The Politics of Business and Business of Politics

`In early April 2021, Mitch McConnell articulated an unfamiliar Republican grievance. The party of low tax and deregulation expressed a newfound ire at the ‘woke parallel government’ of “Big Business”. ‘Serious consequences’ would face those that about-turn on their politics in choosing to line up behind progressive cause célèbres, so said McConnell. So it may be, but not in the way McConnell imagines. There will likely be no big conservative backlash – however, “Big Business” risks getting itself ensnared in the most dangerous game there is: politics.

Corporations have always been political – government and business need to speak, and as a necessary corollary, business can nudge government. Corporations can choose to lay low – ironically, this is most often the case when the link between government and businesses is strongest. Think post-war Britain or America in the half-century after FDR. In post-war Britain, the National Economic Development Council (NEDC), coordinated industrial relations, in doing so it formalising a British economic strategy. Tied at the hip, “Big Business” and government communicated behind doors – and so the politics of business remained hidden.

As the small state became fashionable, business and government decoupled - so corporations changed tact. Corporations, especially American ones, invested heavily in political lobbying. In the US, total volumes of cash spent on lobbying went skyward – in 1998 it was less than $1.5 billion, by 2009 it had more than doubled to $3.5 billion. As cashflow increased, the lobbying industry grew – lobbyists became recognisable as part of the mesh of government. Lobbyists acted as substitute for access previously freely given – and corporations don’t flaunt this sort of politics. Lobbying often feels slimy; the industries that invest most heavily – those like pharmaceuticals and energy giants – tend to act against perceived public best interest. When “Big Business” had something to hide, it found a friend with Republican Congressmen. The proliferation of the climate-change-sceptic, libertarian Republican is partly attributable to this. Nevertheless, most companies chose to not get involved in the dirty game. Michael Jordan – a basketball player who branched out to selling branded clothing – famously refused to endorse a Democratic congressional candidate in a knife-edge race. His excuse: ‘Republicans buy sneakers too’.

Things have changed. Exactly what has changed is hard to pinpoint – but there are a few obvious candidates. Government dysfunctionality is one. In America gridlock has become so severe that the public look for substitutes. Calls for firms and corporate America to act as what McConnell degrades as a ‘parallel government’ are real. 153 companies came out against Trump’s Muslim travel ban. Similarly, dysfunctionality has greatly increased the size and number of large companies. Hamstrung government has been unable to react with sufficient speed or scope to the rise of new tech giants like Google and Facebook. The result is companies like Google and Facebook become fiefdoms accountable to no-one. Twitter and Facebook can silence a sitting President – which, whether right or wrong, is surely not a decision for a private company.

Globalisation is another culprit. Globalisation has diminished the relative power of government while also giving greater opportunities for companies to make morally dubious decisions. Apple, not the US government, is the one under pressure for maintaining links with suppliers with dodgy human rights records.  

Potentially, the most consequential change is cultural and political. Politics increasingly acts like a gas – filling the entire room rather than remaining confined to a corner. Politics is totalising, and so it is hard to opt-out. Brands are under both external and internal pressure to take stands. Managers are disproportionately liberal – according to a recent poll 47% lean left and only 27% lean right. The internal logic of a corporate culture dominated by left-leaning voices is self-reinforcing. A company that supports a liberal cause slips into the crowd – what is another left-leaning outfit in a mighty sea of them? That same poll provides support for this view – companies endorsing liberal views are not seen any differently to those whose political advocacy is of an unspecified political flavour. In contrast, rightist companies are treated to a 33% drop in positivity.

“Big Business” is in danger of falling into a trap. Across the western world, the gap between political promise and political delivery is becoming a chasm. Serial failure by western political establishments to deliver a sustained increase in real wages since the mid-1990s has acted as political gasoline to populism. People aren’t stupid – when they see hubristic failure to deliver on promises, they get angry. “Big Business”, in setting itself up to solve half the world’s problems, seems to be acting in bad faith – at best. When Nike made a brand out of Colin Kaepernick – the corporate line was that it was taking a risk. In actuality, the advertising campaign was highly lucrative – and cleverly devised to be so. The boycott from the right was ephemeral and largely symbolic. If Nike pushed at boundaries, it was those society expected it to challenge – it made $6 billion from the campaign.

Conformity is dressed up as rebellion by the corporate world. Businesses exist to make some money – there is no reason to pretend otherwise. Large companies are Janus-like – paying lipservice to the idea that what matters most is social justice, whereas they and we both know the bottom line always matters a little more. According to polls, the American corporate world is currently trusted more than the political one. “Big Business” is likely to sour these waters if it associates itself too much with problems that need hard thought and incremental steady progress. Individual companies may benefit – as with Nike - but cumulatively, the effect is likely to be widespread public cynicism. When things don’t change, people notice. “Big Business” sees political convulsions as an opportunity – this is wrong. The convulsions are both dangerous and infections. “Big Business” should and can make a difference, but action matters just as much as a slick advertising campaign.