We live in an age of goody-goody business. Companies wear their compassion on their sleeves in the form of ever more elaborate rainbow flags and inclusivity statements. Shareholder capitalism has been replaced by a lengthy list of virtue-signaling successors: “shared value capitalism” (Michael Porter), “conscious capitalism” (John Mackey) “compassionate capitalism” (Marc Benioff), inclusive capitalism (Lynn de Rothschild) and ESG- and DEI-flavored capitalism (almost everyone).
Driving all these buzzwords, manifestos and TED talks is the idea that the best way to do well is to do good. Doing good boosts profits by producing happy workers and delirious customers. Doing “bad” does the opposite by alienating workers and poisoning customer relations. People, profits and planet can fructify all at once.
But what about people who think that this is all twaddle? A select group of business leaders and companies have put their money on being “bad.” This does not necessarily mean being “bad” in a moral sense — hence the quotation marks — but rather ignoring or flouting the conventions of polite society. The most basic case for this is market differentiation: If everyone else is trying to be “good” then it makes sense to swim in the blue ocean of “bad.” There is also a simpler business case: Being “bad” can be a good way to motivate employees and identify customers.
Elon Musk and Peter Thiel both love scandalizing polite society, rather like naughty boys who surreptitiously release rats into a polite dinner party. Musk rails against the “woke mind-virus.” Thiel says that he no longer thinks that democracy and freedom are compatible. Charles Koch, perhaps the most successful US CEO for the past few decades, has devoted billions to fighting what he regards as climate-change hysteria.
Michael O’Leary, the CEO of Ryanair, Europe’s biggest budget airline, prides himself on his offensiveness — he calls passengers who fail to print out their boarding passes (thereby incurring a £60 fine) “stupid” and says that he would like to charge for the use of the lavatory. “One of the weaknesses of the company now is it is a bit cheap and cheerful and overtly nasty,” he once said, “and that reflects my personality.” Anna Wintour, the global editorial director of Condé Nast and queen of the fashion industry, is so hard to work for that one of her assistants wrote a book-turned-film about her called The Devil Wears Prada.
Some of the world’s best companies relish their “bad boy” image: Think of Exxon Mobil Corp. or Glencore Plc or Koch Industries Inc. in the oil-and-commodities sector or News Corp. in the media business, all of which seem happy to join in the Millwall Football supporters’ favorite anthem, “no one likes us, we don’t care.” Goldman Sachs Group Inc. has recently tried to woke-wash its public image, but the reality remains the same: You do not bank with Goldman because you think it’s nice but because you know that it’s populated by hard-nosed people utterly dedicated to money-making.
The finance industry is seeing the creation of more anti-woke businesses. Some 27 anti-ESG funds promise to return to the time when shareholder interest rather than values was the be all and end all of investing, targeting “sin” industries such as armaments that are shunned by ESG investors and conservative states such as Florida that are withdrawing money from ESG funds. Take your pick: the God Bless America ETF (ticker YALL), Point Bridge America First ETF (MAGA), or Strive US Energy ETF (DRLL). Another, 1789 Capital, named after the year the Constitution took effect, has invented a new business metric, EIG, entrepreneurship, innovation, and growth.
Being “bad” can provide companies with a dark glamor that simultaneously attracts the right sort of people and filters out the wrong sort. The 1980s saw two high-profile media exposes of Wall Street — Michael Lewis’s book, Liar’s Poker (1989), about his time at Salomon Brothers, and Oliver Stone’s Wall Street (1987) starring Michael Douglas as a financial predator who proclaimed that “Greed is Good.” Ivy League students responded to the two like Bronx teenagers watching Goodfellas — applauding the villains and declaring that “I want some of that.” The Wolf of Wall Street had much the same effect in 2008, at the height of the financial crisis. Michael Lewis confesses that he’s exasperated by the number of people who greet him with a smile and say you’re the reason I went into Wall Street.
Being “bad” can also create a powerful sense of loyalty to the organization. Companies such as Koch Industries and Exxon Mobil are notable for their strong esprit de corps: its “we happy few” against a world that either misunderstands or maligns us. In The Power of Being Divisive: Understanding Negative Social Evaluations, Thomas Roulet, of King’s College, Cambridge, analyses the social and psychological forces that create this feeling. Employees bond together to reject the stigma imposed on them by outsiders and to affirm their personal and collective worth. The more they are vilified the stronger the bonds become.
