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Abstract

The American political landscape is defined in large part by the fundamental differences

between liberalism and conservatism. Their divergent values and opinions affect businessin general as well, for better or for worse. Both mindsets have origins that are centuries old,

and have evolved over time to embrace the changes in society, economy, lifestyle, and of

course, business. In order to discuss conservatism and liberalism from the standpoint ofbusiness, this paper will first define liberalism and conservatism, compare and contrast the

two on a broad basis, and detail the positive and negative effects that both have on

business.

Conservatism Defined

To begin, a general definition of conservatism will be useful. Generally defined,

conservatism is an ideology that seeks to preserve the status quo, values faith, family andself reliance, and feels that the government should have limited influence over everyday

life, faith, and business (Lindberg, 1999). Limited government influence under

conservatism stretches to encompass environmental policy, taxation, and much more. To

put this definition into a practical format of business for the purposes of this research,conservatives feel that individuals should be able to pursue wealth and success without the

government over regulating this pursuit, and that self sufficiency and hard work are what isneeded for a thriving economy. Further, the conservative mindset is that everyone be given

equal opportunity in business and that no race or group of people in particular be given

advantage by legislation or government regulation. Compassion, but not favoritism,embodies the conservative mindset. In pursuit of brisk business and a healthy economy,

conservatives believe in a strong national defense to protect the interests of domestic

business.

Conservatism has its roots in 19th century Europe, when it was embraced in an effort torestore order in times of financial and political unrest. In recent decades, conservatism in

politics has seen a renaissance in the philosophy and example set by world leaders such asRonald Reagan and Margaret Thatcher. Under President George W. Bush and Republicancontrol of the United States Congress as of the time of this research, the conservative

agenda stays alive in present day American politics and business. Successive portions of

this paper will analyze and discuss the positive and negative effects conservatism has onbusiness.

Liberalism Defined

On the opposite side of the spectrum from conservatism, we find the ideology ofliberalism. In stark contrast to conservatism, liberalism is defined as a philosophy and

political agenda that seeks strong governmental involvement in business and everyday life,

including assurance of the well being of every citizen, especially in the form of subsidiessuch as welfare payments, free food, shelter, and medical care (Liberalism, 2004). To put

this definition into a practical format from a business standpoint for this research, liberal

though holds that within the scope of business, the government should strongly regulatetrade, business practices and the like in order to keep the progress of business moving

forward. Under liberal control, business should receive extensive financial support from the

government, and laws should be enacted to implement quota systems that ensure equal

opportunities for minorities and other protected classes of people. Within the actual scope


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of businesses hiring others, liberals have in the past tried to drastically raise the minimum

wage that workers are paid in the false belief that this would improve their standard of

living, not taking into account the higher prices and increased employer costs that wouldresult. Liberal governments are also prone to excessive taxation of business in an effort to

raise more funds to finance social aid programs that liberals so strongly endorse. Often

times, the heavy taxation and regulation that liberals endorse actually hurt businesses in thelong run (this issue will be discussed in more detail in other sections of this paper). Liberals

also place importance on protection of the environment and strict regulation to restrict what

can be done with natural resources.Liberalism has its roots in feudal times, when people were heavily taxed and regulated

regarding where and how they could earn a living. Modern liberalism is proliferated by

luminaries such former American President William Clinton and Senator Edward Kennedy.

The political mindset of liberalism endorses a "make love, not war" philosophy, advocatinga pacifist military strategy and the like (Kerlinger, 1984). Liberalism also embraces some

controversial social viewpoints which play a role in forming opinions about business. For

example, the liberal advocacy of open reproductive rights for women, relaxed fiscal

policies, and affirmative action will be discussed later in this paper in respect to their effecton business, for better or worse.

Positive Effects of Conservatism on Business

Conservatism has certainly had countless positive effects on the business world, both in

America and around the world. Because of the conservative emphasis on the pursuit ofwealth and business success without much, if any, governmental interference, the economy

is allowed to grow as large as practicality will allow. Entrepreneurs are free to work hard,

invest their money, and take risks without worrying about the government restricting their

activities. Within this framework, countless innovations in agriculture, manufacturing,medicine, and technology have been allowed to occur. Without excessive taxation, more

dollars are able to be dedicated to the actual research and operations of the business which

gives more opportunity for the business to grow. Beyond research and development, in afree labor market, under conservatism, employers are not forced to pay a certain wage to

workers. Workers are free to choose whether or not to work for the company at the given

wage, but beyond that, the company is not burdened by having to pay excessive wagesbecause of a law telling them that they must do so. Again, this realization of additional cash

being retained within the business allows the business to continue to invest in process

improvements, equipment, new product development and so forth, which also provides an

opportunity for the business to succeed. In the long run, the higher income of the businesswill result in more taxes being paid, which is something that also contributes to the growth

of the tax base. An important differentiation must be made here between paying high taxes

because of their nature and paying a healthy amount of taxes because of high income.As also mentioned earlier, conservatism also advocates a relaxed restriction on

environmental policy, which allows for greater business opportunities without the burden

of overregulation. For example, oil companies are able to expand their exploration for newsources of oil, which ultimately increases the likelihood that more oil will be produced,

increasing profits and organizational growth. Real estate for business purposes can be

acquired more readily and used more widely if the user is not held back in regard to the

type of building or other use for the parcel(s) of land.


