It took an extremist mob attack on the Capitol on January 6, 2021, for American companies to speak out in favor of democracy. The unprecedented threat to political institutions in the leading Western democracy, encouraged by Donald Trump, was what led Corporate America to finally jump from the then-president’s foolish and mutinous ship.
The populist leader was already losing a portion of the market’s support for ignoring the climate crisis, for not condemning racism and for minimizing the seriousness of the COVID-19 pandemic. But this clean break came only after he incited an angry crowd that contained armed maniacs who desecrated the Capitol, even responsible for deaths.
The Business Roundtable criticized Republican politicians for spreading the “fiction of a fraudulent election”. The association, with a membership roster that includes CEOs of major American companies, had previously praised Trump early in his administration, for his tax plans and appointment of Steven Mnuchin, formerly of Goldman Sachs, as Secretary of the Treasury.
Following the invasion, technology companies increased restrictions on Trump’s social media and limited services on the then-president’s website. Finance and industry suspended their political donations, particularly to Republican congressmen and senators who endorsed the false narrative of fraud in the 2020 election.
Critics say the companies took too long to react. Attracted by the promises of tax cuts, deregulation, and restrictions for foreign competitors, especially China, the corporate world, particularly the financial market, allied themselves with Trump during most of his term and bet on his re-election.
However, some realized that good business cannot come at the expense of democracy, such as the business leaders affiliated with the Leadership Now Project, a coalition that protects American democracy, founded in 2017 by Harvard Business School alumni. Its Academic Council includes veteran names like Michael Porter and new thinkers like Rebecca Henderson, author of the book Reimagining Capitalism in a World on Fire.
And in Brazil?
Since 2019, we have been led by the most inept and ineffective president in our history. Guided by primitive principles, Jair Bolsonaro always proudly opposed everything that represents a civilizing evolution.
After two years in office, he has proven that his focus is destruction. He has eroded our international and multilateral relations; dismantled our mechanisms for protecting the environment; paralyzed the federal education structure; disqualified the institutions of culture and art; removed civil society from public policy councils; collapsed the healthcare system in the midst of a brutal pandemic; encouraged and participated in coup demonstrations.
While the media, the courts and part of the legislature faced off with Bolsonaro to mitigate his damaging actions and to avoid coups from gaining ground, what did business do? Most of them continued to believe that the Finance Minister Paulo Guedes’ liberal agenda would tame the nationalist-statist dinosaur. Bolsonaro is an unconditional ally of corporatism, as it was abundantly demonstrated in his 27 years of obscure parliamentary activity prior to arriving at the presidency.
Just like the case of Trump in the USA, Bolsonaro’s cost and risks were disregarded by a great many businessmen in Brazil, who celebrated his election, which put a stop to a hegemonic and anachronistic power project by the PT, the main party of the left.
It is worth noting that the 2018 elections were preceded by healthy expressions of business activism. Non-partisan groups of shareholders and executives helped to found organizations focused on best political practices and citizen engagement in public matters, including the pioneering RAPS, then followed by RenovaBR, Agora! and Acredito. Groups also promoted supra-party forums for political discussion, such as Você Muda o Brasil.
However, since then, and even in the most critical moments of this dark period in Brazilian history, many in business vacillated between timidity and silence, while the rest kept their bets firmly placed on this debacle.
Those under the impression that liberalism can co-exist with reactionary extremism and supported Bolsonaro’s candidacy even launched an institute using the slogan “conservative in customs, liberal in business”. Another group of businessmen marched with Bolsonaro across Praça dos Três Poderes (Three Powers Plaza) towards the Supreme Federal Court early in the pandemic, speaking out against safety and sanitary measures to mitigate COVID-19, which had been implemented by states and municipalities.
When the president, his sons, and his allies intensified their rupture with the institutions in mid-2020, the result was the formation of new democratic movements in civil society, though none originated in the business community.
The first one, “Estamos Juntos”, was particularly influential and was led by artists like Caetano Veloso and Marieta Severo, politicians including Fernando Henrique Cardoso and Fernando Haddad, lawyers such as Miguel Reale Jr. and Oscar Vilhena, and economists including Armínio Fraga and Pérsio Arida. The movement was launched with the support of 2,000 citizens. Only 30 of these were businesspeople.
Business leaders rarely openly defend democracy, but an exception is Pedro Passos, from Natura, who penned a piece for Valor on October 9, 2020. “Democratic institutions are under constant attack. The current government gives clear indications that it does not value democratic principles. At times, it questions the rule of law itself,” wrote Passos. In addition to Passos, Horácio Lafer Piva, from Klabin, and Pedro Wongtschowski, from Grupo Ultra, are among the few voices from this arena that call for protection of democracy.
However, the loudest silence is not individual, but collective. The absence of positions taken by business entities, largely co-opted by leaders who have long been in power, working to protect the sector privileges that anchored our economy in the past.
Two days after the desecration of the Capitol, Rebecca Henderson published in the Harvard Business Review, the article “Business Can’t Take Democracy for Granted”. In her warning, Rebecca argues that strengthening democracy is the only means of ensuring the survival of free-market capitalism. She demonstrates the close relationship between democracy, economics, and business, to show that companies must watch over democracy to keep markets genuinely free and fair.
Companies are relevant agents of the social structure and can no longer recuse themselves from issues of high public interest. Fifty years later, Milton Friedman’s doctrine stating that social function of companies is only to maximize profit for their shareholders is now being revised at the concept’s birthplace — the University of Chicago. We are inexorably moving towards stakeholder capitalism, and sustainability has finally penetrated the business mainstream, due to the growing role of ESG criteria in investment decisions.
The principles of sustainability, however, can only exist and expand within democratic models. The populist right and left governments that have taken root worldwide show an aversion to the environmental agenda, social evolution, and the fundamentals of governance.
It should be recognized that many Brazilian companies and business leaders have been coordinating and acting in defense of the environment, health, and education, working in opposition to federal mismanagement. Alliances such as Coalizão Brasil and Concertação pela Amazônia, and entities such as CEBDS and Todos Pela Educação are some examples of groups with purposeful attitudes.
However, at a time when the Democratic Rule of Law, the greatest achievement of our society, is repeatedly threatened, its defense and protection must be a priority. To achieve this, business leaders need not engage in ideological proselytism or partisanship. They only need to ostensibly assume their share of individual and collective responsibility to openly defend the very fundamentals of citizenship.