Covid-19: something good from something bad?
The Covid-19 crisis has ignited something Brexit failed to spark – a meaningful, national conversation about the future of Britain as a capitalist society in a globalised world.
It has inadvertently given us all time to think about what kind of economy, society and world we want to live in. How can we build on these conversations happening in our homes to make something good out of something bad. For us at The Good Economy, Covid-19 has sparked the following thoughts about what should happen next.
Covid-19 reveals we absolutely can and should tackle poverty and inequality
As governments spend trillions and billions to shore up aggregate demand and consumer spending, Covid-19 is revealing how economies and societies would be more inclusive and sustainable if we had policies to reduce poverty and inequality. The IMF and other international bodies have long argued this.
Now is the time to increase pressure for a long-term policy framework, not short-term policy fixes – that’s the Covid-19 message. Covid-19 has led the UK government to depart from market fundamentalism out of sheer economic necessity – for example, by introducing a variation on basic income provisions. A decade of austerity was unfair and unnecessary.
We urgently need to debate economic policies that break with conventional thinking. Modern Monetary Theory (MMT) could offer us greater economic freedom to tackle the UK’s social problems. Fortunately, the UK controls its own currency which MMT requires. We don’t need quantitative easing followed by another wave of austerity policies – handing the Covid-19 ‘bill’ to people and enterprises least able to pay for the wreckage.
Covid-19 reveals how an economic slowdown is a blessing in disguise for the planet
Land, air and sea traffic is at a near standstill. In London, air pollution has fallen to the lowest level since records began in 2000. The skies over Delhi are bluer and Venice’s waterways are clearer. We’re adapting to new ways of working from home using new technology in response to the Covid-19 lock-down. If this were to become normal working practice, even once a week, the negative externalities associated with mass commuting and traffic congestion would be much reduced. Our communities would be healthier, our workforces more productive, our businesses more efficient and our public services more accessible.
Capitalist economic growth has been decelerating since the early 1970s as Oxford professor Danny Dorling powerfully shows in his recent book Slowdown: the end of the great acceleration. We should embrace rather than lament this change and move on to new models of sustainable development and leave the goal of growth behind.
We know Earth could be uninhabitable in less than 30 years unless we embrace a different economic development paradigm. Developing countries with meagre resources are most vulnerable to global warming and will be hardest hit by Covid-19 through sudden capital outflows and cancelled supplier contracts. Inequality and climate change are undoubtedly the biggest global risks to investors and businesses, markets and economies, societies and communities. Covid-19 has given us a golden opportunity to see how these risks could be mitigated – an inadvertent first rehearsal of something much bigger and more final.
Covid-19 reveals why the SDGs should be taken much more seriously
Much of what I have said is contained within the UN Sustainable Development Goals (SDGs), which governments, businesses and investors have already signed up to. The SDGs are a humane agenda for a global good economy – which should ‘work for everyone’ with ‘nobody left behind’.
Mainstream investors are increasingly using the SDGs to measure and report on their social and environmental impacts. Covid-19 shows it is incumbent on investors and corporates to treat SDGs as actionable commitments to improve the lives of people in ‘left behind communities’ right across the world. The world is well behind on the 2030 SDG targets. The UK, for example, is still stuck in the SDG starting blocks.
The Covid-19 crisis should be used to ‘jump-start’ the SDGs globally and locally. We can do this through public awareness campaigns that make all SDGs part of our everyday conversations, emulating what Greta Thunberg has achieved for climate action (SDG 13). We have to compel governments, businesses and investors to deliver the SDG agenda by 2030. The Good Economy is a business partner of the UKSSD.
The Good Economy itself is helping investors to develop robust approaches to ESG integration and impact measurement, management and reporting. Covid-19 provides a timely and valuable test of this emerging investor commitment to social and environmental impact and inclusive stakeholder capitalism. Early signs suggest a recent surge in ESG investing – but this needs to be permanent and focused on SDG outcomes to bring about systemic change.
Covid-19 reveals why we need to invest in the foundations of our economy
Covid-19 has highlighted the central role of the NHS in maintaining not only social cohesion, but economic resilience. A decade of under-investment by successive governments has weakened this foundation of the economy and society. Let us draw on the spirit and vision that drove post-war reconstruction in the UK.
It is good to see the Prime Minister and the Chancellor wearing ‘Protect Our NHS’ tee-shirts, but we need those tee-shirts to stay on once the Covid-19 crisis recedes. Investing afresh in the NHS and its workforce should be the great national project for our times. The Foundational Economy movement, coming out of Manchester, has good ideas for a new post-Covid era of economic and social reconstruction. Let’s listen.
In our own work, we are launching a collaboration on ‘place-based impact investing’ in key areas that make us a better society – for example, social housing and green energy. UK investors should be putting capital to work in their ‘own back-yards’. Our analysis has found that ironically local government pension fund money is piled highest north of the North-South Divide, where deprivation is most severe and widespread. We should put this money to work, ensuring it is not at the expense of pension fund members.
The Covid-19 pandemic is an unfolding human tragedy. But as a ‘black swan’ event we’re already asking if a newfound collective spirit can make something good out of it. These conversations are taking place on a global scale. What is happening to the world right now could prove to be a leveller like we've never seen before.
At The Good Economy we're busy exploring how we make sure these conversations have an impact. If you’ve got an idea or opinion to share or want to work collectively on bringing different voices together, please send us a message via twitter or LinkedIn or simply email me at email@example.com. And, of course, make sure you're signed up to our newsletter here.