The People Are Revolting — Or Soon Will Be

The People Are Revolting — Or Soon Will Be

The following commentary/analysis is one I wrote in my capacity as a senior fellow at “the nation’s oldest consumer protection agency,” Consumers Research, where, among other things, I compile a weekly letter for public pension-fund managers.  I am sharing it here today because I thought it might be useful to some of you.


Drowning American Markets

The other day, Joel Kotkin – the noted demographer and political commentator – penned a long piece about “the coming revolt against woke capitalism.”  Although I have a tendency to cringe at the colloquial usage of the term “woke capitalism,” I nevertheless read the piece eagerly, mostly because of its author.  I was not disappointed.  Kotkin makes a strong and clear case that today’s cultural and economic elites are radically misjudging their influence and power and are, as a result, likely headed for a rather disagreeable reckoning:

Nowhere is the gap between the elites’ political activism and the interests of the public more evident today than when it comes to the overhyped climate crisis. To a remarkable extent, the current ruling oligarchy in tech and on Wall Street have embraced the ideology of Net Zero, even though this threatens to undermine Western industrial power and raise the cost of living for the masses. Elite opinion, in general, is far more engaged on climate issues than the general population. In one recent poll, those living with graduate degrees in big dense cities and making over $150,000 a year are far more likely to favour such things as rationing meat and gas than the vast majority of Americans.

The ultra-rich have been particularly drawn to draconian climate positions….

The clear hypocrisy of the greens does not go unnoticed by the masses. Those same elites who demand climate austerity for the many are widely known to enjoy the use of private jets, build $500 million yachts and own numerous, often enormous mansions. The fact that the most recent climate confab, COP28, had a session on ‘responsible yachting’ tells people all they need to know about the hypocrisy of the super-rich….

Like French aristocrats before the revolution, the oligarchs talk largely among themselves. They seem unaware that they may be financing fashionable causes that may threaten ‘their own rights and even their existence’, as Alexis de Tocqueville said of the Ancien Régime. In pre-revolutionary times, French aristocrats and top clerics preached Christian charity and celebrated the rights of man while indulging in gluttony, sexual adventurism and lavish spending, as well as exercising their historic privileges. Just like the revolutionaries of 1789, many in today’s third estate are disgusted by the hauteur and hypocrisy of the upper classes.

As longtime readers likely know, I am fascinated by both the French Revolution and by analogies to it, for a handful of reasons.  First, it was the first “modern” revolution and has provided a template for every revolution that has followed, both political and cultural.  Second, it served as the “bloody birth” of the political Left, the functional application of Rousseau’s ideas and their disastrous consequences.  And third, it is fairly easy to understand and appreciate.  Burke explained most of it, as it was unfolding, and what he didn’t explain, Tocqueville did subsequently.

Ironically, given this last bit, Kotkin and I have differing takes on “woke capitalists” and the position they hold in the French Revolution analogy.  Whereas he places them in the role of the Ancien Régime, I have long considered them to be the early revolutionaries, the men who overthrew the regime, who launched the revolution, and who, in doing so, upended the traditions and conventions of society, only to replace them with nothing more than platitudes and slogans:

[W]hile it is easy to destroy the old order, it is not so easy to create a new one.  As it turned out, the Assembly could assign its new order all the power it wanted, but it didn’t have the ability to make that power a reality, to turn its new constitution into the law of the land.

The largest factions within the Revolution were frustrated, seeing the new constitution as a betrayal.  The largest of these frustrated factions was the Jacobin Club, which dominated the Paris Commune and was, therefore, the de facto ruling body of the city of Paris.  By the middle of 1792, the Jacobin Club had decided that it could no longer support the Assembly or the new constitution.  They stormed the Hȏtel de Ville, where the King and the Queen were housed, and seized and imprisoned them.  Over the next several weeks, the Jacobins dissolved the Assembly, declared the establishment of a Republic, and established something called the National Convention to rule the country on behalf of “the people.”

The Jacobins also arrested and murdered scores of royalty and clergy, which their nominal leader, Georges Danton justified, declaring: “These priests, these nobles are not guilty, but they must die, because they are out of place, interfere with the movement of things, and will stand in the way of the future.”  Three months later, they established the Orwellian-named “Committee for Public Safety” and began attempting to restore order.

