USElection

The Uberization of corporate political action

By Dieter Zinnbauer

With more than USD 12 billion spent the 2020 US election cycle may well have been the most expensive political campaign in the world so far. Yet in the shadows of this epic political contest another campaign unfolded that in my view provides some really interesting early signals on emerging trends in corporate political activity.

Alongside the national election Californians went to vote on a number of plebiscitary ballot measures. Among them Proposition 22 that like no other exemplifies how business lobbying unfolds in the era of what is often called the gig-and platform economy.

Prop 22, as it is known for short, was spearheaded by Uber and Lyft as a last ditch effort after exhausting all judicial and legislative tactics to win an exemption from a new Californian labor law that aimed to force these companies to classify their drivers as employees, rather than independent contractors.

A special type of thing

Leaving aside the merits of the argument – as consequential and hard to defend the position of Uber and peers may be- Prop 22 is remarkable on many fronts. It exemplifies the growing use of what was once meant to be a plebiscitary counterweight to corporate influence by these very corporate actors to advance their own interests.

It saw platform companies that connect millions of drivers and tens of millions of passengers in so called two-sided markets take fully advantage of these relationships by intensely lobbying and mobilizing these constituencies for their cause.

It witnessed the deployment of targeted push messages and suggestive survey snippets through the proprietary app infrastructure, administered and tracked by a black-box algorithm that also sets prices and assigns business opportunities and thus commands Foucauldian-like disciplinary allure. Which driver would want to be seen and classified to be unsupportive of the company’s political project while the day’s earnings depend on being assigned this one lucrative trip to the airport?

Ballot 22 also starkly illustrates the chimera of political equality or of even the resemblance of a level playing field in a world with unconstrained campaign expenditures that resulted in the gig-side outspending the labor side by a factor of 10 to 1. And it is truly remarkable in its brazen disregard of democratic legitimacy. It aimed to expressly derail a provision that was not hidden on page 1205 of a large body of complex legislation and stealthily whisked through without much public scrutiny. Instead it took aim at a piece of legislation that had been in the public, even international spotlight for quite some time, extensively discussed and lobbied on and resoundingly tested and confirmed in court.

Even more astounding, Prop 22 sought to prevent any future democratic course correction through including a clause that would require an unprecedented 7/8 supermajority in the legislature for overturning it – a much higher hurdle than is set for amending the US constitution.

All these features are fascinating in themselves and deserve a much more detailed examination which has already begun in academic circles, for example with regard to platform-led mobilization or data-driven corporate advocacy and to which I hope to contribute to in a longer essay elsewhere soon. Here and now I just wanted to offer some very early and unpolished ideas on one more, largely overlooked angle that makes Prop 22 and the corporate political actions of Uber et al. so fascinating.

In very broad brushes the thinking here goes as follows:

Businesses that are not explicitly chartered as public benefits corporations derive their social license to operate primarily by making a positive economic contribution in terms of innovation, resource efficiency et al. (and yes, by doing this as responsible corporate citizens that respect the spirit of applicable laws, planetary boundaries etc.). The longer-term ability of a company to be financially self-sustaining in a competitive, externality-free market situation is – absent any other claims about achieving non-financial societal benefits – a first approximation for such a positive economic contribution.

Society puts a higher economic value on the contribution of the corporation than the costs of its fairly priced inputs. The business model adds overall economic value, the business organization – not just the people involved in it as individuals claiming their citizenship rights – can invoke this overall economic contribution to justify a certain degree of standing in the democratic discourse.

Yet this is precisely not the case with companies such as Uber and Lyft. They have been losing vast sums of money for years, bleeding cash on every ride even while exploiting many regulatory gaps that lower their cost structures relative to their competitors in the ride-hailing business. All this was made possible by enormous sums of venture capital funding – USD 26 billion for Uber alone up until April 2020. Venture funders bet on those companies to eventually achieve a winner-takes-most status and commensurate pricing power in a market characterized by strong network effects and economies of scale /scope.

The envisioned route to economic dominance, however, also requires to simultaneously build and assert the political influence necessary to stave off regulatory efforts such as categorizing drivers as employees and many other pricey regulations that threaten to close the very regulatory arbitrage opportunities on which large parts of the business model of Uber, Lyft and other gig companies are ultimately built.

Overall this results in a situation where venture-funding is at least as much about blitz-scaling political power as it is about financing hyper-growth for market dominance. Both are necessary, both reinforce each other. The build-up of political good will and supportive constituencies is not a by-product of building customer loyalty. It is an essential part of the strategy to architect a business model that critically depends on regulatory accommodation and complicity. Yet, all along and rather ironically this heavy reliance on political action and political success stands in stark contrast to the relative normative weakness of claims made by companies without a clear route to profitability that cannot convincingly back up their political voice with an obvious net positive contribution to overall economic welfare. Stripping away all ornaments what’s left is a story of VC-funded particularistic political rent-seeking.

