Back” became a byword at Occupy rallies that sought to convey the desire to let people “step up” and express their grievances, but also to “step back” if they were from more privileged backgrounds. The goal was that people with less privilege could jump the queue. In practice, “Step Up, Step Back” meant a gay black woman’s desire to speak would be prioritized over a straight white male’s, even if he was there in solidarity with the disenfranchised and had been a victim of big bank cronyism himself. Over time, Occupy became less interested in the more concrete and immediate financial collapse, and more preoccupied with the eternal war between the privileged and the oppressed, with privilege determined by fixed characteristics like skin color and cultural upbringing. In the end, the Occupy movement was not thwarted by outside forces, but enervated from within.

Wall Street saw Occupy tearing itself to pieces and began zealously partnering with the divisive force that catalyzed it. In a word: “wokeness.”

Wall Street’s escape from public ire coincided with another significant social shift: Around that time, the children of successful baby boomers (Millennials) were on the verge of receiving the largest intergenerational transfer of wealth in US history. As Ludwig von Mises pointed out in his book The Anti-Capitalistic Mentality, children of those who rose to tremendous wealth compete with their parents in one of two ways: by making even more money than their parents through their own hard work and gumption (which is hard), or by aiming for moral superiority (which is easier, because they can design an ethical metric that accommodates them rather than their parents).

So a generation of young, privileged Americans, aware (and ashamed) of their parents’ wealth saw an opportunity to deflect the shame of their privilege by rejecting their parents’ on moral grounds and easing their own existential discomfort by bending a knee to wokeness. Meanwhile, Wall Street had taken up the cry of wokeness to redirect attention from the bad press they were receiving for the financial crash. In effect, the angst-filled, self-flagellating Millennials and opportunistic corporations met each other’s needs at a moment of mutual vulnerability. Wokeism and capitalism were wedded, providing Millennials with deliverance from their shameful inherited privilege and Wall Street with a desperately needed distraction. Big banks are happy to put identity politics front and center. A thoughtful, dedicated Marxist would pose a much graver threat to their interests.

The best arranged marriages are born of trust—not between the couple, but of each spouse in his and her parents’ choices. The marriage between capitalism and wokeness will never flourish because it was based on mutual necessity and usefulness—not genuine love. In fact, they do not care for each other, and are willing to overlook the other’s faults as long as the tradeoffs seem worthwhile. For now, corporations increasing wokeism’s societal reach in exchange for a cloak of virtue to cover up corporate abuses remains a viable tradeoff.

Well-meaning liberals and progressives do a tremendous disservice to their most noble ideals when they cozy up to corporations. Something critical to the integrity of the causes is lost in the partnership. It’s not that different from ambitious high school students volunteering at hospitals (as the author did), but who never help the sick much at all because they are busy studying or flirting in the break room. In both scenarios the goal of helping is subservient to personal gain—whether college admissions or profit. Sadly, even more common than service’s subservience to personal gain is service’s growing irrelevance. The cause simply does not matter for many in corporate America.

If you are a progressive, you should be worried about what this lack of corporate integrity means for the causes you cherish if you entrust the message to big business. They have positioning and profit in mind much more so than your cause actually succeeding.

When a big business champions a cause without genuinely caring about it, the values of the cause get warped or dropped if a more profitable bandwagon rolls into town—even if the new cause is racist or sexist or misogynistic.

For example, feminism suffers in the long run if adding a woman to a board becomes viewed as the litmus test of things genuinely changing for the better. The goal of feminism is not a forced, perfunctory hire or nomination, but a society in which women are treated as equals and afforded the same respect as men.

Here is the dilemma for the virtuous progressive: Do I allow a company to take the message I care about and run with it in the interest of using their reach to spread that message? It’s a Faustian bargain, where you can make a deal with the corporate devil, as it were, which allows the cause to get attention and even achieve the appearance of success, even if the cause ultimately loses its soul in the process.

There is a recent news story of a small Swedish town that was polled to see if its citizens would let the government set up a nuclear dumpsite nearby. When framed as an opportunity to perform a civic duty and sacrifice for the rest of their country, half the townspeople said they were willing to do so. When polled again and asked if they would be willing to have a nuclear dumpsite nearby if compensated with $8,000 per person, only a quarter of the citizens said yes. For those Swedes, offering money hollowed out and commodified a lofty opportunity for service to the Swedish people. The offer of thousands of dollars would probably sweeten the deal for most Americans, and that is okay, but we are in real trouble as a country if service becomes a means of getting ahead in the rat race. And unfortunately, the increasing bastardization of service in the United States is yet another consequence that Woke, Inc. exacerbates.

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