Most of us living in democratic nations take democracy for granted. This is partly because we have been born and brought up in a democratic set up and have never seen alternative or adverse conditions. If asked to prepare a list of essentials for setting up a successful business, rarely would we consider democracy as one of the defining factors.
However, those who keep an eye on global business trends, know the role liberal democracies have played in creating conditions ideal for business endeavours. Comparative analysis clearly highlights that the ease of setting up and running a business is higher in a democracy.
As a matter of fact, the business world as we see today is quite the product of the coming up of democracies across the globe, and has much to owe to democratic ideals.
A comparative analysis:
The World Bank conducts a business survey annually to bring out the report on the ease of doing business in different nations across the world. Statistics suggest that governments that respect human rights, follow the rule of law, respect free-speech and are transparent and accountable foster environment suitable for businesses by giving space to individual aspirations. In turn, oppressive regimes curb business endeavours by limiting opportunities and imposing barriers in trade. In fact, the liberal approach to trade by democratic nations has become a model that non-democratic nations are forced to follow in order to promote growth and development. Prime examples of such cases would be countries in the middle-east that are autocratic or monarchical in nature but have recently adopted reform schemes contrary to their traditional principles in order to boost theireconomies. However, exceptions exist and strong ones at that. China is a leading example of a non-democratic fast-paced economy that is challenging the west. The challenge lies in adopting their principles as their political economy is hard to replicate or draw general theories from. Such examples are also unique in many ways and limited in number.
Furthermore, keeping in view nations across the world, one cannot discredit the mutually advantageous relationship that businesses and democratic governments share.
Democracies kindle entrepreneurial energy:
Entrepreneurship and entrepreneurial thought are being seen as the felicitators of major positive changes in the coming future. Democratic governments kindle entrepreneurial energy in ways more than one. For starters, the space for upward mobility in a socio-political set-up is of prime importance for entrepreneurs to execute their ideas. Democracies not only maintain equal opportunities for all but also thwart monopoly by a handful of people, something autocracies actively propagate.
Accountability, answerability, giving preference and proper attention to voter’s demands make it difficult to adopt policies that go against popular demands and needs of the time. Democratic procedures of fierce debating and strong exchange of ideas before decision-making ensure that the best possible projects and reforms are executed. While all these may not seem to have direct consequences on the ease of doing business, they cultivate and nurture conditions suited for start-ups through their welfare schemes and provisions in education and healthcare.
The paradox with big businesses:
As amicable as the relationship between businesses and democracies might seem to the common eye, the relationship is not free of paradoxes. One of the greatest paradoxes is the challenge that businesses like Facebook, Google or amazon are posing to existing democracies. The growth of these companies has been beyond comprehension and their independent worth surpasses that of many small nations. Their access to data, consumer base and immense multinational presence make them immune to most national governments and their policies. These companies have surfaced as major challenges to democracies in recent times with questions of data security and privacy being raised.
While such paradoxes should not discourage our collective approach to seeking democratic ideals, they should make us revaluate our existing norms and practices.