Now, much more needs to be explored here and there are many holes that can be punched into this storyline as described in these very broad terms. So please check back here soon for a more developed version of this argument. In the meantime I would love to hear your comments and criticism to help advance this conversation.

Epi-epilogue

Uber et al. won Prop 22 by a large margin of 58% to 41%. Prop 22 turned out to be the most expensive ballot initiative in US history. So far. After the vote Uber’s CEO announced in an analyst call that the company will “more loudly advocate for laws like Prop 22 [and] work with governments across the US and the world to make this a reality.” The company continues to loose large sums of money.

About the Author

Dieter Zinnbauer is a Marie-Skłodowska-Curie Fellow at CBS’ Department of Management, Society and Communication. His CBS research focuses on business as political actor in the context of big data, populism and “corporate purpose fatigue”.

Photo by ryan park on Unsplash

The Task At Hand: Facing a Trump America

The following post by American CBS MBA student Wynne Lewis is an accompanying piece she wrote recently for the Financial Times’ MBA Blog.

Titled “Case for responsible business post Trump and Brexit shocks“, Wynne spoke to the shocks of the recent inauguration of Mr. Trump in the U.S. and the vote for Brexit in the UK. She argues that these events are creating many setbacks to the strides we have taken recently in favour of human rights and combating climate change. But they are also catalysts for positive change for the individuals who are fired up and ready to go stand up for what matters most – for example by contributing to a more sustainable economy by founding your own venture.

Read the full post on the FT MBA Blog.

In her latest piece on the CBS MBA blog, she now offers a little bit of inspiration to get you started with making a change.

By Wynne Lewis.

As Eleanor Roosevelt once said,

“You gain strength, courage, and confidence by every experience in which you really stop to look fear in the face. You must do the thing you think you cannot do.”

We fear regression, but there is much we can do.

I spoke with my classmates (representative of countries from all around the world), my professors, and visiting speakers and here is a little bit of inspiration to get you started.

For Employers / Employees:

Recognise the power of business. Do not be ignorant to your own influence. There is no such thing as an a-political corporation in the polarised climate under which we are operating today. Every decision must be intentional.
Create meaningful working class jobs. If your consumers are voting pro-nationalism, are they willing to pay a higher price for locally sourced products? Can you source your products or raw materials locally? Can you conduct market research to prove your case to investors? There may even be a risk management case to make for keeping the supply chain close for better transparency.
Treat your employees with respect and invest in their development. Look at the most recently hired/promoted people at your company. Are they a diverse group? Are you promoting from within? If not, chances are good that some of your talent is falling through the cracks or not being developed. It may not be intentional, but you can become aware of it and take strides to be sure you are capitalizing on your best resource – your employees.
If you have employees who may feel marginalised or unsafe in the current social climate sparked by the election, reach out and check-in with them. Do they feel safe in their commute to work? (This has been very relevant for many of my friends living in New York, so it is worth asking.) Is there anything you can do to help? Has the office climate changed at all for them? It is important that they are able to focus on doing a good job without feeling marginalised or harassed at work. Keep tabs on this. If handled with care, you will foster the establishment of a strong working environment and retain your talented minority (women included) workers.
Look for business opportunities. What was the change you were hoping for? Is there a gap in products/services today and the products/services we need to achieve that change? Your next great venture may just be hidden in the void.

You will know best how these things must ultimately align with a clear business case appropriate for your company, but it is important to point out those business practices that shape our countries, our politics, and ultimately our societies.

For Investors:

Divest from energy companies who are not investing in the future. Oil is booming right now with the recent elections, but the future will hold a diverse portfolio of energy sources. Companies who are only focused on fossil fuels are resisting innovation.
Be an active voter in the companies you invest in. If you hold stocks in companies that are doing things that you do not support – underpaying workers, polluting, vocalising racist sentiment – use your voice as a shareholder to change things. Be active and let them know that as an owner you do not support the way they are operating the business. Chances are high, you are not alone. Get other investors involved.
Invest in companies that are good for people, planet, and profit. There are many resources for those interested in impact investing. Read up and put your money where your values are.

On the personal side: invest in values you care about. Whatever they are, donate your time or money to the things that matter most. Create the world you want to live in and that you want your children to live in. Consider it a long-term investment.

The most important thing ultimately is to do something. So get out there, and be active.

Have some great ideas? Please add a comment below.

Based in New York, Wynne is currently enrolled as an MBA student at Copenhagen Business School. She was attracted to the Copenhagen MBA for its strong focus on Responsible Management and the promise of a global classroom. Post-MBA, she is toying with the idea of starting her own venture. She is a blogger for the Financial Times MBA blog, where she hopes to tell the story of what really powers her passion for Responsible Management on the far-reaching global business platform that is the Financial Times.

Pic by Pexels

US versus Him

By Catarina Pessanha Gomes.