Within a few months, the Jacobin-led Committee had decided that strong action was needed to preserve the Revolution, and so it launched what would become known as “the Reign of Terror.”  Unfortunately for Danton, the Committee was overseen by one of his chief rivals within the Jacobin Club, a man named Maximilien François Marie Isidore de Robespierre. During this period, Robespierre “protected” the Revolution by slaughtering some 40,000 French men, women, and children, at least 16,000 of whom were guillotined.  On April 5, Robespierre turned his attention to his fellow Jacobins whom he saw as a threat.  Danton himself was labeled insufficiently revolutionary and was beheaded alongside the man who sparked the storming of the Bastille, Camille Desmoulins.  The Revolution had “evolved.”

Three months later, Robespierre himself was guillotined.

While it would appear, superficially, that Kotkin and I have taken diametrically opposed positions here, I think that the message in both positions is the same: “woke capitalism” is on the verge of unleashing forces that likely cannot be contained, and only a concerted effort from both its opponents and its nominal supporters can prevent those forces from destroying the system in its entirety.  Whether one sees BlackRock CEO Larry Fink as King Louis XVI, about to be guillotined, or as Camille Desmoulins, likewise about to be executed, the end result is the same: people want the guy’s head.  And while I have little sympathy for Fink and believe that he continues to exacerbate the problems associated with ESG/stakeholder capitalism/woke capital/whatever you call it, I think that it is inarguably in everyone’s best interests that we avoid metaphorical (not to mention literal) bloodshed in the effort to move American business and capital markets away from their currently disastrous course.

The idea here is to move business and markets “back to neutral,” not to replace the current political prejudices with other, more populist or more conservative biases.  Even a reversion to the mean cannot be done, however, if the forces promoting ESG/woke capital continue to apply their own political biases to the system and to insist that the thorough discrediting of their vision is invalid or itself politically motivated.  That will only exacerbate the unrest and, as Kotkin warns, create “a direct threat to our insane ruling class.”  That’s a situation no one wants.  We absolutely need them to understand the stakes and to return to sane management of markets and business of their own accord (even with more than a little cajoling).  If they don’t, they will create the conditions described by Samuel Taylor Coleridge in Specimens of the Table Talk, from which comes my favorite quote on the French Revolution and the “spirits” it called forth:

Necker, you remember, asked the people to come and help him against the aristocracy. The people came fast enough at his bidding; but, somehow or other, they would not go away when they had done their work. I hope Lord Grey will not see himself or his friends in the woeful case of the conjuror, who, with infinite zeal and pains, called up the devils to do something for him. They came at the word, thronging about him, grinning, and howling, and dancing, and whisking their long tails in diabolic glee; but when they asked him what he wanted of them the poor wretch, frightened out of his wits, could only stammer forth, – “I pray you, my friends, be gone down again!” At which the devils, with one voice, replied –

Yes! Yes! We’ll go down! We’ll go down! But we’ll take you with us to swim or to drown!”

No one wants anyone else drowning.  And more to the point, no one wants the eventuality that will end the drowning, the emergence of a strongman who will create order through force.  Again, the experiences of the Revolution are instructive.  The madness, once unleashed, did not end until Napoleon seized power, and even then, he unleashed a different madness that left France so weakened economically, politically, and demographically that it has not recovered to this day.

As I warn in the conclusion of The Dictatorship of Woke Capital, the emergence of a heavy-handed, “enemy”-vanquishing, order-producing regime is the inevitable result of the politicized path American business and capital markets are currently following.  But it doesn’t have to be that way.  As Kotkin concludes, “There is still time, despite the power of the elites, to champion democracy, liberal values and the dream of upward mobility.”  I probably wouldn’t use those exact terms, but I share the sentiment.

Back to neutral, in short.

Stephen Soukup
Stephen Soukup
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Steve Soukup is the Vice President and Publisher of The Political Forum, an “independent research provider” that delivers research and consulting services to the institutional investment community, with an emphasis on economic, social, political, and geopolitical events that are likely to have an impact on the financial markets in the United States and abroad.