Breaking the rules of polite society can also be a surefire way of attracting attention to your cause. Act Up provided a template for this strategy on the left by mixing civil disobedience with eye-catching stunts in order to attract attention to the Aids crisis. Extinction Rebellion is employing the same tactics with the climate crisis — blocking traffic in busy streets, gluing themselves to public buildings, even going to the extreme of disrupting the Chelsea Flower Show.
Companies have recognized the commercial possibilities of similar strategies. Benetton revitalized a fading brand by running provocative ads featuring, for example, the pope kissing an ayatollah. French Connection made hay in Britain with the simple slogan FCUK. The Scottish beer start-up BrewDog did a brilliant job of garnering free advertising with stunts such as serving the world’s strongest beer in the taxidermied corpse of a dead squirrel.
The right is also having a field day with similar tactics, particularly in America. The conspiracy theorist Alex Jones used his disgusting allegations not simply to turn himself into a celebrity but also to exploit his fans: In 2014 he made $20 million by selling things that might be useful after the Apocalypse, such as survival kits and water purifiers, according to his divorce settlement. The founder of Nine Line Apparel, which sells a T-shirt bearing the slogan “Trump versus Everybody,” summarizes his business model in one sentence: “polarizing topics create brands.” One academic, Matthew Hughey, has coined the phrase “stigma allure” to describe the way that stigma can be used as a positive signal of authenticity and moral purity.
Recent political news, with Boris Johnson quitting parliament and Donald Trump charged with purloining classified documents, reminds us that there is a price to pay for defying polite opinion. In 2021, Exxon struggled to persuade other oil majors to join it in building a $100 billion carbon-capture and storage hub in Houston, with top executives at Shell, in particular, worrying that associating with Exxon would present an “unacceptable risk” to its reputation. The anti-ESG funds have failed to deliver the promised spectacular returns.
Yet “bad” business will remain attractive in the future. One reason is the perverse logic of the attention economy: The easier it is for the world to broadcast its opinions, the louder you must shout to be heard. The information market rewards polarizing opinions rather than moderate ones, strident voices rather than quite ones, and bigoted statements rather than nuanced ones. This reinforces what John Tierney and Roy Baumeister dub “the power of bad” — “the universal tendency for negative events and emotions to affect us more strongly than positive ones.” It also creates a downward spiral of bad taste. Reality TV shows get more depraved as they compete to think up ever more horrific trials for their guests (eating a bull’s testicles must be topped by eating a kangaroo’s penis) and ever more titillating scenarios for their audiences (one British dating show, Naked Attraction, requires participants to stand naked in a transparent box while potential dates choose between them).
The second is what might be called the woke treadmill. The Woke movement now routinely makes demands that would have seemed outrageous just ten years ago — for example, that companies support not just equality of opportunity but equality of results (“equity”). Walmart has made big efforts to embrace “good capitalism” in recent years by raising the minimum wage, giving employees more power and increasing its emphasis on DEI. But this hasn’t prevented the Drucker Institute’s Rick Wartzman from writing a damning new book, Still Broke: Walmart’s Remarkable Transformation and the Limits of Socially Conscious Capitalism. “If Walmart’s brand of change is the best we have,” sighs Wartzman, “can we ever expect to build a healthy society?” With the bar endlessly raised and trade-offs (for example between wages and prices) routinely ignored, companies might be forgiven for jumping off the treadmill and going to the dark side.
The biggest reason why goody-goody capitalism will never be enough is more positive — business’s role in harnessing the revolutionary forces that are upending the global economy. You cannot build revolutionary new businesses by working 40 hours a week and dutifully filling out employee evaluation statements. You need a leader with a commanding vision and an overwhelming will, and a workforce that is willing to go to extremes to give that vision life.
Good capitalism may be a fine formula for running established businesses, provided it is not driven to extremes by activists. It is certainly an important counterbalance to the forces that are producing cultural and environmental pollution. But when it comes to the business of forging the future, it is at best an irrelevance and, more commonly, an impediment.
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