The past months constituted the culmination of a sequence of events, completely unthinkable even one year ago. These events led to the inauguration of a man that many consider unfit for its position, a man demonstrating unprecedented levels of intolerance, bigotry and racism, a man questioning the foundation of our political system, separation of powers, free press, equality of rights, one tweet at the time.

Like many of us, my heart has been hesitating between a deep state of anxiety for its future decisions and a slight nausea when looking at its proclamation as Time’s person of the year. Yet, this got me thinking about the incongruity of reducing a whole sequence of events, times, peoples and places to a single individual, a troubled reflection of the individualistic tendencies of our societal and political system. While not dismissing the reality of asymmetrical power relations, the emphasis of this post is placed on the anonymous mass, the hidden collective power often forgotten by our political system, but also in our academic fields.

The common, collective, anonymous power is often left unstudied at the profit of the single individual, be it the President, the CEO or, in my academic field, the entrepreneur. Hence, I decided to put aside the overwhelming amount of research focusing on the personality of these special, heroic individuals, constituting a popular narrative of uniqueness and success, focusing instead on organizational studies calling for a comprehension of entrepreneurship in its everydayness, as a societal process with multiple actors and stakeholders rather than an individualistic phenomenon.

The sociologist Richard A. Peterson and Pardo´s studies open the door for considering entrepreneurship not as a special person or situation, but as an action commonly shared that can occur anytime. In this regard, the latter put forward a perspective on entrepreneurial moves through which citizens, here the popolino of Naples, create new possibilities in life, situating entrepreneurship beyond formal economy. Recognizing this collective entrepreneurial action is the first step towards serious political changes, as our democratic system needs to be modified to recognize, listen and integrate this common potential in the political game as a legitimate form of power.

Lyotard states that the world is composed of events giving rise to multiple interpretations, and maybe I really needed a new storyline to help me cope with the current events; maybe I could not make sense of Donald Trump as the final expression of what our society can produce. Nevertheless, for the next four years, I will keep in mind that politics also lies on the everyday, collective power that change society in the shadows, the men and woman giving a hand, creating, collaborating, in organizations or in the anonymity of their own houses, making “US” the people of the year, one action at the time.

Catarina is a PhD Fellow at the Department of Management, Society & Innovation at Copenhagen Business School. Her PhD project investigates partnerships between social entrepreneurs and public institutions, with a particular focus on how social entrepreneurship can be institutionalized.

Pic by the Office of the President of the United State

The CEO President

By Dan Kärreman.

President Trump is going to be different. So far most of the commentary has been focused on him as a trailblazer for white nationalism and populism, and for his unique personal qualities. This is understandable, since the marriage between white nationalism and populism was dissolved in 1964 in the USA when the Democratic party finally took a long hard look on its racist past and decided to become the party of civil rights, thus fracturing the mix of white supremacy and New Deal policies that had ruled the South since the implementation of the New Deal. And as for president Trumps personal qualities… let’s say that we can expect unorthodox and colorful commentary on that front for the next four years.

Can Trump’s business habitus compensate for a lack of experience in government & politics?

One aspect of Trump that has been overlooked is that he has no previous experience of government and politics. To the extent it has been an issue, Trump has largely managed to make this a point that has worked to his advantage as it has given him credibility in claiming that he is not part of the (corrupt) establishment. His celebrity has also compensated for the lack of name recognition that normally would hamstring the outsider candidate. But his lack of experience of government and politics is likely to have a profound effect on how he will operate as a president.

On the other hand, Trump has considerable experience of being a business president. He has worked a business executive for more than 35 years. In Bourdieuan terms, this is his habitus. Being a business executive is different (but not completely different) from being a politician. It is worthwhile to have a closer look on what we can expect from a business executive.

Authoritarian, KPI-driven and delegating responsibility

First, executives run on hierarchy. As an executive, it is a given that you have say-so in your domain. Operationally, this is perhaps not different from politicians who also mostly work in hierarchical arrangements. However, as a politician in a liberal democracy you must internalize the idea that you represent a constituency and at least pay lip service to the fact that power comes from the people. Not so for an executive, where power comes from the guy above you in the hierarchy. Fact is that executives are not only comfortable in authoritarian set-ups, they thrive on it. The authoritarian aspect of Trump’s persona is perhaps the most grating one for the political class, where such tendencies are expected to be suppressed. They are unlikely to be troubling for most of the electorate though, since most people interact more frequently and more comfortably with executives than with politicians in everyday life.

Second, executives are driven by a narrow set of key performance indicators. The indicators can be played to some extent but they are also real in the sense that they operate as grading mechanisms for performance. Expect Trump to identify a narrow set of deliverables that he will insist to be evaluated upon. The most likely candidates are immigration (or rather deportation), trade, nominating socially conservative judges for the supreme court and infrastructure spending. Having said that, Trump is probably open for negotiation on this point. He does not appear to be particularly ideological (apparently, he has changed his party affiliation 5 times the last 15 years) but he would insist to have indicators that makes it possible to claim success. Success is very important for executives.

