Essay: Business and politics have their differences

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  • Published on: August 9, 2018
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  • Business and politics have their differences
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Business and politics have their differences; however, both are interdependent on each other. This is due to politics involving the actions associated with the governance of a country or area, thereby setting rules and regulations for society as a whole, especially businesses to obey (Dictionary, 2017). Thus, I will be exploring the different types of political systems and the way they both impact businesses. This will be followed with a discussion regarding why businesses would prefer a democratic government.

Different countries have different political systems that create rules and regulations for society and businesses to follow. Due to some countries having a different political system there is often a variation with these laws. This is because of each system having its own belief on what is classed as ‘good governance’ for its country.

Autocracy, a form of government in which there is a ‘rule by one’ as one individual has the power to make all the decisions for the country. The individual is often a ‘dictator’ resulting in this political system also being referred to as dictatorship. This power is backed by the country, military and the citizens; allowing for their power to be so strong. If the dictator were taking their power for granted no laws or constitution is allowed to remove the power from them. As a result of this occasionally the removal of certain rights from individuals takes place, and human rights are usually trespassed as the citizens have no say regarding what laws are created (Politicalsystems, 2017). North Korea with the dictator King Jong Un is just one example of a country currently with this type of political system.

Democracy is one of the traditional types of political systems and one of the most common due to it allowing for the input of citizens when it comes to decision making (Politicalsystems, 2017). A key reason why democracy is favoured is due to it supposedly ensuring good governance for the country (Wetherly and Otter, 2014). This is a result of it being a form of government where an individual or group of individual is elected in by citizens to have the power to create rules and regulations for the country. If society were unhappy with the way the individuals were running the country, it is highly likely that they will not be voted for in the upcoming election. The United Kingdom is an example of a country with this form of political system as the conservative party were elected for in 2017.

When comparing Autocracy and Democracy it is clear that there are multiple similarities and differences between both.

One of the key similarities between them is that they both have one main leader that sets the rules and regulations within a country. North Korea a current autocratic country has one dictator who beholds all the power. In 2011 Kim Jong II’s death resulted in in Kim Jong Un assuming the power from his father and became the most current dictator of North Korea (CIA.gov, 2017). This is very similar to the democratic government within the United Kingdom. As even though multiple members of parliament were elected. Theresa May is the Prime Minister as she is the leader of the current party with all the power; the conservatives.

Not only that but both types of political parties have control over business laws. Within the United Kingdom multiple laws are in place that businesses must adhere too, such as the minimum hourly wage for employees, and working hours (Gov, 2017). One of the main rules is that businesses must all pay corporate tax. Therefore, with any profit made by the business 20% must be paid as corporate tax (Gov, 2017). Failing to pay this tax is illegal and can result in serious problems for the business. In North Korea Kim Jong Un has created the law that no American business is allowed to invest or do any type of business within the country. This can often mean that businesses miss out on vital investments that can help their businesses grow further (ASIAbusiness, 2018).

Within a democratic country the public have a say. This is due to them being able to vote for who they believe should have the power and they also have an imput when it comes to certain decisions being made that will impact the country. For example, in June 2016 the conservative party gave the citizens a right to vote within the EU referendum. This vote determined whether or not the UK would stay or leave the EU. Due to the citizens being able to vote it allowed for the people to have their say. This is compared to an autocratic system where citizens have little or no input in any decisions made. An example of this is Adolf Hitler who was one of the most powerful dictators of the 20th century (History, 2018). He had the belief that Germany should fight wars for land, therefore once he came into power in 1933 the military had no choice but to back him. This therefore allowed for him to have the resources to create a world war. At the time citizens had no say in what was currently taking place.

The person in power of a democratic or autocratic system has different levels of control. Within an autocratic political system, the person with the power is responsible for decision making and does not need the approval of others. Whereas, within a democratic system such as the UK’s the decisions or laws that Theresa discusses have to be voted for within the house of commons before they are official. These laws then get passed through Monarchy as the Queen then has to approve these laws before being made public.

When we look at democracy there are two main types; capitalism and socialism. In relation to capitalism there are three models:

• Minimal state

• Developmental state

• Social-democratic state.

The minimal state takes a very neoliberalism view as they aim to roll back the state as they want businesses to be privately run rather than state run. Developmental state and social-democratic state are very similar to each other as they both see the market and private businesses being the main mechanism when it comes to allocating resources, the state then takes are role within economic life with specific purposes to aim to promote economic growth and development. Therefore, this is different to minimal state as both the government and businesses work together by being involved in a type of planning. Within this planning the government aims to work alongside the private sector to help them meet targets allowing for economic growth (Wetherly and Otter, 2014).

