Saudi agents lured Washington Post columnist and American visa-holder Jamal Khashoggi into their embassy in Turkey, where he was tortured, murdered and dismembered three weeks ago. Our president waved off the incident since the Saudis own an entire floor of Trump Tower, share his hostility toward a free press, and figure prominently in his financial crimes. The State Department and the military have responded with moves to protect a $100bn+ arms deal with the theocratic kingdom. So much for that “City on a Hill” nonsense.
Meanwhile, AT&T, Google, Ford, JP Morgan, CNN and numerous other companies announced a boycott of a critical Saudi media event. Uber’s CEO joined the chorus, refusing to attend the event despite the company’s heavy Saudi financing. Virgin CEO, Richard Branson, suspended all of his many ties to the Saudis, a move that endangers more than a billion in pledged funding for his space ventures. Meanwhile, US Treasury Secretary and Bond-movie villain, Steve Mnuchin, still plans to attend.
We’re seeing this pattern consistently. Now that the government at the center of the “Free World” has been bought off by a corrupt global kleptocrats, who is standing up for liberal democratic values? Corporations, of course. Get used to it, because this is the strange new shape of liberal democracy.
Rising corporate activism will not be entirely good news. Our new class of creative global corporations has interests largely, but not entirely aligned with liberal democracy. How these companies identify their interests will be heavily influenced by the assertiveness of their employees, their customers, and the general public. Corporate benefactors will not simply ride to our rescue. Recognizing the importance of corporate class interests doesn’t mean waiting for Bill Gates to save the world, it means that all our plans for political activism need to be updated to include an economic and corporate appeal. Corporations will not be our saviors, but we will not succeed in building a just 21st century order without successfully engaging them.
Not all corporations are joining the boycotts and protests against oppressive regimes, racism, and bigotry. Companies are not all the same. Like people, they have class interests. Also like people, there is a process by which these companies waken to their class interests. The story of the 20th century was the rise of socialist-inspired class consciousness, eventually dominated by large middle-classes in the western democracies. The story of the 21st century may be the rise of post-socialist corporate class consciousness, dominated by a powerful new order of creative businesses, reliant on talent and a free society for their profit stream.
We don’t think of businesses as a force for social progress for some very good reasons. Most of the dominant business models from the industrial era depended on resource exploitation. When you make your money from squeezing oil out the ground, growing cotton, or stamping out widgets, labor is just another cost burden. Pollution is a competitive advantage. A minimum wage is nothing more than a drag on the bottom line. Commodities must be seized at the lowest possible price by any means necessary. Every dollar lost to taxes, regulation or humane interests is a dollar wasted.
By comparison, pause to think about how YouTube, Salesforce or WordPress make money. Slaves produce lousy video content. You don’t get better code by beating your programmers. Yes, there is pressure in tech companies to produce, but when you compare that pressure to life for workers in industrial era companies, the complaints look pretty thin. Very few programmers will die or get cancer producing the next version of Linux. Processes companies used to get higher productivity from a factory floor simply don’t work in a creative economy. Much of the foundational economic logic of an industrial economy is maladaptive in the information age.
Tesla and Ford are not in the same industry. They will not make money from the same practices, processes and political climate. Ford is an automotive manufacturer, earning the bulk of its profits from selling trucks. Tesla is a software company that will make the bulk of its revenue from data analytics and AI. Tesla sells rolling data platforms. That data is the company’s most crucial profit center. Tesla has sold barely 200,000 vehicles, yet its market capitalization has already exceeded Ford and equaled GM. They will be left in Tesla’s dust.
Like Tesla, other companies in more traditional industries have made this crucial leap, and their public priorities have followed. Amazon was an online bookshop. It now sells the infrastructure for ecommerce. Nike, which began life as a shoe store, is now closer to a media company. Domino’s now calls itself a software company that sells pizza, crushing competitors thanks to a technical edge sharpened by their location next a major university.
When we think of creative companies we imagine a narrow slice of Silicon Valley innovators, but that’s a false picture. The creative economy extends to the best performing organizations involved in almost every form of business, from shoes to pizza. The world’s fastest growing, most profitable organizations have left the 20th century industrial model behind. They are fueled by talent, data, and ever-accelerating parallel processing. They don’t need armies scouring the world to secure resources. They don’t need a supine, starving labor force, divided by racism or nationalism and blinded by religious bigotry. They don’t need an unfettered right to dump toxins in the environment. In fact, all of these industrial era priorities cut against their interests.