Third, executives delegate. This goes beyond the idea of the fact that it is impossible to be experts on everything. Executives are strong believers in the division of labor, in fact the whole idea of an executive is built on division of labor, and are comfortable in pushing out responsibility to subordinates. Delegation offers possibility for subordinates to prove themselves and to further their careers, thus creating bonds of loyalty between executives and subordinates. Politicians delegate too, but the career aspect of delegation is less pronounced. Politicians delegate to increase representativeness and to invite expert commentary. Put bluntly, executives delegate for reasons of expediency while politicians delegate for reasons of deliberation.

A Business presidency

Overall, we can expect a presidency that will work more like a business presidency than the typical political presidency. The authoritarian aspects of the business president are likely to be an ongoing source of frustration, since the US presidency in actual reality is a weak office with a lot of checks and balances (foreign policy is an exception but Trump does not seem very interested in this area). The importance of projecting success is likely to make the Trump presidency prone to unpredictable policy shifts. Finally, the promotion of expediency will open for a lot of semi-scandals and crypto-grafting since it promotes a potent but problematic mix of loyalty, initiative and patronage, qualities that sits uneasily with the ethos of public government.

Dan Kärreman is Professor in Organization and Management Studies at the Department of Intercultural Communication and Management at Copenhagen Business School. He is on Twitter.

Pic by Steve Baker, Flickr

Democracy Trumped – Understanding Trump’s Propaganda

By W. Lance Bennett.

How did a brand magnate reality TV star with a vindictive style and no political experience become president of the United States? Why did so many people vote to ignore climate change, pull back from the global economy, and disrupt North Atlantic relations?

A few years back I asked a colleague in Italy to explain Berlusconi. He pointed to a corrupted and dysfunctional political system that angered voters enough to throw a bomb into government. Never mind that Trump, like Berlusconi, oozes a special corruption all his own. Most of the press and party elites missed the scale of angry emotion aimed at them by white working and middle class Americans. Indeed, the cosmopolitan press had long rendered these folk nearly invisible, brushing off the early warning signs of the Tea Party as a minor disturbance. And so, most media experts and party insiders engaged in knowing discussions of how impossible it would be for anyone to be elected with Trump’s combination of inexperience, shady business dealings, and inability to manage his emotions and stay on script.

Winning votes through Marketing: emotio, not ratio

Meanwhile, Trump found and fed the white anger with simple, emotional messages, such as the promise to “drain the swamp” in Washington. He branded “Crooked Hillary” as the ultimate insider, with close ties to the banks, a trail of (largely manufactured) scandals, and trouble drawing a line between official business, the Clinton Foundation, and her ties to Wall Street. Despite the baggage that Clinton carried through the campaign, she did win the popular vote, and might have won the election had the (Republican) FBI director not renewed an investigation of her handling of official emails as Secretary of State.

This was the “October surprise” that sent many undecided voters, including a majority of white women, to Trump. Clinton tried in vain to get policy messages into the news, but Trump dominated the daily media spectacle with tirades against immigrants, government corruption, establishment politicians from both parties, the press, and the global economy. His clarion call at rallies was “I am your voice.” When he mentioned Clinton, the crowds ritualistically chanted “lock her up,” which he promised to do. Reporters were herded like cattle into fenced pens at rallies, and crowds shook their fists and chanted at them when Trump denounced the lying, biased media. Reporters needed Secret Service protection at these events.

A radical right social movement against the Establishment

Through his deft use of social and conventional media and relentless appearances at rallies, Trump created a movement that revealed, like Bernie Sanders in the Democratic primaries that selected Clinton, the emptiness of the US party system. The Trump revolt echoes the rise of the radical right sweeping European democracies. Traditional parties have become “hollowed out,” in Peter Mair’s term, uninterested in engaging voters beyond crude marketing campaigns at election time. The British felt this shock with the Brexit vote, and no fewer than 28 countries in Europe have radical right parties on the rise, or already in power and threatening basic democratic values. Even though the radical left is as numerous and angry as the right, it is burdened with identity politics and the romance of deliberative democracy, which undermines conventional party organization, leadership, and the capacity to generate appealing ideas that travel via simple emotional messages.

How cosmopolitan arrogance lost the election

The specter haunting democracy today is the legacy of centrist neoliberal elites, and the press organizations that cover them. The core democratic institutions of press and politics have failed to engage white working class populations that have been economic casualties of globalization. Perhaps even more troubling is the failure of the center left and right to engage white middle classes who are more the symbolic casualties of globalization. These are the god fearing Christians for whom racial and patriarchal privilege once offered social identity and status, and who now feel threatened by multiculturalism, immigration and Islam. Yet, neoliberal politicians from Tony Blair to Barack Obama have told them that globalization is irreversible, so get over it. Clinton’s message of “stronger together” surely felt wrong to those who lived in Trump’s America and wanted to make their nation great again – in their own image.

