In his 1973 book Capitalism and the Permissive Society, the late Financial Times columnist Samuel Brittan observed that “businessmen can usually be relied upon to defend the indefensible aspects of their activities while giving in to their collectivist opponents on all essentials.”

The corporate political positions that have become fashionable of late contribute to a dangerous trend that undermines the separation between economic and political power. Note that “power” has a different meaning in the two cases — corporations cannot send anybody to jail — but the difference shrinks when corporations become less distinguishable from the state.

Of course, private corporations — as “private” implies — should be free, through their executives, directors, and ultimately shareholders’ assemblies, to determine corporate positions on any issue, express their political opinions, and peacefully act upon them. One would think that the diversity of their shareholders’ and their customers’ political opinions would check this politicization, but the principle remains valid. Contrary to what some activists on both ends (and elsewhere) of the political spectrum think, free speech is important. But we also have the right, following Brittan and other classical liberal thinkers, to tell corporate officers and shareholders that they are often being naively caught in debates they don’t understand and that they are acting against their own interest and that of their customers.

New voting laws / In April, more than 300 corporations, their chief executive officers, and other executives issued with great fanfare a statement against proposed and recently enacted changes in state voting laws, most notably in Georgia. The merit and intent of these changes are debatable, with reasonable and not-so-reasonable arguments being offered both for and against them.

It is noteworthy that these laws are pushed by Republican state governments and that, as pointed out by the New York Times, two-thirds of Georgia absentee ballots were cast for Democratic presidential candidate Joe Biden. There is room for thinking that these “publicly minded” politicians are indirectly trying to target the voters who don’t vote for the “right” candidates. The issue is partisan and related to Republican Donald Trump’s baseless claims of election fraud after his humiliating defeat in the 2020 presidential election. On the other hand, it’s doubtful the changes will have much effect on election outcomes, even in especially tight Georgia.

Corporate officers and shareholders are often naively caught in debates they don’t understand and act against their own interests and that of their customers.

So, should corporations and CEOs get involved in this issue?

The April declaration began: “We stand for democracy. A government of the people, by the people” (strangely omitting “for the people,” the third leg of the consecrated formula). The short declaration implies that “the right to vote for all of us” is currently in peril. “We all should feel a responsibility,” it states, “to oppose any discriminatory legislation or measures that restrict or prevent any eligible voter from having an equal and fair opportunity to cast a ballot.”

But what exactly is “an equal and fair opportunity to cast a ballot”? Obviously, it implies that no violence is used to prevent certain voters from voting, but this goal was reached decades ago. If the goal is for every voter to bear the exact same cost in terms of time and information gathering, it is unrealistic and superfluous: Individuals who earn more have a higher opportunity cost of voting. It takes time not only to go to the voting booth — and to queue there — or even to fill and return the absentee ballot, but also and more importantly to obtain and understand the candidates’ platforms (or lack thereof) so as to not vote blind. The cost of voting is thus, and it cannot be otherwise ceteris paribus, higher for a middle-class voter — and higher still for a wealthy voter — than for a low-income or unemployed person.

“Who in their right mind would say that they want legislation that will limit people’s ability to vote?” asked one of the main coordinators of the statement, Kenneth Chenault, former CEO of American Express. But there will always be limits on people’s ability to vote, so the question is, in what degree? Should people be paid to vote and brought to the polling place in limousines? There is a good argument that somebody who does not want to spend any effort voting (like one-third of the American electorate) should not be pushed too hard to vote. More radically, Georgetown University philosopher Jason Brennan has presented a serious argument that uninformed voters should not vote. (See “Power to the Knowers!” Spring 2017.)

There is a good chance that our progressive CEOs haven’t thought much about these issues. They are too busy and focused on their and their companies’ self-interest. Or, as Brittan wrote, “Businessmen are paid to operate the system rather than understand or expound it.”

Walmart is one company that did not sign the statement. Its CEO, Doug McMillon, wisely declared, “We are not in the business of partisan politics.” Harvey Golub, another former American Express CEO, correctly argued that “at the end of the day, corporations and the idea of capitalism will be in lower repute” from such involvement. “We’re under no illusions that big business is a reliable friend of capitalism,” noted an April 15 editorial in the Wall Street Journal.

Discriminating against customers / The April declaration is only one example of a general politicization of corporations. Many firms now try to push their professed political opinions on their customers. Facebook and Twitter have erased posts or marked them controversial, notably about the COVID pandemic and what “the science” says — but never mind what economic science says. They have deleted accounts. Although they may have had good reasons to do so in certain cases, their so-called “community standards” appear to be what they and their friends in the tech sector consider politically acceptable opinions; they are following the standards of one specific community or faction within society.