II. Innovators of the World, Unite!
Why will companies take on a public role more significant than Andrew Carnegie scattering coins around? Companies will coalesce around a more active, engaged political program for the same reasons that people do – to promote their threatened class and identity interests. Class and identity interests of this new generation of creative companies happen to line up to a large extent with the interests of middle-to-high-income knowledge workers and more affluent non-white voters largely left behind by the GOP’s slide toward white nationalism. The most important divide in our politics is the rivalry between corporate dinosaurs and parasitic rentiers, represented by the GOP and its criminal standard-bearer, and the innovation age companies steadily lining up behind Democrats and other left-leaning institutions.
Corporations, like people, have a peer cohort and rivals. “Rivals” in this context, does not refer to competitors. Business competitors will mostly be class compatriots, in much the same way that the steel-worker standing next to me in line to get picked up for day-labor is both my competitor and my “comrade.” In political rather than business terms, my rivals are defined by their identity. Just as in the development of class consciousness among voters, there’s a process by which companies are coming to recognize their authentic interests and class identity in politics, apart from just jostling with competitors for a few regulatory concessions.
Companies are not the same. Some breed broad prosperity. Some spread suffering and poverty. Some have been well-represented in politics. Some of have been under-represented. Creative-class companies are under-represented in politics, partly because they have yet to recognize their authentic class interests. We are at the earliest stages of an emerging corporate class consciousness among innovation age giants.
III. A Corporate Taxonomy
There are five distinct classes of companies at this stage of our development. Ask someone what they think about “big corporations” and they’ll probably describe the most powerful class, the old extraction/exploitation model in the mold of Exxon, US Steel or GM. Then there’s finance, the oldest of them all. The largest class is small businesses, the companies that own your local restaurant chain, doctors’ or accountants’ offices, dry cleaners, auto repair shops, and so on. Newest on the scene is the class of businesses driven by talent, data and creativity.
Finally, there are the garbage companies, the true jackals of the corporate jungle. Private equity vultures. Secretive family trusts. Shell companies within shell companies within holding companies in partnership with offshore real estate investment trusts. Networks of pure parasitism, often producing nothing at all while hiding and laundering money for rich rentiers. Real estate business like the Trump Org are the poster-children for this class of businesses. Much of the middle tier of corporate agriculture, most major real estate developers, and the local networks of small fossil fuel companies fill the ranks of the garbage companies.
Our political system is dominated by finance, extraction companies, and garbage companies. Almost every politician in our system has been sold to one or more of these interests. At the local level, small businesses play a powerful role in politics, dominating city councils and planning boards. Data/creative companies have remained on the political fringe, their influence still latent. They emerged largely from a politically-skeptical counter-culture, working to avoid rather than engage the political world. Now they’ve become too large to remain sidelined. For the most economically potent institutions in our economy to be this disenfranchised sets up a dangerous tension. Expect earthquakes as these organizations awaken to their class interests and leverage their power.
IV. The Creative Class Corporate Agenda
For those accustomed to seeing all corporations as a monolith, interested only in resource exploitation and low wages, the behavior of creative class corporations can be confusing. These companies have already played a powerful role fighting discriminatory legislation in red states. Their leaders have begun buying up media companies to protect journalism. They’ve been at the front of efforts to fight the Trump administration on trade and immigration. In short, they aren’t Exxon. So what do these companies want?
What the most profitable new corporations value is talent and creativity. An environment that cultivates these values must be free, open, and culturally diverse. To promote the development of that talent into lucrative products, that environment should also be politically stable, with reliable legal norms, and open to trade across the widest possible geography. These companies thrive in high-tax, high-regulation environments, where governments make significant investments in infrastructure, education and the environment. If a democracy can create these conditions, then great. But if these conditions can be fostered without democracy, that’s great too.
Creative class companies line up surprisingly well with the left on a certain core of issues, encouraging some confusion over their remaining interests. Most of this overlap rises from these companies’ relationship to their employee base and customers. Innovation companies tend to have a much smaller, much more highly compensated and valuable workforce than their industrial predecessors. Some, like Amazon, retain a large base of low-skilled workers for certain jobs, but many of the most profitable creative businesses have few if any clock-punching employees. Their employees are their most expensive and lucrative asset, fought over in tight competition with other firms. Their employee relationships more closely resemble the labor structure of professional sports teams or movie studios than the mass, undifferentiated labor pools of industrial age businesses.
Businesses that depend on talent as a resource see bigotry as a massive hidden tax. In the US, in particular, a deep legacy of structural racism and sexism mean that a huge portion of the population never has a chance to develop their capabilities. Innovation businesses recognize the cost of a culturally monolithic employee base, but without the ability to transform the wider society their initiatives are stunted. Women, African-Americans and many other minorities are often eliminated from the job pipeline years before their resume might show up on a tech company website. The problem goes deeper than obvious issues around education equity. A social safety net organized to exclude minorities, a culture that devalues women’s contributions, and bigoted attitudes that stunt immigration limit the capacity of creative companies to meet their goals.