Popumisms greatest weapon is propaganda supported by social media

Beyond the lying mainstream press, which Trump helped his followers deconstruct every day, Trump’s coded messages of resurgent white nationalism circulated through the alternative or “Alt” right media system in the US. This network includes radio talk personalities such as Rush Limbaugh, with 13 million listeners, who issued daily defenses of Trump’s many miscues in the final months of the campaign. Among hundreds of Alt right websites is Breitbart with 19 million unique monthly visitors.

Late in the summer, when struggling with self-inflicted damage in the establishment press, Trump picked Breitbart publisher Steve Bannon to head his campaign. The campaign media team was soon joined by Roger Ailes, who began his political career reinventing Richard Nixon for the television age, and later headed Rupert Murdoch’s Fox News channel until he was driven out by a sexual harassment scandal. Bannon and Ailes have visions of consolidating their victory by forging a Trump media network that will serve as a surrogate party organization, and bypass the mainstream press in keeping Trump propaganda flowing to supporters.

A new order?

In light of these trends, it is time to ask: What is the future of democracy given the imbalance between left and right, and the disdain shown by many victorious right politicians for civil liberties, moral tolerance, racial, sexual, and religious diversity, press freedom, and basic civility? Those of us who benefit from cosmopolitan societies and global economies have failed to notice that democratic institutions of press and parties have withered, while a new and more ominous political and communication order has emerged in our midst.

Lance Bennett is professor of political science and Ruddick C. Lawrence Professor of Communication at University of Washington, Seattle USA. His most recent book is News: The Politics of Illusion (10th Edition, University of Chicago Press). He is also founder and director of the Center for Communication and Civic Engagement. and is on Twitter.

pic by aux

Let’s not waste the crisis of a Trump Presidency

By Dirk Matten

Last Tuesday’s election in the US has left the world in shock. As entertaining, astonishing, at times surely revolting, the Trump performance has been during the campaign – I do not know anybody that would have predicted him actually making it into the Oval Office. But that is history now.
I found myself always harboring rather ambiguous thoughts and sentiments regarding Trump’s ascent. But being surrounded by folks where even the slightest empathy with Trump made myself look like a total moron – I learned to keep my feelings to myself, not at least in the hope I somehow got this wrong.

To begin with, I was not at all surprised to see Trump win the election. In some ways, this outcome is the logical conclusion of more than three decades of neoliberalism in the US. It did not help that his opponent had virtually nothing to offer to counter the very anxieties that carried Trump over every however unlikely hurdle during the campaign.

With all the shock and depression now seeping through the mainstream media there is one thing I really cherish and find extraordinary about this election: Trump won this election as an, albeit wealthy, outsider – against the united front of the media, the political class and the moneyed elites in the US and beyond. It helped that he is wealthy but that is not the main point. Even fairly balanced media outlets, such as the New York Times or the The New Yorker, over the last months just read as thinly disguised pro-Hilary propaganda; out of 55 main newspapers in the US, only one (1!) endorsed Trump. And yet he won the election. This should give other forces in many liberal democracies something to ponder. It is possible to beat ‘the system’, and in some way I am a little confused why this enormous victory of bottom-up democracy is not celebrated for what it is.

Trump is a symptom

Of course the main problem with Trump is Trump-the-person. He did all but help himself in giving fodder to the public to embark on an almost two-year project of character assassination. But again, I happen to have a different take on this. Did he tell a lot of lies? Of course. But then let’s not forget why Bush and Blair started the Iraq war. Lying is an integral part of US politics (and I am not even talking about his opponent’s husband when dealing with his White House romance). Trump said preposterous things about women. But in some way he just bragged about things that actually no one enacted more by the book then his opponent’s husband – covered up and tacitly supported by her for decades. Did he say racist things about Mexicans? Yes, but then let’s have a look at the 2.5m ‘aliens’ the Obama administration deported between 2009 and 2015. Did he say absurd things about Muslims? He sure did, but again, what he expressed is already social consensus in the US. Just think of the many people bumped off airplanes in the US recently just because they ‘looked’ or ‘spoke’ like Muslims (i.e. terrorists). Oh, and he has no experience in political office, right? Have we all forgotten that the same was said – on good grounds, at that – of his predecessor? Yes, he was talking about ‘bombing the sh** out of ISIS’. But wasn’t that exactly what his Nobel Peace price winning predecessor actually did for eight years by chaperoning a global drone war that killed almost 5,000 (incl. ca. 500 civilians)?

All I am saying then is that the media still tries to paint him as ‘unamerican’, as against the current political culture, as a pariah. The truth is, however, that he just unapologetically verbalised what is common practice all long. The United States – and I am talking about the political and economic system, as well as about half of the population – are an inherently racist, bigoted, violent and unfair country these days. As much as one may reject Trump as president – I think that his presidency just tells the true and accurate story about the moral morass the country has gotten into over the last three decades. It is ugly, but it is nonetheless not just attributable to one symbolic person.