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The conservative viewpoint that quota systems, which force employers to hire people of

certain races or backgrounds in order to provide equal opportunity is not necessary, also

provides another business advantage. If companies are allowed to hire whomever theywant, based on objective criteria such as a particular skill, education, or other

qualifications, the talent pool of a given company will be filled with those who add the

most value to the operation of the business. With only the "best and brightest" employedwithin a given organization, that organization will have the brain power that it needs to

offer the best products or services, putting them ahead of competitors, and allowing the

company to realize its maximum potential. This would not be as likely in the scenariowhere unqualified people are higher simply based on membership within a certain class of

people, just because a law requires the employer to retain that person.

A final, yet significant positive effect that conservatism has on business is the belief that

tax advantages should be given to higher income individuals. While this sounds like purefavoritism for the rich, it actually has a more useful purpose. In theory, if those who make

high amounts of money are allowed to keep more of that money because of not being

saddled with a lot of taxes, can invest that money in their own or another business, which

basically put, "spreads around the wealth". In this way, prosperity can flourish without asocialistic redistribution of wealth.

Positive Effects of Liberalism on BusinessCountering the advantages that conservatism gives to business, liberalism also has its own

unique positive effects on business as well. Because liberal thought advocates the heavy

taxation of business, only the strongest businesses can realistically remain economicallyviable and survive for any extended period of time. In this case, only the best businesses

will be able to continue to exist, and the competitive arena will only contain companies that

have the strength to weather the storm of many taxes in order to operate in business in the

first place. This raising of the bar forces companies to offer the best products and services,minimize waste, and be the very best that they can be in their given industry. As an aside,

this also gives benefits to the consumers because it provides a wide selection of only the

best products and the best services, so the consumer ultimately benefits.Another significant positive effect that liberalism has on business is the redistribution of

wealth. More precisely, the huge tax revenues that liberals collect can be used to assist

other companies in process improvement, expansion, training, and other needs. In contrastto driving companies out of business, this can allow weak companies to succeed and

survive in the long term, enabling them to pay more taxes, and the cycle continues.

When liberal policy protects physically limited people or those of certain races by

requiring companies to employ them, businesses benefit in that they are given access topeople that they may have not considered for employment given a completely free choice

in the matter. Special talents of a given group of people can be harnessed by the

organization for their greater good. A good example of this is the unique talent that NativeAmericans have for climbing to great heights without fear. For a construction company,

this is a huge benefit, as these people will produce more because of the lack of fear, and

they are less likely to be injured on the job itself.By keeping wages at a certain level, liberal regulation, in a strange way, makes companies

get the most out of a given employee's performance. This could lead to the company

pushing their workers to greater heights of performance, better attendance, less

misbehavior, and so forth. If an employee works hard, shows up for work consistently, and


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is compelled to learn new tasks and take on more responsibility, the fruits of their labors

will translate to the bottom line of their employers. With more income, companies will pay

more taxes, which under a liberal system, provides the fuel for the liberals to create moreprograms to benefit others and continue to tax others, and the cycle continues. Steady

streams of money coming from business into the coffers of the government eventually

works its way back to the business itself.Negative Effects of Conservatism on Business

Both conservatism and liberalism also have negative effects on business. We will first take

a look at conservatism's negative impact.As was previously mentioned, conservatives advocate very little restriction on what

businesses can do to the environment in the interest of profits. While it is true that this

opens up chances to gain revenue, precious resources may be limited, and if they are

wasted or exploited, they may no longer be available to any business, which restricts futureopportunities. Certain industries or research into other products may totally disappear.

Corporate greed must also be discussed when considering the negative effects of

conservatism on business. Without a lot of regulation and observation, as recent events

have shown, some corporate executives tend to indulge in deceptive accounting practicesand outright fraud in extreme cases. When a CEO, for example, is able to in essence rob

their company of all of its assets, the company can without a doubt fail. If the business isbrought down by greedy leaders, of course, the company drops from the business

landscape, leading to unemployment for the staff and the disappearance of tax revenue,

which in the long run, hurts everyone. Beyond the illegal greed, executives usually have agreat deal of latitude in regard to their legitimate compensation. Excessive compensation

can also drain a company of its lifeblood and lead to its demise. Legal or not, greed is

greed, and it can kill a business.

Without the requirement to hire people within protected classes, in direct contrast to theadvantage of liberalism, companies may be missing out on the unique talents of a given

person or persons. If their talents never reach the company, no one benefits, and the

company may actually be hurt in the long run due to "brain drain". Also, if anothercompany hires that talented person, the other company gains a competitive advantage

which may be enough to put the first company totally out of business. A far stretch, but

possible nonetheless. It is important to note that conservatives should understand that eventhough they don't have to do something, they should consider it for its beneficial aspects

anyhow.