Creative class companies also consume relatively few commodities in comparison to industrial businesses. Having massive pools of engineering talent to tap, they tend to use innovation and technology to side-step resource demands wherever possible. Apple meets its enormous power needs entirely through renewable energy. Oracle doesn’t need a steady stream of steel or minerals. If we stopped mining coal tomorrow, Schwab wouldn’t notice. Commodities are a miniscule element in most creative companies’ balance sheets. What these companies care about is education, trade, infrastructure, immigration, and most of all – their ability to protect intellectual property. These interests are well-aligned with much of the modern left.
Then, there’s the rest of the picture.
What creative companies don’t care about is traditional labor rights, especially unions which they loathe. There is a logic to this hostility. Confrontational, antagonistic labor organizations make less sense in an environment in which employees are fought over and aren’t threatened with workplace injuries or death. However, even sports and entertainment celebrities have union protections. Employees in the creative economy may enjoy radically better work conditions, than their industrial era parents, but the absence of formal employee organization still weakens their influence.
Creative companies also have little patience for concerns over data privacy or security. They have been willing to push forward with any form of innovation, no matter how potentially dangerous or destabilizing, as long as it represents “progress” toward the next big breakthrough. Creative companies may be our allies in traditional fights over environmental pollution, but will be an obstacle to the public interest on questions of data pollution, or the spread of unstable, insecure or untested automation of key infrastructure.
Perhaps of greatest concern is the attitude of creative class companies toward government itself. These businesses emerged largely from a late 20th century counterculture, informed by a deep skepticism toward institutions of all kinds and a hyper-individualized mythos. In short, these businesses largely dislike government. Beneath that distaste is a more troubling hostility toward democracy that can manifest in confusing ways.
The creative class represents a new, remarkably large, and entirely globalized economic and intellectual elite. Democracy is almost always an obstacle to elite ambitions, no matter how wise or beneficent those ambitions might be. This new corporate class could develop into an ally of democratic reformers, thanks to their shared interest in dismantling many of the abuses of industrial age capitalism. Or, as patience wanes, rising creative corporate class activism could become one more vector tugging at the foundations of liberal democracy.
These companies need basic property protections, global trade, and a “liberal” society – up to a point. What they don’t need or in any manner respect is input from the unwashed, MAGA-bot masses in the general public. Creative class businesses will not feel a moment’s concern for the destruction of democracy if it guarantees their vital priorities. A relatively just, stable, and free environment delivered by a Singapore-style business-autocracy works just as well for them as life under a successful liberal democracy. Whether this new class of business becomes a foundational ally in the fight to save liberal democracy, or the force that replaces it entirely, will depend in large part on will, organization, awareness, and activism of these companies’ employees and the general public.
V. Are Tech Companies “Good?”
This new class of businesses will be as good or bad for society as we make them. If we, as the general public and as employees and shareholders, create an atmosphere that presses them into politics as our allies and punishes them for undermining public interest, they will become a pillar of a new liberal democratic order. This seems to be happening, but should be pursued with more deliberate effort and clear-eyed accountability.
On the contrary, if we turn to them as saviors and defer to their interests uncritically, they will quickly become just one more vampire squid on the body politic. They may have little interest in polluting our rivers or enslaving employees, which is nice, but with innovation comes nasty new challenges. Their emerging power over data, thought, and information is a direct threat to liberal democratic values. As their transnational structure continues to undermine nation-state power, their ability to skirt the political influence of the voting public in any country grows larger, along with potential temptations toward money laundering, tax evasion, and the concentration of wealth.
What can we do? Recognize the voting power in your wallet. Make companies pay for harmful behavior and reward public interest. Abandon the blanket skepticism of corporate power, recognizing that there is no way forward into a healthy democratic order without the partnership of these potential creative class allies. Perhaps most importantly, employees in these organizations must awaken to their latent political power.
Unions in the traditional model might not make sense for workers at a tech startup, but employees must begin to build parallel organizations in some form to voice their interests and opinions. A successor to 20th century labor unions should take shape soon, granting creative class employees the political voice that their economic influence deserves.
Institutions are shaped by their environments. Creative class companies are thriving on the liberal values of an open society. If we feed those interests and curtail their abuses through active engagement, this new corporate class will be a bulwark of democratic success. Investing time and energy in corporate activism may be as important to our future as voting.
This post is part of a series exploring what’s next after liberal democracy and what we should do to prepare. Much of this material was covered in The Politics of Crazy, though from the perspective of a more optimistic era. The work fits better as a whole, but reading through a 6000+ word piece on a computer seems impractical. When these are complete I’ll gather them into a series of links on a single page.