Political Polarization is on the rise across the world. From India to the United States of America, we notice a deeper divide between the communities existing within the countries. Does such a divide have an effect on the economy? Or does it go deeper than that and alter the perceptions of people with opposing views? This rising antagonism in democratic societies could hurt the very foundations of it. Ipsita Chatterjee, Winner of the 2024 CoBS CSR Student Article Competition at ESSEC Business School, delves into the issue of political polarization and the broader consequences of this phenomenon on the economy and the psyche of people.

Originally published under the title Divided We Fall: The Ripple Effects of Political Polarization in Society by Ipsita Chatterjee.

Defining Political Polarization 

Polarization, or the state of being divided into two extreme poles, happens when opinions about political parties, ideologies, and specific issues become concentrated around those poles. This is seen in many countries across the world where two major parties exist and have opposing stances. For example, the Democrats and the Republicans in the USA are an often-cited example of vastly polarized political stances. However, this definition does not cover the extent to which political polarization causes a divide in the society. Lyengar et al coined the term “affective polarization” which refers to the level of animosity and distrust of the opposite pole.

People not only disagree with the opposing side’s political stance but also their way of living which encompasses their morals, beliefs and attitudes. This type of polarization is particularly alarming since it makes politics – emotional; it entangles hatred/ dislike with policy preferences which is a slippery slope. For the rest of the article, we will use this definition of polarization to illustrate the depth of the issues caused by this phenomenon.

The Money Factor

The drivers of political polarization are numerous, complex and multi-faceted. Firstly, we have the economic determinants which may have a direct effect on how the government is viewed by the public. Measures of economic condition of an economy such as real GDP and government expenditure have been shown to have a positive relationship with political polarization.

Basically, when people’s basic needs are met, they are less likely to resort to extreme ideologies. Income inequality also plays a pivotal role since countries with higher income inequalities have a higher level of polarization. Economic insecurity often fuels polarization as people seek scapegoats for their economic hardships. Optimistic economic conditions can foster a sense of shared prosperity and social cohesion within society.

The Origins of the ‘Divide’

In most countries, polarization is caused by a dramatic change in the country’s political life. For example, the idea of a “Hindu Rashtra” has been on the rise since the election of Shri Narendra Modi in 2014. Is this clash new? Well, no, the divide has long existed but is exacerbated by the winning party’s (BJP’s) association with right-wing extremists (RSS).

The clash arises from the idea of nationalism which one party claims should be based on their place of birth and the other argues is entwined with a person’s religion. Gandhi and Nehru were of the opinion that the Indian nation would be a secular state where all people regardless of their caste, religion, gender would coexist in harmony. On the contrary, Hindu nationalists strive to establish the dominance of the majority, i.e., the Hindus. These tensions continue to drive polarization in modern times due to the ruling party’s associations with such Hindu Nationalists (RSS).

Similarly, in the USA, political parties don’t just represent a political standpoint, they embody a certain ideology and identity. This was not always the case but since the 1970s, major political parties started becoming increasingly aligned with certain ideologies, races and religious identities. For example, Democratic voters were, on average, younger, more racially and ethnically diverse, and more likely to possess college degrees than Republican voters. Such perceptions fuel the “Us v/s Them” thinking and highlight the differences (which may not always be substantial) between both parties to further their agenda.

The Echo Chambers

Social media companies have been playing an influential role in political discourse. The average person spends 2.5 hours on social media. Many people depend on social media for keeping up with the current events and gathering information. This can lead to the formation of filter bubbles which according to Eli Pariser means that algorithms create “a unique universe of information for each of us which fundamentally alters the way we encounter ideas and information.”

Filter bubbles are not the sole perpetrator of the wrongful dissemination of information. Preconceived notions are also a driving force in the kind of information they find despite the filter bubble. The filter bubble is an added challenge in bursting this bubble. There is a higher chance that people are strongly convinced that their notions are correct. The filter bubble leads to increased confirmation bias. Algorithms are created to maximize user engagement.

Maximizing engagement increases polarization, especially within networks of like-minded users. When people view political content on social media, they are more likely to make them more antagonistic to the opposing view. Extreme polarization has been fuelled by widespread social media usage which, in turn, has led to declining trust in democratic values and scientific facts.

Influences and more…

The degree of proliferation, independence, and overall quality of the media can have a non-trivial effect on political polarization in a country through a direct influence on public opinion. Media channels have been proposed to have a temporary learning effect for rational voters, or a permanent effect for non-rational voters subject to persuasion. Humans are social beings and the society at large does affect the decisions they make.

