Regardless of which side of the political equation you sit on, it's difficult to be satisfied with the status quo. In many countries, the left has moved even further to the left and demonized the institution of business. At the same time, the right has moved further to the right and embraced a narrow view of business as primarily concerned with money and the people who have it. Around the globe, one of the results of this schism has been the hollowing out of the middle.
From our vantage as researchers in a leading business school, we see a vital need to end the left-right divide that is strangling democracies. It’s time to make more room for a middle ground that’s based on both the democratic ideals of freedom and helping those in need. It’s time to call on both government and business to play critical roles in building this middle ground.
A Stark Left-Right Divide
Our political factions are more extreme today than at any point in our lifetimes.
The left sees markets as basically unfair and in need of detailed regulation. The right sees markets as always working for the good of all and in need of no regulation. The left thinks that the poor are in need of help and that government programs that transfer income from the haves to the have-nots are the primary answer. The right believes that by giving tax breaks to the most well-off in society, wealth will trickle down to those most in need.
These divergent points of view have left us with an increasing gap between rich and poor, deadlocked governments around the world, and a slow-growth global economy. We need a change. We need a different story about what businesses and government can achieve.
The left needs to embrace the idea of responsible business. Responsible businesses are those that are driven by a purpose. They create value for the communities and societies in which they operate, along with value for their customers, suppliers, employees, and financiers. Of course there are companies like Enron, which collapsed in a wave of criminal activity, and other organizations and leaders that have become engulfed in scandal. But for every one of those, there are thousands of companies trying to create value while also doing the right thing. Most companies were started by entrepreneurs who had a dream, who made sacrifices, and who sweated to build something they were proud of, not just something from which they could make money.
The right needs to embrace a responsibility toward the least well-off members of society. Don’t we teach our children to help others who are less fortunate than ourselves? There is nothing wrong with inequality per se, but the level of inequality of opportunity has led to vast swaths of society who have lost hope of ever living a meaningful life, let alone achieving something like the American dream.
We need policies and ideas that are both pro-business and pro-poor. We need to be creating business incubators and accelerators for building responsible businesses. We need to be teaching schoolchildren about what responsible businesses are and how to start one. We need to be making capital available through venture funds and giving tax breaks to those funds. These are just a few of the ideas that can easily be implemented with very little cost.
In short, we need thousands of experiments. We are beginning to see some in smaller and local governments — as with opportunity zone legislation in the United States designed to spur development and jobs in distressed areas — and in public-private partnerships all across the globe, such as the Upwardly Global partnership between a not-for-profit immigrant services provider and Accenture, which helps refugees and immigrants to the United States who have training in fields such as technology or medicine but lack U.S. certifications and employment networks. All too often, though, these kinds of good ideas get muddied by the left-right ideological divide and fall by the wayside.
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Finding a Way to the Middle
We need a manifesto to create a middle — both a political middle and an economic middle. This won’t be an easy task, and it won’t be done in one election or one business cycle. But we think it’s feasible. Here are four ideas we believe will help create this middle way.
Market participants need to be responsible. Markets work for most ideas, most of the time. But they need participants who are going to be conscientious about the effects of their actions on others. Adam Smith understood this well. We are in danger of forgetting this lesson by concentrating only on delivering financial value to shareholders.
Governments urgently need to provide the conditions that allow for good businesses to develop. Among its many proper roles, government needs to facilitate value creation. Infrastructure — whether that means physical infrastructure or education reform or internet access — connects non-urban areas to their countries’ larger economies. In the U.S., in part because of poor transportation options and limited availability of broadband, many rural and suburban residents are physically and digitally disconnected to sources of employment, and many rural producers have a hard time reaching urban markets. Pro-business Democrats and pro-poor Republicans in the U.S. understand that they can’t win the hearts and minds of voters who can’t hear them in the first place. Rural residents must be brought into the commerce of the larger economy.
We need to embrace the idea that government and business are the two most powerful tools we have to improve the lot of the least well-off. Business as an institution has endured not because it creates value for shareholders, but because it provides jobs, goods, and services that people need, and because its profits are often reinvested in innovations that make the whole economy better off. Business is deeply rooted in society. The left needs business because it is the most successful institution in history at channeling the benefits of economic activity toward workers. And while they may object to saying so on aesthetic grounds, the right knows that business is the most powerful tool for combating poverty and inequality.
Education must be a top priority. Pro-advocacy righties and pro-business lefties must converge on creating a system of primary and secondary education that responds to the needs of its most vulnerable citizens. Education is what will prepare our children to participate fully in society as it will exist in 20 years. While a universal basic income may have appeal as an immediate solution to a workforce replaced by algorithms, primary and secondary education are the civil rights issue of our day. More than any other thing, education will determine who survives automation and whether business can find its next generation of skilled labor in currently depressed local economies.
In the U.S. and many other countries, there is a need for regulatory reform, tax reform, health care reform, and entitlement reform. In every locale, the only way to accomplish these difficult goals is from the middle. The current system is broken. Let’s try more common sense for a change. Our children’s future depends on it.