USR-update #12 NEVER WASTE A GOOD CRISIS

It goes without saying that the outbreak of the COVID-19 virus is impacting societies profoundly. Public life as we know it has come to a standstill, with empty streets, trains and offices, closed shops and schools and a social life that is increasingly taking place via digital channels. It feels like a Sunday-morning economy. An economic recession of serious proportions is, without doubt, the most likely scenario.

I find it shocking to read that for decades renowned organizations have warned us against rising risks of pandemics. Why did we not act accordingly? The answer lies in the fact that for the past three decades free-market thinking has lead to the privatization of a crucial share of our healthcare systems. As a result, the focus of those organizations became dominated by short term thinking. As such, we developed an ignorance of the rising risks of pandemics. To make matters worse, climate change, global loss of biodiversity and deforestation fundamentally change the global ecosystem, enabling the widely spread of viruses in new environments. 

The upside is that the dominant neoliberal approach that ruled mainstream policies and business operations for decades – built on the human image of the selfish ‘homo economicus’ – now makes way for another view that emphasizes the importance of public institutions and collective action and underlines the responsibility of all. Many public responses to the outbreak indicate we now need people to behave in accordance with ‘homo empathicus’, people fully aware of public needs, the importance of communities and shared responsibility. It looks like many have eagerly waited for a different public conversation and atmosphere, in real life and in social media, in which other values are dominant. The recent statements of public support, like applause for healthcare workers, are an example of this, so are the entrepreneurs and economic communities that started to produce mouth masks and respiratory equipment. 

The corona-outbreak is, without doubt, a terrible event. Yet, can we learn anything from it?

The corona crisis exposes structural weaknesses in the contemporary global social-economic system. First of all, the global ecological degradation seems to be a fertile ground for the spread of these kind of outbreaks. Secondly, the present crisis also shows the great vulnerability of our global economic system, excluding many people lacking resources and social protection. After all, its bad economics: the current costs in human, social and monetary terms should make everybody think. History indicates it may take two crises to change. Maybe, we have now arrived there. Let’s resist the attempts, already visible, to postpone the climate and food transitions or to put improvement of social inclusion and reduction of inequality on the waiting list. Let’s reject actions of fear, blame, egoism and nationalism by offering tangible initiatives of cooperation, solidarity and humanity. National and international recovery plans should build on agendas like the European Green Deal, the redesign of the current food and agricultural system, to reconnect finance and the real economy, and be based on markets steered by true prices and circular regulation, smart public investment plans and greening of tax systems, grants, financial regulation and trade regimes.

It’s time to move beyond economic growth as the holy grail of economic progress. We need to rebalance social, ecological and economic values to ensure the promotion of broad welfare and inclusion. Let’s revalue the ecosystems on which all human activity depends and start building a regenerative economy that respects planetary boundaries and restores the huge damage done in the past decades. The resilient economy of the future is based on stakeholder business models, being the leading model of economic development, respecting mutual dependence in good and bad times and connected to the communities they serve.