The Brexit vote has been called a victory against big business. But Kenneth Amaeshi says it was a missed opportunity to grasp responsible capitalism.
The UK’s vote to leave the EU has been framed in some quarters as the defeat of globalisation and a push back against the domination of big business in politics and public life, the ugly face of globalisation and the main enemy of ‘ordinary people’. But the idea that Brexit is a defeat of big business is partly a distortion. Big business is indispensable.
It’s also a lost opportunity to focus attention on how to curtail the excesses of big business on a global scale. Something articulated very eloquently in recent conversations around the pursuit of responsible capitalism.
The world is confronted by global challenges such as climate change, poverty, inequality, terrorism and water scarcity. And there is now a growing recognition that the private sector has a role to play in meeting some of these challenges.
The consistent call on businesses to contribute to the achievement of the Sustainable Development Goals (SDGs) – through initiatives like the Business and Sustainable Development Commission and the World Business Council on Sustainable Development – is just one example of the important influence they can have on society.
But will the pervasiveness and excesses of big business become more prominent in post-Brexit UK?
The question arises because of the free market orientation of the UK economy and its strong tendency, if unchecked, towards short-termism and impatient capital, which may, in turn, have significant adverse effects on the economy in the long run.
This stands in contrast to the mainland European variety of capitalism, which is more long term oriented and focuses on the interests of broader stakeholder groups than just shareholders.
The EU tends to strike a balance between the two versions of capitalism in Europe. On one handpromoting the free market, and on the other safeguarding workers’ rights, often taken for granted in liberal market economies.
So a concerted effort will need to be made in post-Brexit UK, to ensure big business is managed in a way which leverages the advantages they bring while ensuring that they are well governed and managed.
Pros and cons of big business
While anti-business rhetoric has gained ground and become popular it seems to be built on the assumption that there are more credible alternatives. But big businesses are ubiquitous in our lives.
From the basic human needs of food, shelter, and clothing to the exotic heights of human aspirations of walking the moon and touring the space. We now live and breathe the products and services of big business. So it’s overly simplistic to envisage a world without them.
Big corporations can do good. They create jobs, most of them pay taxes and contribute to economic development and social prosperity.
Meanwhile, their size and prevalence is a strength. Their ability to efficiently coordinate across borders, for instance, can reduce transaction costs which can be passed on to consumers.
Nonetheless, their global reach can be their downfall. It’s possible for them to escape the clutches of national governance apparatus and play one country against the other to take advantage of what has become a conspicuous global governance void.
And it’s within this opportunism which lies the potential for environmental abuse, bribery and corruption, regulatory capture, tax avoidance and evasion. All of which can undermine public trust.
Accepting the good, managing the bad
Those who complain about big business obviously want to enjoy the positive impact they have but not their negative effects. This is understandable.
The question is: how can the power, capability, and reach of big business be used to contribute to the continued progress of humanity in the world? The possible misuse of power typical of big business leaves a nagging question of how to control and govern them in such a way that they contribute positively to society.
The governance of big businesses is a complex endeavour requiring enormous capacity. The EU’s ability to restrain Microsoft’s antitrust practices in the trading bloc is a good example of what it takes to control big business.
There was a lost opportunity in the unfocused Brexit debate to nudge big business toward the realisation of a responsible capitalist system. As the discourse rages on, thoughts must now surely turn to whether this task is better achieved with, or without the EU.
Professor Kenneth Amaeshi is Professor in strategy and international business at University of Edinburgh Business School, and Director of the Sustainable Business Initiative.