In today’s political landscape, populism has emerged as a formidable force, capable of destabilising both political systems and economies. This unpredictability poses significant challenges for businesses, prompting the question – with populism continuing to impact politics, society, and business, how should corporate leaders prepare to ensure continuity and resilience in a turbulent global political landscape?
Populism is characterised by a few core ideals that resonate with the general population. The first is that the fundamental political divide isn’t between the left and the right, or the rich versus the poor – it is between the elite and the people.
When populists refer to the elite, this isn’t just reserved for the wealthy or upper-classes, however. Rather, it’s about those who control power – for example by owning media or being a part of media circles, by having access to circles of power or harnessing social and cultural capital. Intellectuals, journalists, judges, they are all depicted as part of a system that is rigged against ordinary people. This group can also include technocrats and policymakers, who stand accused of making upward mobility complicated to exclude the general public.
At the root of this populist system, is the idea that ordinary people have an innate wisdom that makes them pure and legitimate (hence the popularity of referendums and other direct forms of democracy), whereas the elite has only its own interests at heart.
Populist leaders often advocate in favour of protectionism, prioritising national interests over global cooperation. This approach can lead to trade wars and the erosion of international alliances. Populism thrives on polarisation, which creates deep voter loyalty to the populist leader through a hyper-personalisation of politics.
This has a number of consequences. First it ends up fusing peoples’ political loyalties with everything else. With the help of social media, but even traditional media, aligning with ‘camps’ consumer views become subservient to political affiliations. It means that businesses are far more susceptible to unpredictable realignments of customer bases, and consumer backlashes if they fall foul of real or perceived slights to one of the camps.
Second, the hyper-personalisation of politics often leads to corruption and cronyism. It means that the existing playing field is difficult to navigate, and it becomes riddled with inefficiencies.
Third, while some populist regimes enjoy a honeymoon period with some investors on side – this generally doesn’t last. The unpredictability of the regime is too great leading to a slowdown in entrepreneurship, and avoidance of risk. In extreme instances, because populism thrives on emotions and leaders being seen to be decisive and bold, policy decisions can have grave economic consequences for businesses.
Finally, populism tends to create hung, or fragmented institutions. In France, for instance, populism of the left and of the right have delivered a hung parliament and thus uncertainty for businesses who don’t know whether there will be tax reforms, whether pension reform will be reversed, and whether the cost of labour is set to skyrocket.
Managing and protecting against populist impacts
For businesses, the rise of populist politics introduces a range of risks and uncertainties. Populist leaders often make costly promises that necessitate higher taxes and employer contributions, increasing the financial burden on businesses. Organisations must develop robust strategies to manage and mitigate the risks associated with populist politics.
This involves engaging in dialogue with key political actors, advocating for policies that support business stability, and protecting organisational values such as diversity and inclusion. Creating a united team around core values is crucial, especially for staff members who may feel vulnerable due to their nationality, preferences, or other personal attributes.
As populism continues to shape the political landscape, organisations must prioritise resilience and adaptability in their risk management strategies. By protecting core values, engaging with political stakeholders, and preparing for potential unrest, businesses can navigate the challenges posed by populist movements.
Dr Catherine Fieschi is an author, academic and analyst in politics, specialising in the emergence of populism and authoritarianism within advanced democracies.
Image credit: FRANCOIS LO PRESTI via Getty Images
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