Playing with Power: Implications of the Increased Presence of Corporations in the Social Sphere

Among many actors influencing social, economic, and political life, corporations are increasingly gaining power. Society is divided into two categories: those demanding more social activism from corporations, and those fearing corporations may grow too powerful. In their pioneering work, The Modern Corporation and Private Property, written in 1932, Adolf Berle and Gardiner Means predicted that corporations will eventually grow so powerful that they will be competing with the government for the dominant form of social organization. Has that day come?

Recent examples of corporate social advocacy on LGBT rights and Gun Control Movement by companies like Salesforce and DELTA exemplify how corporations use their economic leverage to push their political agendas– demonstrating both the potential of corporate activism and the vulnerability of the policymakers. Even more vociferous are the evolutions on voter suppression issues, where it becomes harder and harder to draw the line between pure social activism and partisan political championing.

The 2020 presidential elections exposed a longstanding problem: the fragile balance of voting rights. After his defeat, former President Trump incited an overly zealous movement which resulted in hundreds of bills and policy proposals all over the country, most of them limiting voting rights in one way or another. Opponents of these laws, including voting rights activists and community leaders, urged businesses to stand up for democracy. And many stood.

An impressive business alliance soon emerged opposing the former President’s movement, led initially by black leaders, such as Kenneth Chenault (a former American Express CEO) and Kenneth Frazier (CEO of Merck). It grew steadily, coopting notable brands, such as JP Morgan, Apple, PayPal, Amazon, Airbnb, Google, Pepsi, and many more. Some of them went even further than simple statements. For example, Major League Baseball decided to move its All-Star Game from Atlanta after Georgia legislators passed a highly controversial voting rights bill. Other big names, like Coca-Cola, announced their decision to pause political donations.

But what repercussions can corporate activism have on political processes? Will it be the balancing element between people’s needs and interests of politicians or a trojan horse driven by pure profit?

Some community leaders say corporations gain their power directly from communities and people, thus it is natural that companies should use their leverage to speak up and stand for those communities. The idea that companies should increasingly utilize this leverage is seemingly reinforced by local leaders who have come to expect this kind of advocacy on their behalf from influential companies. For example, in Georgia, Governor Brian Kemp signed a bill restricting voting rights by limiting volunteers from serving water or food to voters in line, along with imposing voter ID requirements and limiting drop boxes. As a result, Black communities publicly demanded action from big companies based in Georgia. And when that action didn’t come, some religious and community leaders, such as Bishop Reginald T. Jackson of the Sixth Episcopal District of the African Methodist Episcopal (AME) Church—representing over 500 churches in Georgia—announced an economic boycott of Coca-Cola, Delta, and Home Depot on April 1, 2021. Notably, Bishop Jackson asserted, “We cannot and will not support companies that do not support us in our struggle to cast our ballots and exercise our freedom.”

Opponents of corporate social advocacy warn about the perils of such ventures. The Senate minority leader Mitch McConnell claims that businesses ought to “stay out of politics.” Mr. McConnell blamed corporate leaders for “dabbling in behaving like a woke parallel government.” He went further, threatening that companies’ actions “will invite serious consequences if they become a vehicle for far-left mobs to hijack our country from outside the constitutional order.”

As an old saying says, the truth must be somewhere in the middle. Mr. McConnell’s allegations do bear some rationale and there are troublingly powerful corporations indeed. But it can hardly be argued that any of them have done too much social activism if too much social activism is even possible at all. Business leaders standing for religious, racial, or sexual minorities or corporate engagement on climate crisis is barely a sign of “hijacking the country.” If there is something to be apprehensive about, it is the other side of corporate advocacy: suspicious funding of political agenda and all shades of influence peddling. And this, unlike corporate social activism, is not new at all.

But there is another angle to look at this problem. The growing need for corporate interference on social issues is proportional to the increasing inefficiency of policymakers. Politicians are so absorbed by political battles and games, struggling to keep their power and undermine their opponents, that in the process they become simply ineffective. Good laws are repealed, laws of compromise are passed, and those policies that people need the most are subjected to infinite debate with no foreseeable outcome.

In absence of efficient political power, people and communities are turning to the next able actor in line. As it happens, it is corporations.