Which leads to a big, often ignored or belittled core question. Trump did win the election because about half of the American electorate agrees with him. The real question we have to ask is what happened to the oldest democracy, a country that – 70 years ago – pacified Europe and gave the continent a new political setup based on enlightenment values. We just have to acknowledge that these United States are history now and that the country has been indeed on a steep decline in cherishing some of the core values which made it the world’s only superpower in the second half of the 20th century.

The America today is the America of ‘Dogville’, ‘Manderlay’ (as my Danish readers would appreciate) or ‘A History of Violence’, rather than ‘Independence Day’ or ‘Forrest Gump’. Trump’s majority is not just angry white men, as some want to make us believe. He represents a much wider fraction of American society as some of the poll’s analyses now painfully unveil.

So, what is the agenda then?

So do we have to be afraid of a Trump administration? On balance, I would be rather relaxed here. Not that I am not worried about some aspects. The main of which would be that many of the things he said during the campaign – as much as I am convinced he said them just as a good marketer and with an eye on his target constituency – can have rather ugly effects on common people. He legitimised racist and violent language, and it is no surprise that we have, for instance, seen hate crimes rising. If what I hear from friends in the US just these last two days is anything to go by, his words have legitimised and empowered views and behaviours which for a long time were at least publicly suppressed. He has opened a pandora’s box, for sure. And whether this spirit can be put back remains indeed an open question.

Beyond that, I feel very much reminded of Ronald Reagan’s election in 1980. I remember people saying back then that ‘Reagan is a 2nd rate actor, delivering a 1st rate performance at playing a 3rd rate president’ and stuff like that. Reagan was initially a joke and a lot of what he said (‘Mr Gorbachev, tear down this wall!’) wasn’t political correct or even sane at the time. I would really doubt if a three times divorced New York socialite will actually embark on some of the socially conservative projects (with regard to race, immigration or women’s rights) which popped up so frequently in his campaign.

In some way the crucial litmus test of his presidency will be if he will be able to actually address the social and economic worries of his core constituencies. These issues are somewhat similar to the Sanders agenda, and the agendas of many other left wing political movements throughout the world. Will Trump be able to substantially improve the living conditions of middle- and working class Americans, regarding income, access to healthcare, education and other welfare state features? It is here where he has a real chance to become ‘Reaganesque’ – albeit in mostly reversing many of the political changes Reagan initiated in America and which ultimately brought the country to this dismal place.

So what to watch then in the business-society context?

So like any good paper, I should finally make the sharp turn on this blog to what editors tend to call the ‘managerial implications’ ☺ (I hope you get the joke…).

Actually, there are a few. My main point here is really that as much as Trump’s presidency can be seen as a disaster, it is just a brutally espoused symptom of a failed economic and social experiment. What really puts me off is that even now post election many smart minds seem to run away from that conclusion and rather engage in a lament of the candidate’s horrible character (as much as I agree, watching him and his lot on the stage Wednesday early morning was ugly- but that’s a distraction).

It takes the sleazy, ‘bridge and tunnel person’ (as Manhattan establishment figures still derogatorily refer to him) from Queens to defeat a political system that is largely in the pocket of the moneyed elites, using corporations to make sure their class interests are dominating American politics. It is here that Hillary’s defeat makes me happy indeed. With hers and her husband’s massive obligations to the corporate world, we would just have continued the same system over and over again, behind the veil of the wonderful advancement of a woman president (btw, exactly the same thing we have seen with Obama, just replace ‘woman’ by ‘black’).

Trump’s victory then spells out one simple fact. Capitalism (in the form we have cultivated it in the US and globally for the last four decades) and democracy are just not compatible. Democracy is more than just giving people a vote every four years. As T.H. Marshall has posited ‘the fullest expression of citizenship requires a democratic welfare state’. Democracy only works if the electorate has some basic provision of a dignified life, a basic sense of participation in determining their material living conditions, as well as the basic education that allows informed and critical political choices.

It is fair to say that the neoliberal project has infringed, if not abolished, these basic elements of a vibrant democracy. Let’s not forget, the ascent of the US as a superpower in the second half of the last century was built on the New Deal, on the idea that a vibrant democracy (in the face of the rise of fascism and communism in other parts of the world) needs a basic welfare state with the result of what we have come to know as a ‘middle class’. The people that elected Trump all represent the part of American society that no longer enjoys these pivotal elements of a democratic community. That is why they fall for simple answers (be them racist, bigoted, religious, misogynist or otherwise).

One of the main driving forces behind these shifts has been the interests of capital, the interests of the wealthy elites, enacted through their control of private corporations. Culminating in the Citizens United ruling of the Supreme Court, we have witnessed the creeping and dominant interests of private corporations capturing the political process in the US over the last four decades.