Within the UK the conservative party are currently in power. This party is a right-wing party meaning that they take capitalist views especially when it comes to businesses. The conservative party believe that having a stronger economy is the underlying factor for having prosperity and security within Britain. Therefore, they aim to lower taxes, have better regulation and free trade deals with markets around the world. The conservative party also take on a slight minimal state view. This is because they want to privatise some of the businesses that are currently run by the government. One example of this is the train lines which are all currently run by the government in a previous bid to aim to keep prices to a low. However, the conservatives are currently aiming to privatise this industry allowing for more competition and a change in prices when wanting to travel.

Socialism, another type of democracy is very different to capitalism when it comes to what they believe in. This is due to them believing in an economic system where goods and services are provided by a state-owned business rather than through a competitive and a free market system. A socialist government also believe that individuals should be provided with the access to public goo
ds to allow for self-actualisation (Diffen, 2018). For example, education is currently provided to the public for free which therefore allows for an individual to grow personally and develop throughout their life.

A current example of a socialist party within the UK is the labour party. The main beliefs of the labour party however are that they want an economic system that is fair for everyone. The labour party want to ensure that certain industries stay privatised such as the NHS (Labour, 2018). In 1945 when the labour party were in power they introduced the National Health Service this allows for all individuals to have good healthcare regardless of their wealth. Education and British rails are another two examples of industries that have been privatised when the Labour party has been in power.

Democracy and autocracy impacts businesses in completely different ways which often means businesses tend to begin trading in a country that allows for growth and development.

Within a country that follows autocratic regimes when an individual wants to set up a business it must be passed through to the dictator before being set up. This results in there being less markets within the economy due to it being difficult for the businesses to be started up.

Once a business has been set up the owner will have less control over their own business. This is due to restrictive rules being in place meaning that everything the business is wanting to do such as an investment or who they are wanting to do businesses with, must be passed through to the dictator who will say whether or not it can take place. Not only that but any changes a business wants to make again must all be approved by the dictator.

In North Korea, businesses cannot trade as must as they may want to with other worldwide businesses. This is because Kim Jong Un decided that businesses can only invest and do businesses with certain EU countries and businesses. He has also stated that no investment or business can be done with any business coming from an American background. Therefore, if an American business wanted to invest in a North Korean business it would have to be declined as Kim Jong Un would have to approve the investment before it was approved (Asiabiz,2018).

Democracy also impacts businesses due to the rules and regulations set by those in power. Within a country that follows democratic regimes it is a lot easier for businesses to begin trading. When wanting to set up a new business within the UK only a few simple steps must be taken before being classed as a fully running business. This then allows for there to be more markets within the economy as new businesses are regularly starting and growing allowing for economic growth. For example, if an individual wanted to begin trading in the UK as a self-employed builder just few simple steps will have to be taken and then the business is the individuals to run and have the responsibility for themselves.

Figure 1: Source The Economist 2018

As seen in figure 1 South Korea currently has a high-income economy especially since modernising their views and left North Korea to take on democratic government. This is just one example of a country who changed their views and have seen an increase in their economy.

In the 1950s both North and South Korea were under dictatorial regimes. However, the 1980s saw South Korea taking on a more democratic view as they began to allow individuals to have a choice when it came to decision making. Once South Korea adopted democratic views they took the opportunity to introduce more technology allowing for that industry to grow across the country.

North Korea however has stuck with the more traditional views which has left them in the dark meaning that they haven’t been able to develop economically like South Korea.

Before having a democratic system, countries are limited to how much capitalism they can put through the country in relation to businesses. Meaning that it is much harder for business owners to be able to run their business freely making them reluctant to start a business within a non-democratic country.

As a result of this businesses would prefer to begin trading in a democratic country due to the higher amount of trade available. In democratic countries, there is no law in what a business can or cannot trade in. Therefore, allowing different markets to be established within the country. An example of this is South Korea, as before taking on democratic views there were little technology within the country. However, once these views were adapted the country invested into technology. This has since resulted in them being at the top of the technology cluster and having a high-income economy due to the investments and trade that have since come from this.

Businesses are also often against trading in autocratic countries due to the limitations they are faced with. Not only that but autocracy is currently a failing political systems that more and more countries are beginning to evolve from. However, North Korea currently still follows these traditional values and has caused a lot of negativity around dictators. From this it is unlikely that businesses would want to be involved with a country that has all this negatively around them.

Overall, it is apparent from comparing both autocracy with democracy that both have their similarities and differences. Even though when comparing both there are more differences than similarities. While looking at the way both will impact businesses it is evident that they a more likely chance of being successful when trading within democratic countries. This has been noticed by countries who have since gone from more traditional views to more modern views of a democratic government. This has then resulted in a higher economy as due to more business investments are made as there is no longer tight restrictions on what they can do. For example, businesses never used to want to trade within South Korea due to their traditional beliefs. However, since leaving an autocratic government and moving to the more modern democratic government it is seen an increase in their economy. This is because more investments were able to be made so they invested a lot in the technology industry causing an increase in trading and resulted in a boost in the economy.

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