The abuse of freedom that conservatism provides to business needs to be reinforced once

again. If no one is watching, a business may have a tendency to break rules, exploit people,and do whatever is necessary to chase an almighty dollar. This, in a strange way, may not

be in the best interests of the business. For example, if a firm disregards the quality of its

product, the voice of their customers, or the market conditions, the company couldtheoretically indulge its own fancy to the point where they cannot survive as a viable

enterprise, defeating the whole purpose of the business entity in the first place. This cannot

be overemphasized.Conservatism's favoritism of "big business" can also be a bad thing for the overall business

environment. If only the "big guys" are given the advantages at the expense of small

upstarts, a quite viable sector of the economy can be adversely affected. It is a fact that

entrepreneurs make up a significant sector of the U.S. economy (Kristol, 1993). If


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entrepreneurial sprit is snuffed under the foot of behemoth business, an excellent source of

talent and contribution is lost. In the long run, the small businesses that are allowed to

flourish eventually grow into the big businesses that provide a great deal of tax revenue,employment, and contributions to the business environment. Bigger businesses are not

always better, and if the conservative viewpoint only allows indulgence of the big

enterprise, a talented voice, that of the innovator and entrepreneur, is silenced. Everybusiness, large or small, should be given equal opportunity to offer products and services,

and compete side by side on a level playing field. While big businesses will still have

advantages through economy of scale, for example, the smaller company can still makethings happen.

Negative Effects of Liberalism on Business

For all of its advantages for business, as we have presented, liberalism can also have

negative effects on business, which we will now discuss.The liberal viewpoint that everyone should be given an equal employment opportunity

regardless of ability, while a pleasant thought and social policy, is simply bad for business.

If a company has to pay someone who does not have the ability to produce at the level that

is needed for the success of the company, they actually can kill the company where theyare employed. Think about the effect of perhaps hundreds of unqualified people being

allowed to work in a company because of a legal edict. The company switches from aprofitable organization to a charity. Without profit, the business folds- and that is the end of

the story.

Along the lines of employment quotas, the liberal belief in a minimum wage is also a bigburden for businesses. A small business, for example, could be drained of everything

because of the requirement that people be paid a certain amount, whether or not the

company can actually afford to pay the wages that are dictated by liberal policy.

The good intentions of liberals to protect the environment are also a negative for business.For example, when oil production or the use of other natural attributes is banned in an

effort to protect the resources, some businesses may not be able to continue. Take, for

example, ExxonMobil, a huge petroleum refining organization. If they were not allowed tosearch new areas in search of the oil that they need to serve their customers, there would be

no way to generate income, or profits, and a huge employer (and tax payer) would

disappear virtually overnight. Imagine the rippling effect of such an occurrence, withinevery corridor of the business world, both in America, and worldwide.

Liberal's relaxed viewpoint on crime and criminals is also, in an unusual way, is bad for

business. Going back to the corporate greed that was discussed under conservatism, if

violators are given merely a slap on the wrist instead of hard punishment, this type ofbehavior could be allowed to flourish. Before long corporate theft could become the norm

and companies will not be able to survive the cash drain when funds are being openly

stolen from corporate coffers. Liberalism sometimes creates a free for all type ofenvironment, and if no one is expected to play by the rules, everyone will be hurt badly

overall.

The excessive taxation that takes place under liberalism is also poison for business. If allof the profits are being sucked up by huge tax bills, the very survival of a business is in

question. Moreover, if a business does not have a great deal of extra funds, they cannot

reinvest in new products, hiring more people, expanding the physical plant, or any other

things that would benefit that company and give more business opportunities to other


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companies such as those that would build a new plant for a growing company, or even sell

cups of coffee to a growing employee roster. Again, we see a vicious circle that goes

around and around because of liberal policy.Something important to note is the liberal mindset that the intentions of a given action are

more important than actual results (Kerlinger, 1984). When liberals promote equal

opportunity employment, the intention is to make sure that everyone is allowed to earn aliving. However, in forcing this upon businesses, they create unnecessary expenses for all

businesses, leading to a burden that does not need to exist. The company has a challenge to

face that is created strictly by the creation of liberal laws and policies. In the big picture,the good intention of such as social and business policy is bad.

Summary

As we have seen, both liberalism and conservatism have pros and cons for business.

Perhaps, in the final analysis, they both need to exist to create a balance in the businessworld. For better or worse, both systems are important and will continue to play a role for

generations to come.

References

Liberalism. (2004). In The Columbia Encyclopedia (6th ed.). New York: ColumbiaUniversity Press. Retrieved January 20, 2006, from Questia database:

http://www.questia.com/PM.qst?a=o&d=101255286

Kerlinger, F. N. (1984). Liberalism and Conservatism: The Nature and Structure of Social

Attitudes. Hillsdale, NJ: Lawrence Erlbaum Associates.

Kristol, W. (1993, September). A Conservative Looks at Liberalism. Commentary, 96,33+.

Lindberg, T. (1999, July 20). Competitive Conservatism. The Washington Times, p. 21.

Ponnuru, R. (2003, December 22). The Tempting of Conservatism: In Supporting Bush

and the GOP, Don't Lose Yourself. National Review, 55, 38.

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