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Clarity in the Midst of Complicated Politics

Wigan Salazar
, Tue, 01/30/2018

Why Corporations Need to Respond to the Crisis of Liberal Democracy

For many decades, politics seemed an easy field for corporations to navigate. A company may have had a regulatory problem or two that public affairs professionals could take care of. But, in general, global corporations could adopt a fairly aloof, neutral stance to the greater political debates. The reason for this mainly lay in a liberal and globalist (I personally have a positive relationship to both terms.) consensus. More recently, since the 1990s and after the collapse of most Communist regimes, most governments looked at closer multilateral cooperation, the opening of markets and, to varying extent, the liberalization of economic regimes.

How different the picture looks today, in 2018. Liberal democracy and global-minded thinking has come under populist pressure from both the right and the left. The linear logic toward ever-closer international cooperation seems broken: The end of the transatlantic and transpacific trade zones -- TTIP and TTP -- before they even started and the specter of Brexit show that the game has fundamentally changed.

One may argue that corporations are still faring well. Despite all the challenges to liberal democracy, the main global stock indices are hitting record heights and many pundits believe that tax reform in the USA will further fuel these trends. Cynics will add that historically corporations have had a knack for adapting to political situations and will be more than happy to work in liberal as well as authoritarian regimes as long as they work profitably.

But this misses an important point: Corporations, and especially global corporations, are a perfect target in these complicated political times. I would argue that companies have in the past decades honed their approach against attacks from environmentalists and activists from the left. Most global companies, and least those that aim to be respectable, have worked on reducing carbon emissions, implementing social standards throughout their supply chain and eliminating discriminatory recruiting practices. I would indeed argue that corporate citizenship is not a fad but that many managers (and the majority of those that I have encountered as a consultant) truly want to make a difference and act as good corporate citizens.

But now, times are more confusing. While every global corporation will have inclusive recruiting policies and glossy brochures with staff from all sorts of backgrounds, how should they respond to the nativist and anti-liberal backlash across the world? How should a company that actively wants to diversify its workforce act if the political constituencies surrounding its main plant locations are represented by far-right, anti-immigrant parties? How should a consumer goods company act if it notices that its customers frankly don’t care about its lofty corporate responsibility activities?

It is a confusing political time indeed. And here is where clarity kicks in. If a company and its leadership truly believes that it has a mission and a purpose that goes beyond its products and its financial responsibility toward its shareholders (I must admit, this is very important.), now is the time to articulate it clearly. By contrast, the old times were easy because, by and large, everyone agreed. But the enemies of the liberal order – whether they hail from the right or the left – are attacking the fundaments on which successful global companies have built their fortunes. The vibrancy of our global economic life is part and parcel of the economic and political freedoms we have achieved in the latter part of the 20th century. These are freedoms worth defending, and businesses now have a chance to show that they are true corporate citizens.


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MSL is partnering with the Holmes Report for the coverage of the World Economic Forum 2018.  This year’s World Economic Forum is based around the theme of creating a shared future in a fractured world.  MSL links to the theme through its own corporate purpose of multiple perspectives and holistic thinking.

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