It is indeed the pivotal role of private corporations which in my view is one core problem that the Trump victory epitomises. I am actually not pinning too much hope on the Trump administration itself to change anything substantial here. After all, with a republican controlled congress, and a democratic ‘opposition’ which is largely in the pockets of the corporate world, I don’t see any hope for substantial change. The Obama administration was probably trying the hardest in recent history to move the agenda, be it in consumer protection, access to healthcare or regulating the financial sector – and we all know how well that went. The Affordable Care Act was a healthcare reform, that did not substantially infringe corporate interests and control. It very well might ultimately be considered as one of the key drivers that energized Trump’s base – given the substantial rises in premiums during this last year.

No, I would, first of all, urge any scholar, any public commentator, anybody able to make a contribution to the debate we have to have here, to, first, not just dismiss this week’s election as an outlier and something that can mostly be attributed to one crazy person. It is of the essence to see this election result as part of a fundamental crisis of western democracies – and the US is just again the showcase here. Brexit and the rise of the far right in Europe is just another symptom of the same problem.

What is the underlying problem here?

The core problem is the role of private corporations in the governance of society. On a macro level this implies re-thinking the big questions about regulating markets, most notably financial markets and labor markets. It also involves re-thinking basic institutions of welfare provision. This might also include a debate on new forms of division of labor between the private and the public sector. Since for technological and (geo-)political reasons it will not be able to just turn the clock back to the 1950s new forms of non-employment based welfare models need to be discussed and developed, including things like basic income and other new institutional arrangements. We basically have to invent new – or reinvigorate to some degree old – forms of income redistribution, through intelligent new forms of taxation and other ways of addressing the vast inequalities. Mind you, the urge to change our current model of capitalism is no longer some sort of leftist or anti-corporate agenda. It is meanwhile becoming more and more clear also to business leaders that the current capitalist system, and particularly the role of corporations within it, is no longer sustainable. As some of those CEOs, such as Dominic Barton (McKinsey), Paul Polman (Unilever) or Ratan Tata (Tata Sons) argue, we have to ‘re-imagine’ capitalism in substantial ways (see Kipping/Barton/Horvath 2016).

On a meso level, we need more thorough work on a re-conceputalised role of the corporation, and its essentially political nature. As Robert Reich outlined time and again, the corporation in the US is just dominated by two interest: ultimately by shareholders, i.e. capital, and on a more instrumental level, by consumers. And this is still the accepted model, more or less, in business school academia and teaching. Not that we have not seen efforts recently to change this (see for instance Baars/Spicer 2017). This effort though has to be sustained, broadened and conducted in a more interdisciplinary mindset.
Ultimately, on a micro level, the relation between corporate management – across all disciplines – and the public good has to be re-introduced as a legitimate field of inquiry. So far, most of the business school research never really transcends the traditional management model of corporations being just economic actors. That even applies to the subfield on which one might pin the highest hopes: research in corporate (social) responsibility, ethics or sustainability. But even this subfield is largely constrained by a thinking in business cases and even new offshoots, such as the debate on ‘political CSR’ never quite embraces a political role of business beyond these constraints.

For a short blog such as this one, there remains of course a lot more to say. I just wanted to put some thought triggers together. Quite often – and in my view quite falsely – commentators have evoked the comparison with Germany 1933 when evaluating Trump’s rise to the presidency. Donald is no Adolf, sorry, and Washington 2016 is nothing like Weimar 1933. But if you twist my arm, I would allow one parallel here. The historically most successful reaction to the depression of the late 1920s still is the New Deal. While I am also aware that Trump is no FDR, this situation of apparent crisis should, first of all, enable a more open and honest discussion about the reasons for Trump’s ascent. And we can all agree that this IS a crisis indeed. But we should capitalise on this crisis to develop new ideas around the way we have organised social and economic life in liberal democracies. The one certainty we can take away from this is then that the role, functions and impact of private corporations is at the heart of such a debate.
Exciting times then for business related scholarship!

References

Baars, G. & Spicer, A. (Eds.), The Corporation: A Critical, Interdisciplinary Handbook. Cambridge/New York: Cambridge University Press

Barton, D., Horvath, D. & Kipping, M. (Eds.), Re-Imagining Capitalism : Building a responsible, long-term model. Oxford/New York: Oxford University Press

Dirk Matten is Hewlett Packard-Chair in Corporate Social Responsibility and Professor of Strategy at Schulich School of Business, York University, Toronto. Since 2015, he visits CBS as a research fellow. You can visit his website and drop a tweet @dirkmatten .

Pic by The Economic Times

Merken

How Could the Democrats Get it so Wrong?

By Jette Steen Knudsen.