The phenomenon is fascinating. Corporations proudly take a stand against some of their customers’ political opinions. Many explicitly advertise their woke conversion. Former diplomat Dave Seminara wrote in the Wall Street Journal:

When I look around my house, I see many products from woke companies that want me to know how strongly they disagree with me on pretty much every issue of the day. … It doesn’t seem like too much to ask that the businesses I patronize refrain from actively and loudly despising me.

PayPal certainly has — and should have — the right to prevent its customers from using their accounts to purchase guns or ammunition, a right protected (against government) by the Second Amendment of the Constitution. I would also defend the company’s right to discriminate against its customers who exercise their First Amendment rights. But I would recommend that PayPal’s executives read Brittan’s book as well as Milton Friedman’s 1962 Capitalism and Freedom to appreciate the importance of separating politics from the market. It’s urgent.

This politicization of business contributes to alienating a sizeable part of the American public from “the community.” This discrimination is not a recipe for social peace nor, of course, for liberty.

The supposed corporate goal of “meeting the needs of society” — as some say to justify this trend — is impossible as long as not all the individuals in society have the same needs and preferences. The only thing we can hope for — and it is the secret of prosperity — is that free and competitive businesses try to meet the demands of their customers.

The politicization of business contributes to alienating a sizeable part of the American public from “the community,” which does not contribute to social peace or liberty.

Separation of politics and economics / One major advantage of the separation of economic and political power is that their union facilitates government authoritarianism. As long as businesses offer their goods and services to whomever is willing to pay the market price, and as long as they hire the talents they want at the market rate, individuals who disagree with majority opinions and government preaching are free to earn a living and live as they want.

Your fuel oil delivery man is not interested in your political opinions but only in your check. That is not a bug but a feature of capitalism. Friedman emphasized the idea that political freedom in the sense of individual rights is only possible if the economy is free from government and politics.

In many ways, the benefits of economic freedom were illustrated a contrario by the Jim Crow era. Subjected to government discrimination, black people would have been even more oppressed if free enterprise — businesses selling them food, motel accommodation, manufactured goods, etc. — had been more generally prevented from serving their needs. Railroads in the South were willing to serve blacks as well as whites until state governments forced them to segregate their cars. The Negro Motorist Green-Book, which was published annually from 1936 to 1967, informed black travelers where they would be welcome in hotels, restaurants, gas stations, or even public beaches and picnic places, instead of being harassed and humiliated (or worse). Imagine if all private businesses had been state corporations!

In Capitalism and Freedom, Friedman taught us that, all else equal, a private business in a free and competitive market will discriminate less than a government or public organization. This idea was reinforced by Gary Becker, also a Nobel economics laureate, who explained that a competitive private business must generally pay the cost of its discrimination against customers in the form of lower sales and against employees in the form of higher labor costs. In contrast, a public organization passes on the cost of its discrimination to the taxpayer. The majority of taxpayers or a winning minority among them may be happy to finance the discrimination they like, but dissenting taxpayers are forced to pay for it. In other words, an existing “taste for discrimination” (in Becker’s terms) in the public is better enforced by government than by competitive businesses.

In his 2019 book A Republic of Equals, economist Jonathan Rothwell estimates that without various “barriers to free exchange” approved, promoted, and enforced by governments in the United States, “inequality in income would fall by half.” The real estate market is a case in point. From the 1920s through the New Deal and until the 1960s, the federal government actively encouraged housing discrimination against blacks by building or financing segregated housing and promoting segregated zoning guidelines, notably through “red-lining” — that is, the Federal Housing Administration giving poor credit ratings to non-segregated neighborhoods. (See “The One-Percenter State,” Spring 2020.)

Courting the mob / Some people seem to believe that “nice” governments, together with politicized and obedient corporations, can do a lot of good — although many of the same people continuously criticize governments and corporations as they operate in reality. But even if Nirvana were within reach, social currents can shift suddenly, and politicized corporations may in the future support very different political ideas. Popular fads change with time, and it is always useful to have free businesses that will continue to cater to minorities even if the government does not.

Another tragic aspect of the current evolution is that today’s corporations that support current popular causes probably do so in the vain hope and tragic illusion of avoiding more criticism, regulation, and control. It is far more likely that the opposite will happen. Once firms are perceived as pursuing “public” missions, they will be regulated as the effective extensions of government that they will have become. They will lose their economic freedom, just like their customers.