As societies face up to an increasingly conflicted ideological landscape, businesses must ready themselves for greater uncertainty, resistance to expertise, political polarisation and currency fluctuations. This blog will explore what form ideological upheaval is taking, and what business leaders should do to prepare for it.
History has started again
In 1989, political scientist Francis Fukuyama claimed that we had reached “the end point of mankind's ideological evolution and the universalization of Western liberal democracy." Today, it’s hard to make such an argument.
We live in ideologically fraught societies where citizens of democracies and dictatorships alike are rejecting the status quo.
In much of the world this takes the form of populism, the rise of parties or individuals claiming to represent the people against the ‘elites’.
Populism can be left- or right-wing but tends to share certain characteristics; Professor of politics at Princeton University, Jan-Werner Müller, names these as:
Nationalism – the aggressive assertion of a nation’s individuality. This often involves a country enriching itself at the expense of others (through prioritising local industry or even wars) and racism.
Hijacking the state for the ends of partisan loyalists – or in other words, using the power of government over legal, social and economic matters to profit supporters. For example, if a mining company gave a large donation to a populist party, they might ensure that the company receives the rights to a rich area for mining in return.
Weaponising the economy to secure political power – this could mean putting political opponents under investigation for tax fraud, or appointing close supporters to supposedly independent positions like head of the central bank.
This represents a step-change from Fukuyama’s claim (widely lauded at the time) that Western-style liberal democracy was the final ideology.
Adding to this upheaval are the changes taking place in non-Western societies. As they seek the West’s material and economic progress, they also want to retain their own cultural values and identity; this could cause societies to ‘converge’ or ‘fragment’.
Potential attempts to dilute and ‘become more western’ could fuel religious, ethnic, cultural, and nationalistic dysfunction and fragmentation. But, equally, the intersection of ideas and cultures, as diverse people confront similar political and economic challenges could create new hybrid ideologies, enhancing collaboration, outputs and gain consensus around global government issues.
The causes of this return to conflicting ideologies won’t be discussed in this blog, but there are some fascinating and accessible pieces on the subject (a few of which can be found in the Further Reading).
What does this mean for businesses?
Generally, ideological upheaval is not good for business because it breeds uncertainty. This is especially true of populism because, according to Kingsley Chiedu Moghalu, it “attempts to substitute facts and empirical foundations with conviction as a basis for public policy.” Fears about the future of a populist state can lead to severe market and currency fluctuations (the Turkish Lira for example).
Increasing political polarisation means more entrenched positions and more dramatic changes of direction following elections. Right-wing populism tends towards deregulation on a grand scale: for example, the Brazilian Social Liberal Party of Jair Bolsonaro has overseen a 278% increase in Amazonian deforestation.
On the other hand, left-wing politicians are starting to advocate much tighter regulation on environmental and data issues. In the US Elizabeth Warren, a contender for the Democratic nomination, has advocated breaking-up the tech giants like Facebook and Amazon, and in the UK Jeremy Corbyn’s Labour Party included a swathe of renationalisations in their 2017 manifesto.
Clearly the potential for about-turns in industrial policy should give business leaders pause for thought and will necessitate careful and open-minded contingency planning.