Why "Enlightened Capitalists" Never Seem to Win

By Hamilton Nolan | October 30, 2017 | 3:20pm

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On the day of Armageddon, when all is in flames, there will be a rich person saying that—though it may sound radical—it may not be too early to start undertaking a study of these problems we seem to have.

Ever since Marx predicted that capitalist greed would sow the seeds of its own demise, more optimistic businesspeople have been preaching the need for “enlightened” capitalism—a version that would keep all the innovation and abundance, but would not be so greedy that eventually the masses would want to chop every rich person’s head off. This should be simple, in theory. All it requires is that the winners of capitalism be willing to spread around some of their winnings rather than continually maximize profits until the whole system blows up. But in America, there is a conflict between the enlightened capitalist ideal and the reality of our capitalist system. Corporate America, as currently constructed, is a machine for maximizing profits, and its profitmaking algorithm will happily buy control of our political system in the process, if that is what it takes to protect its profit stream. There is little room there for enlightenment. Corporations are machines; CEOs are along for the ride. Our nation’s search for a kinder capitalism so far resembles a car salesman futilely instructing a rich Ferrari buyer not to always drive it 200 miles an hour, as the rich guy floors it out of the lot and never looks back.

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Aetna, the health insurance behemoth, is in the news after CVS made a $66 billion bid to buy it late last week—the sort of bid that highlights one of capitalism’s long-predicted pitfalls, increasing consolidation and an inevitable rush towards monopoly that ultimately short circuits competition and hurts consumers. The news has cast a new spotlight on Aetna’s CEO, Mark Bertolini, who has himself spoken up about the need for enlightened capitalism in a way that is fairly remarkable, by CEO standards. Fortune magazine’s Clifton Leaf recounts what Bertolini told him just months ago:

“Here’s the way I think about it,” he told me at the end of August. “CEOs are required to paint a stark reality of what the world looks like in five to 10 years. So it’s not what it is today versus other alternatives today. It’s about what should we be versus what it’s going to look like in five to 10 years from now. And doing nothing, in the current model around capitalism, will destroy capitalism. When 65% of people under the age of 35 believe that socialism is a better model, we have a problem. We have a problem. So unless we change it, it will change—and maybe not in a good way.”[…]

“I think there’s a clarion call to make a difference here,” he went on. “And unless we do it on our own—unless people speak out and talk about how we can be better, and we can lift all boats versus just the 1 percent—We’re in for a really bad time.”

Mark Bertolini is right. He says that he is speaking to other CEOs about the issue. In theory, his message should resonate. One would expect that anyone with the economic literacy required to be a Fortune 500 CEO is capable of reading a chart on rising economic inequality and getting scared about its implications for the future. But there is something wrong with this picture. Corporations and their CEOs have great political influence in America; they have been exerting that increasing influence for decades; the inequality trends that are now so ominous have been ominous and getting worse for several decades now. Why, in all that time, haven’t the enlightened capitalists stepped in to change things?

Because the enlightened capitalists have been getting rich. A key feature of inequality is that rich people get richer while everyone else does not. The owners of capital—the investors and executives of companies like Aetna, for example—are huge winners in our broken capitalist system. And while CEOs may be smart enough to understand intellectually that doom lies ahead if a change to this enormously beneficial (for them) system is not made, in order to make such a change they must be willing to go against the entire machinery of corporate America that they have been appointed to run. That is decidedly not how the machine is supposed to work.

What, realistically, is the most effective way for the CEO of a major corporation like Aetna to make meaningful change that will “lift all boats versus just the 1 percent,” as Bertolini advocates? Sure, the company can try to pay its own employees more, but that would benefit just 50,000 people, not an entire nation. The real opportunity to move our system of capitalism in an enlightened direction would be for the corporate leadership to exert its influence in politics to see to it that more progressive economic tax policies and regulations are passed—policies that would serve to redistribute wealth downwards, rather than upwards, and prevent the drift towards corporate consolidation, and strengthen the position of organized labor in order to raise wages nationwide.

In other words, the exact opposite of the platform of the Republican party.

How well has Mark Bertolini, advocate of enlightened capitalism, done on this most meaningful measure? According to online political contribution records, over the past two years he made personal donations to Hillary Clinton, Republican Senator Pat Toomey, and former Republican Senator Kelly Ayotte. Toomey is a supporter of the current Republican tax cut plan, which would shower billions of dollars on the very rich, exacerbating the economic inequality that is undermining capitalism in the first place.

Bertolini also made multiple personal contributions to Aetna’s political action committee. During the 2016 election cycle, Aetna donated $250,500 to House Republicans versus $150,000 to House Democrats, and $112,000 to Senate Republicans versus $40,500 to Senate Democrats. For the 2018 election cycle, Aetna has already made 72% of its donations to Republicans, including its single larges donation of $10,000 to House speaker Paul Ryan, the architect of the Republican tax cut plan, a policy which is designed to worsen the problems that enlightened capitalists claim to be worried about.

In 2011, under Bertolini’s leadership, Aetna donated $7 million to the American Action Network and the Chamber of Commerce, two of the most powerful conservative political groups in Washington.

And here we see the reason why inequality continues to get worse, even as rich people themselves speak out about how bad it is. They are not willing to do what needs to be done. Talk is cheap. Writing a check to Hillary Clinton is easy. Wrestling the profit-seeking machinery of a major corporation towards a more just world is hard. For the very rich, taking an unfair portion of America’s wealth and giving back a little is easy. Volunteering to change the political and economic system that rewards them with such wealth is hard, and distasteful, and socially isolating. So the nice talk will continue, and the political action diametrically opposed to the nice talk will continue, and inequality will continue as well. Enlightened capitalism is not impossible. It’s just that we’re going to have to enlighten it from the bottom up. Angrily.