Business and Politics – Can They Be Separated?
The world seems to turn faster than ever before. Humankind is sitting in a time lapse movie, having more and more difficulties to follow ever accelerating developments and processes.
The cruel Russian war in Ukraine and wars elsewhere, rapidly increasing poverty in the world, ever increasing amounts of plastic covering our oceans, quantitative monetary easing and zero interest, appealing technologies that also disempower people…
Is there any business without political links? Can business be separated from politics? Can businesses fade out politics? Can businesses remain silent?
When business people are confronted with political matters or even asked – who dares – to engage themselves in political matters, one often faces a reply such as “I am a business person, I do not interfere politics” or, “business is business and politics are politics” or “as a business person, I shall stick to my business [… and not talk about politics]”. Sometimes, one may hear, “I am not into politics” or, “I hate politics”.
There is a widely spread approach in the business world that business and politics are two different things and that they shall not be mingled. This can be seen as well in posts on LinkedIn, where people often mention not to mix politics with business, or using phrases such as “since politics entered this business platform”, etc.
However, as a matter of fact, business and politics are an indivisible union.
Lack of political engagement plays in the hands of those in power, who will consequently shape society affairs for their own benefits.
Needless to mention that in the era of ESG (Environmental, Social and Corporate Governance), businesses do have a civic responsibility, which comprises of actions and attitudes associated with democratic governance and social participation.
What is politics?
For the avoidance of misinterpretation, having a look into the meaning of ‘politics’ may help.
The citations above were not reactions to any matters related to party politics but to politics in general, without any link or even connotation related to politics or views of specific political parties. Party politics are “political activities, decisions, etc., that relate to or support a particular political party”, (Merriam-Webster). Consequently, this little article does not refer to party politics.
Politics in general “(from Greek: Πολιτικά, politiká, ‘affairs of the cities’) is the set of activities that are associated with making decisions in groups, or other forms of power relations among individuals, such as the distribution of resources or status”, (Wikipedia).
Or, in short, with the words of the American political scientist and professor of law at Yale University, Harold Dwight Lasswell: politics is “who gets what, when, how”, (Lasswell, Harold D. (1963) [1958]. Politics: who gets what, when how. With postscript. World. OCLC 61585455).
Why are business and politics interconnected?
Business is “the activity of making money by producing or buying and selling goods, or providing services”, (Longman), to use a concise definition.
Naturally, business is not conducted in a ‘legal vacuum’ but based on applicable legislation of countries, regions and supra-national bodies. Legislation is created by governments and (ideally) by parliaments, and governments and parliaments are (again ideally) formed as a result of elections. Voting is the transfer to civic responsibility to representatives.
Businesses usually pay taxes on their profits. They may be suffering from high taxes or enjoy fair taxes. They may be satisfied what the government and the state provides in return of taxes collected, or they may (rightfully or unrightfully) complain about the services and care received from the government and the state.
The definition of ‘fair’ and ‘satisfaction’ is based on the difference between expectation and realisation. While expectation is based on personal criteria, realisation is the result of political processes where (often competing) players agreed on a certain balance. (The criteria of this balance are not necessarily justice and equity but often a balance of de facto powers, sometimes ending up with the lesser of two evils.)
Subsequently, players of the one side partly holding back because they believe in not mingling business and politics, do actually empower the other side or sides by lack of participation in political processes.
Cross-border commercial activities are depending on regulations of at least two countries, namely the country where a business is located and the country where a customer is related.
Keywords: import and export regulations, custom duties, VAT regulations, taxation of profits, regulations of electronic distribution of products and services, bi-lateral and multi-lateral agreements, geo-political decisions and agreements, etc.
In light of the correlations listed above, how can a business person remain unconcerned, how can a business person believe that s/he is not affected by politics and thus defending not to “mingle business with politics?
To touch just one more example: businesses do have a responsibility toward society. In these modern times of global business where people and businesses from far countries got much closer than decades ago, that sentence needs to be amended to ‘businesses do have a responsibility toward societies’. People, and this certainly includes business people, cannot stop looking up to their own horizon only anymore, because what is happening beyond their horizon affects their business and affects their lives.
The concept of Environmental, Social and Corporate Governance (EGS) did derive from the growing awareness that businesses do indeed bear an important civic responsibility toward the society where they operate and toward the societies that are affected or might be affected by their undertakings. More and more businesses do understand how their commercial activities are shaping society and thus, how much political responsibility they bear – and how much they are affected by politics.
The world-wide efforts to stop child labour is only one of many examples. The decisions of many clothing companies, just to give one example, not to buy clothes from factories that do exploit child labour, was indeed a political matter. This decisions of many clothing companies did lead to an enhancement of employment laws, introducing minimum age of workers.
A political obligation: defence of overarching values
Other than political decisions on micro level that may affect businesses directly, there are issues and developments where businesses may be affected on a larger scale, often resulting in substantial changes in societies.
One well-known example is the struggle for termination of slavery in the United States of America. Back then, there were thousands of companies which defended slavery to continue exploiting under-privileged people, mainly in the Southern states. They produced tons of arguments to maintain slavery, including the ugly thesis that black people are second-class humans, or not to be treated as humans at all.
On the other hand, there were many companies, mainly in the Northern states, that already terminated slavery and provided their former slaves with human and civil rights.
Both examples, in the Northern and in the Southern states, were interconnected processes where businesses influenced politicians and governments, and vice versa.
Would it have been correct if a business person had defended a position saying “business is business and politics are politics” or, “I am a business person, I do not interfere politics”?
Indeed, it would not have been correct.
No matter what one’s political views are, there are overarching values in the world that do not allow human beings, and that includes business persons as well, to stay aloof and silent.
One of the most important and globally accepted overarching value, globally manifested in various charters, is – humanity.
What can a business person do at least?
Understandably, not ever business person can get engaged or involved in political issues or in issues with political aspects (= most issues) in the same way, manner and depth. People are different, have different environments, different obligations and different possibilities. But everybody has a little niche at least where s/he can find her or his role of engagement.
Of course, a business person is not obliged to get engaged in party politics. As mentioned at the beginning, this article is not about business and party politics.
What any business person can do at least is – speaking out. Not disappearing in silence.
Standing up for her of his position and opinion. Taking her or his part in forming a public opinion that is indispensable for shaping the opinion of politicians and thus taking own civic responsibility.
If people do not feel responsibility toward humanitarian issues and act accordingly, in what way ever, where does their responsibility at a member of society start at all?
Do business people with an announced opinion lose?
Most people who defend not to mingle business and politics are actually fearing a partly loss of their business.
Speaking out, announcing an opinion, getting visibly engaged may of course create opponents and make a person vulnerable. “They might not buy my products”, many are thinking.
And that is true. However…
However, at the same time, a business person who speaks out and gets visibly engaged demonstrates her or his empathy and gains many new friends, clients, customers and cooperation partners, who do appreciate the support of their case, or who are simply attracted by the human-being-factor and the empathy shown.
It is better to gain faithful friends and customers than being befriended by hidden antagonists.
Therefore: speak out, get engaged!
Author: Stefan Nolte, 18/04/2022