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Why Corporations Love Diversity

The embrace of DEI is not a deviation from a natural state in which businesses are neutral on fundamental questions

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(fizkes/Shutterstock)

Affirmative action was imposed on businesses, through government mandates justified by the Civil Rights Act, but it has also been willingly embraced by them. Even when it doesn’t benefit the bottom line, it legitimates business in its current form, according with the interests and assumptions of managers. 

Conservatives who fail to confront this fact imagine that simply repealing government mandates stemming from the Civil Rights Act would mean the end of what they call “woke capital.” That is unlikely to be the case. As Emile Durkheim noted in The Division of Class and Labor in Society, economic organizations have historically sought to advance and uphold various religious and political ideals. The medieval guilds are only the most well-known example of this phenomenon, which can be seen as well in the professional corporations of ancient Rome, which were not just economic organizations but also religious bodies, whose members worshiped together and received common burial. The corporate embrace of diversity is not a deviation from a natural state in which businesses are carefully neutral on fundamental questions, but a continuation of a historical norm.

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This is part of the reason why today’s corporations have provided so little pushback against the demands of diversity. In 1985, Edwin Meese, the attorney general for Ronald Reagan, took aim at Executive Order 11246, an edict dating to the Johnson administration that required proportional hiring of women and minorities for companies doing business with the federal government. According to Labor Department officials, the executive order applied to more than 20,000 companies, including almost all of the largest corporations in America. Meese’s proposal would have freed these companies of a possibly burdensome requirement, yet it received a cool response from the corporate world. When the administration asked 127 chief executives, “Do you plan to continue to use numerical objectives to track the progress of women and minorities in your corporation, regardless of government requirements?,” 95 percent responded yes.

For the managers of these corporations, diversity was a useful legitimating ideology—one that seemed to reflect important changes in the nature of the economy. In 1996, Ralph Nader wrote to the CEOs of 100 large corporations, asking whether they would stand at their annual shareholders’ meetings and pledge allegiance, in the company’s name, to the flag of the United States of America. Only one CEO—the leader of Federated Department Stores—said yes. American corporations had come to see themselves as global agents. In that role, diversity served as a far more useful rallying cry than did older patriotic themes. As Emily Duncan, a diversity officer at Hewlett-Packard, put it in 1991, “We’re at the point where we really understand that in order to be a competitive global company we are going to have to have diversity in our workforce.” 

The appeal of diversity for corporations is not difficult to understand. Diversity has no direct reference to past wrongs. Its terms tend to be utilitarian rather than explicitly moral, and for this reason a “commitment” to diversity doesn’t entail particular demands or specific outcomes. In a 1999 article for the Harvard Business Review, William Bowen, Derek Bok, and Glenda Burkhart noted that some organizations “seek diversity because it is ‘the right thing to do.’ Others are trying to fix a problem from the past.” But the authors concluded that “neither of those reasons goes to the heart of a company’s mission.” Setting aside moral and historical arguments for affirmative action, the authors justified diversity as a business necessity. As Frederick Lynch, professor of government at Claremont McKenna College, has observed, “affirmative action frameworks were retooled into new policy rationales aimed at matching the workplace ethnic and gender diversity with that of rapidly changing customer bases.” What’s good for shareholders merges with what’s just plain “good.”

Yet the corporate embrace of diversity hasn’t been altogether happy. In the 1980s, William Morgan Porter, a former employee of the Buckeye Cellulose Corporation of Georgia, sued his former employer, claiming that the company had shown racial bias because its policy of firing employees for “absence and tardiness” had a disparate impact on blacks. His claim was rejected by courts, but in time his assumptions prevailed. A 1999 paper written by Tema Okun, a diversity consultant, identified several marks of “white supremacy” and urged businesses to uproot them. These marks included perfectionism, individualism, a sense of urgency, worship of the written word, belief in quantifiable progress, and a commitment to objectivity.

By the twenty-first century, an entire industry of consultants had emerged to help universities, corporations, and other institutions “achieve” diversity. In one form or another, the central impediment to this goal was identified as “whiteness.” Diversity would flourish, diversity consultants advised, only if a new mentality was nurtured, one that “makes room” for all the colors of the rainbow. This has meant undermining what Benjamin Franklin described as the “useful virtues” and what Tema Okun denounced as marks of white supremacy.

By disparaging the virtues on which economic production depends, the diversity regime undermines American corporations, even as it is supported by them. This irony, no less than future court decisions or changes in law, may prove its undoing. Business imperatives played an important role in the rise of diversity as America’s official ideology. And they are likely to be among the forces that lead us beyond it.

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