The New Political Capitalism: How Businesses and Corporations Can Thrive in a Deeply Politicized World
by Joe Zammit-Lucia, Bloomsbury, 2022
The argument that companies today need to be more politically aware of their operations and supply chains may seem like a truism. But it’s probably also the case that very few CEOs thought they’d wake up on February 24, 2022 to face a decision on how to respond to Russia’s invasion of Ukraine. Some (including PwC) have begun the process of withdrawing their business from Russia, others initially opted to continue operating as usual. But threats from the public to boycott the latter, amplified on social media, forced the household names to turn around and apologize.
We are now at the extreme end of the era that Joe Zammit-Lucia calls, in his new book of the same name, the age of the new political capitalism: a world where politics and business collide in real time and where there is no such thing as an apolitical business. The new political capitalism was published on February 3, 2022, three weeks to the day before the start of the war in Ukraine, and it is safe to say that its author would not have wanted such a crude illustration of his thesis. In fact, his message for this new era is optimistic: businesses will thrive when they understand and act on the politics of their operations. And behaving in this way can also help solve the existential challenges of the present while ultimately providing a better future for all.
In the book, Zammit-Lucia, who is the founder of Radix, a think tank that positions itself in what it calls the “radical center,” walks us through a decades-long evolution of industrial, shareholder and corporate capitalism. stakeholders. His two previous books, with co-author David Boyle, also of Radix, tackled the issues facing liberal democracy and globalization, which he favors. Political capitalism, he argues, is central to the success of both projects.
Companies will thrive when they understand and act on the political dimension of their operations. And behaving in this way can also help solve the existential challenges of the present while ultimately providing a better future for all.
Zammit-Lucia’s ultimate goal is to live in a world where “the innovative energies of private enterprises operating in competitive, well-structured and well-regulated markets are essential to progress.” But for that to happen, companies need to have “a deep understanding of how politics works and the constant contestation of political ideas, how they drive and follow contemporary culture, and how to integrate that knowledge.” at the heart of their business models. ”
He revisits the themes of globalization and the power of brands to describe and exemplify what he sees as the model political enterprise. One such example is Patagonia, the clothing company that is integral to its environmental policy and was decades ahead of its time when it was founded by American mountaineer and conservationist Yvon Chouinard in 1973. It features global supply chains designed to minimize its environmental footprint. , and it improves the longevity of its products by offering free repairs. In 2002, it announced that 1% of its profits would go to environmental causes.
Chocolatier Tony’s Chocolonely is another model political company and an example of what Zammit-Lucia calls a “purely political brand.” The company was founded in 2005 by documentary filmmakers who wanted to change the appalling working conditions of Ghanaian cocoa farmers. The film they made about child labor didn’t have the impact they hoped for, so the filmmakers started their own chocolate company. When he was sued for claiming to be 100% child labor free by another chocolatier who argued such a thing was impossible, the court dismissed the suit. The advertisement raised the profile of Tony’s Chocolonely. As a result, the wages of its workers, which are linked to earnings, have also increased. The company had put forward its political point of view.
Amid its repeated refrain that corporations must think politically, the book contains delicious nuggets from the history of capitalist culture. One is the story of Elizabeth Magie, a progressive activist who in 1904 invented a board game called the Landlord’s Game. The game had two sets of rules to illustrate how different constraints affect player behavior and was designed to show how new landlord regulations could hurt poor tenants. According to the “prosperity” rules, each player gained money when someone bought a new block of land, and the game was won when the player with the least money managed to double it. Under “monopoly” rules, successful players bought properties and collected rent if other players landed there. Here, the winner was the person with the most money.
When Parker Brothers was shown a modified version of the game by an unemployed home heating salesman named Charles Darrow, they released only one version. Monopoly was a hit and Darrow became an instant millionaire. As Zammit-Lucia writes, Darrow’s rags-to-riches story “provided a better marketing backdrop than a social activist campaigning for a more just and collaborative society.” It was a game of its time. “Who knows where we would all be today if Parker Brothers had marketed Prosperity instead of Monopoly? Zammit-Lucia writes.
Fast forward through the deregulated worlds created by Reaganism and Thatcherism to the era of financial capitalism, the unhealthy relationship between legislators and business elites, and Milton Friedman’s “business of business is business.” Zammit-Lucia argues that this approach to capitalist enterprise is now as anachronistic as a rotary telephone. His proof? The inexorable rise of global threats, from climate change to armed conflict, and multifaceted powerful actors. Which brings us to the present, where CEOs are faced with real political decisions such as doing business with Russia because of the war or buying cotton from Xinjiang province because of the mistreatment of workers.
It is easier to describe the prescription for change than to propose a solution. In a chapter on cultural leadership, Zammit-Lucia suggests that there are three elements to succeeding in the politicized world. First, accept that business is political and has an important role that goes beyond financial performance; second, to lead from the outside in, to understand the effect of business on the world; and third, “leaders must think as citizens, not just of themselves, but of their customers and everyone with whom they do business.” Using the pandemic response as an example, it focuses on collaborations between companies and governments to develop, test and deploy vaccines. His hope: that we don’t forget what can be done for the public good if we work together.