Author Anand Giridharadas was on vacation in August when an email from JPMorgan Chase CEO Jamie Dimon landed in his inbox. “I’d love to talk to you when you have a minute,” the chief executive of the largest American bank wrote.
Giridharadas tells me he considered putting off responding but decided the message was too interesting to ignore. The two are on opposite sides of a roiling debate over the future of capitalism playing out from corporate C-suites to the Democratic presidential race.
Dimon, chairman of the Business Roundtable, led that group, which lobbies on behalf of top CEOs, to recast its mission statement for the first time in 22 years. The new version plays down the importance of maximizing shareholder value. It commits the group instead to promoting a wider good by focusing among others things on employee well-being, supporting local communities and treating suppliers more fairly.
Critics of concentrated corporate power and soaring inequality, including Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., dismissed the move as an empty rhetorical shift. It’s a view Giridharadas gave voice to in his book, “Winners Take All: The Elite Charade of Changing the World,” which argues plutocrats have preserved their power by gesturing toward good works while ensuring the underlying rules delivering them the spoils never change. And he offered skeptical quotes to the coverage of the Roundtable’s move, including in the Fortune piece that broke the news. (Full disclosure: Giridharadas and I co-edited our high school newspaper and remain friends.)
The phone call between Dimon and Giridharadas wasn’t productive, Giridharadas says. The bank chief wanted to know what more the writer would ask CEOs to do. Giridharadas says he offered some suggestions, including that Roundtable companies align their lobbying with the new mission statement and make compliance with that standard a condition of membership in the group.
Dimon, he says, replied the organization is not “a police force” and can’t regulate how individual companies advocate. He objected to Giridharadas’ contention that some Roundtable members exploit their workers as part of their business model; Dimon said he knows the chief executives to be good people, and besides, “a lot of people just don’t like to work,” he said, according to Giridharadas.
“BRT executives, including our CEO, have engaged with a lot of people around the new Statement of Corporate Purpose,” JPMorgan spokesman Andrew Gray said. “These quotes don’t reflect the conversation.”
But the face-off between corporate heads and advocates of systemic change continues – and promises to be a defining fight in the 2020 presidential contest and beyond. The Roundtable launched the latest salvo, responding to a letter from Warren with one of their own. Warren had asked 10 CEOs who signed the Roundtable’s new mission statement what steps they were taking to implement it. And she asked whether they would adopt prescriptions laid out in the Accountable Capitalism Act, her bill to force big companies to secure a federal charter that would legally enshrine their broader responsibilities to stakeholders.
Roundtable president and CEO Josh Bolten made clear the group won’t support the legislation. “While we share the goal of increasing economic opportunity for all Americans, we believe the Accountable Capitalism Act would not advance that goal and, in many respects, would be counterproductive, hurting the very people we want to help,” Bolten writes, according to a copy of the letter the Roundtable gave me. “Given our diverse economy, business decisions about how best to serve employees and deliver high-quality goods and services to customers require flexibility within the private sector. Creating a new government entity to oversee those decisions would undermine U.S. competitiveness and result in less innovation.”
Instead, Bolten pointed to actions its members are taking on their own that he framed as making good on their support for the revamped mission statement. Those include raising the minimum pay for their workers and voicing support for a higher federal minimum wage; backing increased infrastructure investment; calling on Congress to overhaul higher-education funding; and endorsing new data privacy standards for consumers.
JPMorgan has taken its own steps. It just announced that 2,100 of its hires last year – 10% of those the bank brought aboard – have criminal records, the product of the firm’s “second chance” hiring push. Talking up those results this week: Heather Higginbottom, who served in the Obama administration as a deputy budget director and a deputy secretary of state. Now she’s running the JPMorgan PolicyCenter, which the bank just launched to push for regulatory changes addressing racial iniquities and other ills.
Meanwhile, the U.S. Chamber of Commerce announced its own bid to make the case businesses can tackle socioeconomic challenges without new government rules, unveiling an initiative called Project GO. “The fundamental challenge we face today is to preserve the ability of our nation’s companies, to grow, innovate, and drive prosperity under a system of free and fair capitalism, while also acknowledging and addressing the shortcomings in the system,” Chamber president Suzanne Clark said in a speech. “There are better answers than sweeping government mandates.”
Fortune President and CEO Alan Murray, who wrote the original story on the Roundtable’s new mission statement and had the exclusive on the group’s response to Warren, argues more government regulation won’t deliver better outcomes. “I see more and more companies backing up their purpose and values statements with real action these days,” he wrote in his CEO Daily newsletter. “And I see little reason in history to believe that Warren’s legislation regulating corporate governance would be an effective alternative. But the battle lines are drawn.”
Giridharadas counters that regardless of CEOs’ intentions, expecting them to bring needed foundational changes to an order that’s kinged them is folly.
From his half-hour conversation with Dimon, for example, he concluded the Wall Streeter is “very proud of this BRT initiative. I think he really thinks he’s changed capitalism… It was beyond his understanding that voluntary virtue does nothing on its own.”