How business schools can bridge the political divide: part I

Business Impact: How Business Schools can bridge the political divide
Business Impact: How Business Schools can bridge the political divide

The cultural gulf between business and politics remains wide and persistent. ‘Business is business and politics is politics and never between shall meet,’ according to American journalist, Suzy Welch. Yet this perspective is not only outdated, it has also never been true.

Traditionally, business schools have operated in disciplinary silos and the disciplines that have been brought to bear on business education have not included politics. Harvard academic and management guru, Tom Peters, explained in a 2021 Financial Times article how he was ‘angry, disgusted and sickened’ at how McKinsey & Co., his first employer, and its army of clever MBAs ended up paying nearly $600 million USD for their part in the US opioid scandal: ‘Business schools typically emphasise marketing, finance and quantitative rules. The “people stuff” and “culture stuff” gets short shrift in virtually all cases.’

Politics is what people stuff and culture stuff is all about, yet many business schools continue to have a kind of blind spot about the close interrelationship between business and politics. This blind spot carries through when students embark on their business careers. One chair of a major multinational company had just come from a meeting with fellow chairs when we met for a coffee and a chat. He told me: ‘We were discussing politics. We came to the conclusion that politics operates to a totally different logic from business. And, quite honestly, we don’t understand it.’ 

This put me in mind of CP Snow’s renowned 1959 Rede Lecture on the divide between art and science [as published in the 1961 book, The Two Cultures and the Scientific Revolution]: ‘I felt I was moving among two groups – comparable in intelligence… who in intellectual, moral and psychological climate had so little in common that instead of going from Burlington House or South Kensington to Chelsea, one might have crossed an ocean … They have a curious distorted image of each other. Their attitudes are so different that, even at the level of emotion, they can’t find much common ground.’

Why does this gulf exist? Is Welch right that business and politics should never meet? Or, by ignoring political issues, are business schools leaving a huge and important gap in fulfilling their educational duties? 

To explore these questions further, we need to understand what we mean by ‘politics’ and what we mean by ‘business’, and their roles in our societies. 

What is politics?

It is often thought that ‘political’ equates to partisan politics, the increasingly grubby nature of political campaigning, or the shady world of lobbying for self-interest. Yet politics is not that. 

Politics is the mechanism by which we decide collectively the kind of society in which we wish to live. That is something in which every one of us has an interest and about which we have views – often visceral and strongly held. Politics is ‘a great and civilising human activity,’ as Bernard Crick put it in his seminal work, In Defence of Politics. Crick argues that establishing a functioning political order that recognises different views, different preferences and even different truths, marks the birth, or recognition, of freedom.

Politics is about people’s belief systems. ‘Politics is a battle of ideas, in which participants attempt to control the narrative through tapping deep-rooted values and beliefs, rather than invoking objective self-interest,’ says University of Edinburgh Professor, Christina Boswell, in a 2020 blog for the British Academy. In this reading, politics is primarily about identity and culture. People develop political views and allegiances based on their own visions of themselves – much as they choose some brands in an attempt to make a statement about who they are rather than for the brand’s functional value.

Taking these definitions and perspectives, it is clear we all have political interests. We all care about the kind of society in which we live. Given that, how come so many businesses continue to declare themselves to be ‘apolitical’, seemingly trying to absolve themselves of any role in how our societies work? How is it that so much business education continues to ignore politics? 

What is business?

To get to business, let’s start with economics. There was a time when economics was recognised for what it is – a branch of politics. There is no economic theory or decision that is not political in nature which is why we all used to talk about the political economy. All the great economists, from Adam Smith to Karl Marx to JM Keynes, had political thought as a central part of their economic work. 

All of this was swept away when economics developed ‘physics envy’ and wanted to turn itself into a mathematical science. Neo-classical economics dismissed social, political and institutional factors (things not easily subject to turning into elegant mathematical equations) as being ‘exogenous’ to how markets operate, rather than accepting that they are integral to how markets function. 

The fiction of ‘homo economicus’ took off and the narrative around human beings was turned into one of a bunch of automatons making so-called ‘rational’ decisions based on their own economic self-interest. In other words, economics was extirpated from the political context in which it belongs.

Where economics went, business followed. The artificial (and highly damaging) separation carried through to business thinking, which saw itself as belonging in the economic realm rather than the political realm. Over time, neo-liberal economic thinking infected the business perception of itself and its role in society. Milton Friedman’s seminal 1970 article, ‘The Social Responsibility Of Business Is to Increase Its Profits’, poured scorn on the idea that business had any wider responsibility to society other than making money for shareholders. This idea spread like wildfire. It was welcomed by the business community because it simplified their lives, giving them a single target to work towards – shareholder value. Eventually, the idea became embedded in executive compensation programmes and linked exclusively to short-term stock price performance.

A number of business school curricula are still stuck in this paradigm – highly damaging and outdated as it is. The job of business is to maximise profit and deliver money to shareholders, many still claim.

The world has changed

Economist and former Dean of the University of Oxford’s Saïd Business School, John Kay, puts it like this in a 2021 article for Prospect magazine: ‘Business has lost political legitimacy and public trust by pandering to an account of itself that is both repulsive and false. The corporation is necessarily a social institution, its success the product of the relationships among its stakeholders and its role in the society within which it operates.’ 

This perverse view that business has of itself is the legacy of neoclassical and neoliberal economic thinking – thinking that has also caused huge social, environmental and economic damage and that none of us, including business schools, can afford to continue to perpetuate.

Things are changing. Fast. We are entering a new era – what I describe as ‘The New Political Capitalism’. It is an era in which business is rightly seen as being embedded in our social fabric. Where businesses recognise that they are political actors, through their power and their capability of having a significant impact on the sort of societies we live in. 

(This is part one of a two-part series. Please click here to read the second part.)

Joe Zammit-Lucia is the author of The New Political Capitalism (Bloomsbury, February 2022). Following an executive career in multinational business, he founded a management advisory firm with offices in Cambridge (UK), New York and Tokyo. On divestment, he co-founded the RADIX network of public policy think tanks.

This article originally appeared in the print edition (February 2022) in Business Impact, magazine of the Business Graduates Association (BGA).

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