Democracy and Capitalism

This post is prompted by the possibility that two former CEOs may be in the running for two of California's most important political posts. Meg Whitman, former CEO of eBay, is planning to run for governor. There will be no incumbent, since Arnold Schwarzenneger cannot run again. Carly Fiorina, former CEO of H-P, is thinking of challenging Barbara Boxer for her US Senate seat.

I began pondering these two candidacies partly because Whitman has apparently not voted for 28 years. Fiorina campaigned on behalf of John McCain and Sarah Palin in last year's presidential race, during which she said or implied that neither candidate would be capable of running a large corporation. Fiorina herself was fired by H-P's board!

I guess there are many examples of business people running for and holding elected office, especially in the US. Michael Bloomberg, mayor of New York, doesn't seem to be doing a bad job. In Europe, it seems to be less common, but there is the prominent example of Silvio Berlusconi in Italy.

I wonder if capitalism and democracy should overlap in this manner. I feel comfortable with someone like Barack Obama, who rose up through the ranks of politics (albeit with stunning speed). One of the things that impressed me in his autobiography was his very insightful descriptions of community organizing. It seemed to me to be good training, even for a national leader. Parliamentary systems in Europe are also conducive to rising through party ranks. many US senators were congressmen and women first, or held state level offices.

In contrast, when Arnold Schwarzenegger (an actor, but in a way also an entrepreneur) ran for governor of California, he had no political experience at all. He did not have a good grasp of policy issues when he took office, didn't have any networks of relationships to get things done, and didn't seem to be able to work with the legislature, even his own party. CEOs may have more relevant experience than actors, but imperial CEOs (quite common in the US) may also lack skills for political compromise. Business experience provides a sense of how to manage resources, but not necessarily of the kinds of problems faced by citizens, or of social goals.

It may be that Silicon Valley is different, and produces business leaders who can also provide broader social leadership, but I remain to be convinced.

Where does Ronald Reagan fit into these musings? I think he's overrated as a politician. He certainly had vision and charisma, but he also followed policies that have had negative long run consequences.

Maybe there is no simple or straightforward answer to the question of whether successful business people make good political leaders. Maybe it all depends on the person and the situation. I wonder if there is any empirical work on this aspect of democracy and capitalism?