By John Paul Rollert
John Paul Rollert, Adjunct Associate Professor of Behavioral Science at the University of Chicago Booth School of Business, examines why major corporations are retreating from Pride sponsorships across the US. He argues that fear – not profit – is driving corporate conduct in the Trump era, with troubling implications for free enterprise.
Those without pride often lack the courage of their convictions -just ask senior executives at Mastercard. As The Wall Street Journal has reported, the company recently announced that it won’t renew its “platinum” level sponsorship of New York City’s 2025 Pride March, joining the likes of Citi, PepsiCo, and Nissan, all of whom have stepped back from being high profile supporters of the June event.
New York is not being singled out. In the last few months, similar events across the United States have been met with standoffishness by long-standing sponsors and corporate cold feet. What accounts for the reticence? Not a change of heart, but a change in administration. President Donald Trump has put Diversity, Equity, and Inclusion (DEI) Programs at the top of his target list, and US companies have beat a hasty path in the opposite direction of any initiative that might smack of inclusivity. Supporting a Pride March in a major American city may seem like a harmless endeavor, but in a world where officials at the US Naval Academy briefly contemplated removing a biography of Jackie Robinson from library circulation to comply with an order from the Secretary of Defense to eliminate from its shelves books with DEI related themes, the new law of corporate conduct is clear: When it comes to DEI, better to be safe than sorry.
Let’s be clear about what this trend is not. In recent years, many people have called for a return to Milton Friedman’s standard for corporate conduct: “The Social Responsibility of Business Is to Increase Its Profits.” The dictum provided the title for the Nobel Prize winning economist’s 1970 essay for The New York Times, wherein he argued against the notion that business has a “social conscience” that should obligate executives to prioritize ends above and beyond profit-making, such as “providing employment, eliminating discrimination, [and] avoiding pollution.” Friedman had previously described the notion of Corporate Social Responsibility or CSR as a “fundamentally subversive doctrine” in his book Capitalism and Freedom. By requiring businesses to promote a particular vision of “social good,” he said, business executives would “extend the scope of the political mechanism to every human activity.” The business of business should be business, Friedman felt, not political action.
But a lot has changed in 55 years, and what exactly Friedman would have thought of the rise of what I’ve come to call “Activist Capitalism” is unclear. Over the last decade, corporations have increasingly leaned into CSR and even taken positions on controversial political issues because they believe doing so is in the best interest of their business. When Nike hires former NFL quarterback and outspoken civil rights activist Colin Kaepernick as one of its spokesmen or Budweiser crafts an advertising campaign around the transgender social media influencer Dylan Mulvaney, both companies do so not despite their bottom lines, as Friedman warned, but because of them. Like so many companies, they have felt the need to do good – or least appear to do good – in order to do well for their shareholders.
Friedman, who died in 2006, never wrestled with the possibility that consumers might want businesses to be socially conscious, much less overtly political. And while I suspect he would be highly skeptical of the business-use case necessity of such initiatives, if, as he held, the social responsibility of a business is to increase its profits, whenever supporting such causes accomplishes this goal, he would have felt compelled to endorse them.
What he would not have endorsed was the government pressuring companies to abandon such initiatives in favor of some partisan political agenda. If business executives tapping their treasuries to support social causes was typically indefensible, the government using state might to threaten and coerce businesses to support their vision of the public good was intolerable.
“The political principle that underlies the political mechanism is conformity,” he wrote in his New York Times essay, and he feared that “the doctrine of “social responsibility” taken seriously would extend the scope of the political mechanism to every human activity.” And yet, however much he might have worried about Exxon enrolling its shareholders in environmental activism if it decided to stop drilling for oil and start making solar panels, the state using its might in favor of such ends was another matter entirely. A shareholder can always sell his shares and invest in another company, but the conformity that state power demands is directly at odds with the free choice of citizens and companies alike.
Politics makes for strange bedfellows, and while it’s hard to imagine Milton Friedman would be enthusiastic about the rise of “Activist Capitalism,” it’s impossible to think he would support the Trump Administration’s efforts to recast corporate social responsibility in its own image. In the face of such threats, Friedman would tell companies like Mastercard to have some courage and show a little Pride.
About the Author
John Paul Rollert is Adjunct Associate Professor of Behavioral Science at the University of Chicago Booth School of Business. His teaching and research focus on the intellectual history of capitalism, the ethics of leadership, and the application of empathy to law, business, and politics. He writes the In-House Ethicist, a column for the Chicago Booth Review, and his work has been featured in a wide variety of publications, including Fortune, Bloomberg, The Atlantic, and The New York Times.? For two decades, he has also taught courses at Harvard in ethics, politics, and leadership.
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