Liberalism and Conservatism and Their Effect on Business in General

Liberalism and Conservatism and Their Effect on Business in General

The American political landscape is defined in large part by the fundamental differences between liberalism and conservatism. Their divergent values and opinions affect business in 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 of business, 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 and self 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 is needed 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 to restore 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 as Ronald Reagan and Margaret Thatcher. Under President George W. Bush and Republican control 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 on business.

Liberalism Defined
On the opposite side of the spectrum from conservatism, we find the ideology of liberalism. 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 subsidies such 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 regulate trade, 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 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 would result. 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 the long 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, advocating a 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 effect on 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 of wealth 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 a free 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 wages because 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 business will 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 new sources 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.
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 they want, 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” employed within 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 scenario where 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 pure favoritism 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 a socialistic redistribution of wealth.
Positive Effects of Liberalism on Business
Countering 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 economically viable 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 contrast to 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 to people 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 Native Americans 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 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 more programs 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 future opportunities. 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 practices and 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 is brought 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 a great 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 the advantage 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 another company 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 even though 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 could theoretically 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 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. Every business, 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 make things 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 they are 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 a profitable 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 big burden 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 to search 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, within every 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 of behavior 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 of environment, 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 all of 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 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 a living. 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.
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 business world. For better or worse, both systems are important and will continue to play a role for generations to come.


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

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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