The influence of other people’s opinions on an individual’s opinion is undeniable. People often surround themselves with others who share similar beliefs and values. In these homogeneous social networks, individuals are less exposed to diverse perspectives and are more likely to encounter confirmation bias, reinforcing their existing beliefs. Cultural diversity in terms of ethnicity, religious beliefs or linguistic profiles can also influence attitudes towards political matters. The more diverse opinions that exist in a group, the less biased an individual’s opinions on politics could be.

The Aftermath of the Divide

Extreme division undermines the very fabric of democratic governance, wreaking havoc on pivotal institutions. In a democracy, opposing sides are viewed as political adversaries. However, in deeply polarized countries, the opposing side is viewed as an enemy that needs to be neutralized. Extreme polarization makes people feel alienated from and wary of the “other” group. They feel devoted to and confident in their own side at the same time, without questioning their prejudices or the veracity of the material they are presenting. As a result, they are vulnerable to the rhetoric used by political figures to win over votes by inciting fear of the “other.”

Rising polarization creates a pernicious logic of zero-sum politics that incentivizes behaviour undermining democratic institutions and norms. In such a hostile environment, it is difficult for legislative and political bodies to function normally. Legislative bodies become either entangled in deadlock or reduced to mere rubber stamps. The judiciary is no longer considered autonomous as they are either seen as ‘biased’ or filled with loyalists that sway the consensus. Political leaders are often seen as leaders of a faction of society as opposed to a leader for the entire state/ nation. Division also permeates society, poisoning everyday interactions.

In some countries, people would hesitate to permit their child to marry someone affiliated with a disliked political party, or would refuse to engage in business with such individuals. Essentially, extreme division fractures crucial norms of tolerance and moderation, such as gracefully conceding after electoral defeats, vital for sustaining healthy political competition. Furthermore, partisan conflict exacts a toll on civil society, often leading to the vilification of activists and human rights defenders. Even more concerning, divisions can fuel hate crimes and political violence, a trend witnessed in countries like India, Poland, and the United States in recent years.

The Way Forward

All is not lost. Systemic interventions can help reduce polarization before polarization imperils democracy. Interventions can be multi-fold ranging from institutional reform to voter education that warn people of the dangerous zero-sum logic which is fostered in a polarized environment. Reforms should aim to lower the high stakes of elections and empower voters to voice their opinions and make free choices. Lessons from abroad give us some hints: reforms such as shifting to a proportional representation system (as New Zealand did in the 1990s) and/or using ranked choice voting in multi-member districts (such as in Ireland) could break up the rigid binary logic that comes along with polarization. It could provide voters with more choice and allow for coalition-building to ease the gridlock. There should also be systems in place to disable elected leaders from pursuing policies to benefit one party or a small elite group.

With regards to the policing of social media platforms, it needs to start with accountability. Facebook and its social media peers need to move beyond denial and come to grips with their role in heightening polarization. In the face of failed self-regulation, the government needs to intervene and provide the sustained oversight that until now has been lacking. For instance, there could be benchmarks set for harmful content that exists after moderation and if the benchmark is exceeded, the company can be penalized with a fine. Governments could require social media companies to incorporate the new rules into their terms-of-service agreements with users.

Reducing the threat of pernicious polarization to democracy requires deliberate and urgent action. Or, as multiple streams of multi-disciplinary research suggest, democracies across the globe may cease to be. The US presents a troubling polarization problem; it is the only Western democracy to have suffered from such high levels of polarization for such an extended period. The rising polarization in large democracies such as India, Turkey, Brazil etc. are concerning. These experiences point to the urgent need not only to learn from the past but also to innovate new mechanisms to reduce or better manage this phenomenon.

Click here for a full list of references used in this article.

Useful links:

• Link up with Ipsita Chatterjee on LinkedIn
• Read related articles: Political Polarisation, Artificial Intelligence, and the Proliferation of Filter Bubbles in the Digital Environment and Mind the Gap: The role of business schools in bridging the income divide
• Read this and other student articles in the special summer issue of Global Voice magazine
• Discover ESSEC Business School France–Singapore–Morocco
• Apply for the Master’s in Management programme at ESSEC.

Learn more about the Council on Business & Society

The Council on Business & Society (The CoBS), visionary in its conception and purpose, was created in 2011, and is dedicated to promoting responsible leadership and tackling issues at the crossroads of business and society including sustainability, diversity, ethical leadership and the place responsible business has to play in contributing to the common good.  

• Follow the CoBS on X and LinkedIn

Member schools of the Council on Business & Society.

• ESSEC Business School, France, Singapore, Morocco
• FGV-EAESP, Brazil
• School of Management Fudan University, China
• IE Business School, Spain
• Keio Business School, Japan
• Monash Business School, Australia, Malaysia, Indonesia
• Olin Business School, USA
• Smith School of Business, Queen’s University, Canada
• Stellenbosch Business School, South Africa
• Trinity Business School, Trinity College Dublin, Ireland
• Warwick Business School, United Kingdom.