Today I heard Hillary Clinton give her concession speech after one of the most surprising electoral results in US history. Mrs. Clinton was poised, calm and calling for her supporters to give Donald Trump a chance to lead for the good of the USA. The facial expressions of her supporters said it all – they looked stunned, disappointed and many were in tears.

It should have been an easy win for Hillary Clinton

Hillary Clinton was supposed to have won the election by a solid margin. Her polling figures were strong even after F.B.I. Director Mr. Comey just days before the election announced that the F.B.I. had discovered new emails that might be relevant to its investigation of her, which ended in July this year with no charges. Mrs. Clinton was a strong and knowledgeable candidate on the campaign trail. In contrast Trump time and time again looked like he did not know what he was doing, which made him an easy target for Saturday Night Live or other comedy shows. Many well-known Republicans also refused to support Donald Trump’s candidacy. The Republican Speaker of the House Paul Ryan refused to campaign with or defend Donald Trump during his presidential campaign. Former Republican Presidents George W. Bush and George W.H. Bush refused to endorse Trump, as did Colin Powell, the former Joint Chiefs of Staff and a well-known Republican. It should therefore have been a walk in the park for Hillary Clinton. As her ally Senator Elizabeth Warren from Massachusetts said on Election Day on local television: “Thankfully soon we will no longer have to care about what Donald Trump has to say”. But Mr. Trump won the election carrying several states that traditionally vote for the Democratic candidate. What went wrong for Mrs. Clinton?

This Country is More Divided Than We Thought

In her concession speech Hillary Clinton concluded with a somewhat surprised look on her face “this country is more divided than we thought”. In contrast while her campaign may not have understood the extent of the polarization of the American electorate, Donald Trump clearly understood the strong discontent and feeling of exclusion among especially white non-college educated men. Back in July the filmmaker and social critic Michael Moore wrote that Trump needed only to focus on the blue states Ohio, Wisconsin, Michigan and Pennsylvania and noted his theory of “The Last Stand of the Angry White Man.” “There is a sense that the power has slipped out of their hands, that their way of doing things is no longer how things are done,” Moore wrote.

What’s the Matter with Kansas?

But why do so many Americans seemingly vote against their interest? In 2004 the journalist Thomas Frank published a book with the title “What’s the Matter with Kansas? – How Conservatives Won the Heart of America”. Mr. Frank asks why poor people in the heartland of America vote Republican when – at least for people of the East and West coasts of the US – the Democrats are the party for workers, the poor and the weak. In other words, why do so many Americans vote against their economic and social interests? Mr. Frank answers this question by examining his home state Kansas and reveals how conservatism, formerly a market of class privilege, became the creed of ordinary Americans. This conservatism has mobilized voters with explosive social issues such as busing, un-Christian art and abortion and these issues then get married to pro-business economic policies. Add to this that in states such as Michigan and Pennsylvania traditional manufacturing jobs have been lost as factories or mines have closed downs. Service sector jobs don’t pay as well as manufacturing jobs. For example Wal-Mart or Dunkin Donut pay the minimum wage, which in Michigan is $8,50 /hour and in Pennsylvania only $7,25/hour. At the same time health care costs and college tuition have soared in America. It is no wonder that white unskilled workers feel left out of the American Dream. Mr. Trump’s promise to “Make America Great Again” resonates well in the American Heartland.

Democrats on the Coasts

Well-educated high earning Americans live in the coastal areas in cities such as Boston, San Francisco or Los Angeles – and they overwhelmingly vote Democratic. The Democratic Party also made great attempts to include Blacks and Latinos but as a commentator in the New York Times (which had endorsed Mrs. Clinton) conceded this past Sunday, Trump has done one thing right – he has acknowledged that Blacks have not gained much economic or civil rights advances in recent years and that he understands their frustration. East and West Coast liberals have simply failed to understand the frustration of Middle America – and the majority of Clinton’s campaign staff hails from the coasts. The Democratic campaign has probably underestimated the frustration of Blacks and Latinos because although Clinton got more votes from these two groups than Mr. Trump, she got significantly less votes from these groups than President Obama did in 2012.

Midterm Exam Postponed for Teens Mentally Disturbed by the Election Result

The Democrats on the US coasts do not understand Mr. Trump’s supporters and sometimes live in a “bubble”. For example my son’s great public high school in Cambridge in Massachusetts is one such bubble. Cambridge is one of the most liberal cities in the US and is also known as “The People’s Republic of Cambridge”. Students at the high school expected a Clinton victory and almost all students supported her. After the election result came in today, many students were grieving. Many were crying and today’s midterm exams were postponed because too many students were psychologically distraught. This small example illustrates how far the East Coast liberal segment is from Trump’s Middle America.

To unify America will be a long and difficult process.

Jette Steen Knudsen is Shelby Collum Davis Professor at Tufts University near Boston and a Visiting Fellow of the Velux Endowed Chair of Corporate Sustainability at Copenhagen Business School. She resides in Cambridge MA with her teenage son.

pic by Heat Street