WHAT FUTURE AFTER COVID-19?

A year on the fight has still not been won. Vaccines have brought hope, and a faint light at the end of the tunnel, but there’s still a long way to go. We are all wondering: Will we ever recover? What will the world be like after this pandemic? And what will the next “normal” be?

However, there are some who believe the pandemic has provided a unique opportunity to think about the kind of future we want. One of those advocates is the founder and executive chairman of the World Economic Forum (WEF), Klaus Schwab. Over the last few years he has warned that the world economy is in deep trouble – something that has been exacerbated by the pandemic’s effects on society and which has highlighted the ongoing technological revolution and climate crisis: “The Covid-19 crisis has shown us that our old systems are not fit any more for the 21st century. In short, we need a great reset.”

THE GREAT RESET INITIATIVE

In 2020 the WEF launched The Great Reset initiative1 bringing some the world’s best minds together to help to build a better, fairer, greener, and healthier planet after the pandemic.

“The pandemic represents a rare but narrow window of opportunity to reflect, reimagine, and reset our world to create a healthier, more equitable, and more prosperous future.”, says Schwab. It is widely accepted that Covid-19 has heightened existing economic and social inequalities which, if left unaddressed, will make the world “even less sustainable, less equal, and more fragile. We must build entirely new foundations for our economic and social systems”, he adds.

But to be successful, society, governments and businesses around the world must work together to build a better society. “To achieve a better outcome, the world must act jointly and swiftly to revamp all aspects of our societies and economies, from education to social contracts and working conditions. Every country, from the United States to China, must participate, and every industry, from oil and gas to tech, must be transformed. In short, we need a ‘Great Reset’ of capitalism”, he says.

The pandemic has certainly shown there is potential to do this. "Populations have overwhelmingly shown a willingness to make sacrifices for the sake of healthcare and other essential workers and vulnerable populations, such as the elderly. And many companies have stepped up to support their workers, customers, and local communities, in a shift toward the kind of stakeholder capitalism to which they had previously paid lip service." Schwab argues that we will need stronger and more effective governments and private-sector engagement every step of the way to “build a new social contract that honours the dignity of every human being.

A THREE DIMENSIONAL AGENDA

According to WEF, the Great Reset agenda would have three main components:

1. Steering the market toward fairer outcomes

“To this end, governments should improve co-ordination (for example, in tax, regulatory, and fiscal policy), upgrade trade arrangements, and create the conditions for a “stakeholder economy.” At a time of diminishing tax bases and soaring public debt, governments have a powerful incentive to pursue such action.”

2. Ensuring that investments advance shared goals, such as equality and sustainability

“Rather than using the large-scale spending programmes that many governments are implementing, as well as investments from private entities and pension funds, to fill cracks in the old system, we should use them to create a new one that is more resilient, equitable, and sustainable in the long run. This means, for example, building “green” urban infrastructure and creating incentives for industries to improve their track record on environmental, social, and governance (ESG) metrics.”

3. Harnessing the innovations of the Fourth Industrial Revolution

“...to support the public good, especially by addressing health and social challenges. During the Covid-19 crisis, companies, universities, and others have joined forces to develop diagnostics, therapeutics, and possible vaccines; establish testing centres; create mechanisms for tracing infections; and deliver telemedicine. Imagine what could be possible if similar concerted efforts were made in every sector.”

THE DAVOS AGENDA 2021

In January 2021, due to the pandemic, the WEF’s annual Davos Forum took place virtually under the theme “A crucial year to rebuild trust”. Its focus related to the “great reset” vision, an effort to find a response to the current crisis “that goes beyond economic reforms, the great reset outlines an ambitious vision for an inclusive, cohesive and sustainable world.”

STAKEHOLDER CAPITALISM

The WEF, along with many other economists around the world, has long defended the idea that the old capitalism - focused on the premise of maximum profit for shareholders - no longer works in today’s world. It’s time for stakeholder capitalism, in which companies seek long-term value creation by taking into account the needs of all their stakeholders, and society at large.

The stakeholder concept is not new. It has been discussed for more than five decades and broadly adopted in Northern and Western European countries such as Sweden, Denmark, Finland, the Netherlands, Belgium, and Germany. Over time the concept has naturally evolved, and it now entails a more global and comprehensive approach, with two primary stakeholders at the centre: People and Planet.

TOWARDS A NET-ZERO ECONOMY

The deepening climate crisis did not magically go away during the pandemic and cannot be far from the WEF’s concerns. We only have one planet, and it is at risk of dying.

2020 was, along with 2016, the joint hottest year on record, ever. We also saw floods, arctic temperatures rising twice as normal, tropical storms and wildfires (such as in Australia and California). So, as Dominic Waughray, Managing Director, WEF says: “It is no surprise then that the WEF Global Risks Report 2021 identifies climate action failure, extreme weather and biodiversity loss, alongside infectious diseases, as the top global risks for the next decade in terms of impact and likelihood.”

An important step forward was the decision by US President Biden to rejoin the 2015 Paris accord on mitigating climate change. However, that’s not enough. There must be co-operation between countries and true political action to distribute the economic and social costs of moving away from carbon use within and across nations. As Waughray says: "We have only until 2030 to get things on track for a net-zero and nature-positive economy – this should sharpen our minds for action."

LAYING THE FOUNDATIONS OF A NEW ECONOMY

However, Kristalina Georgieva, IMF Managing Director, believes we can take inspiration from previous generations. “They forged a better world in the worst possible moment, in the midst of war. We need the same spirit now for the post-pandemic world - build one that is more inclusive and more resilient.”

We must galvanize what we learned from this pandemic to improve and innovate, building a better world. In the words of Saadia Zahidi, Managing Director, WEF: “While no nation has emerged unscathed from the pandemic, countries with advanced digital economies and digital skills, robust social safety nets and previous experience dealing with epidemics have better managed the impact of the pandemic on their economies and citizens. As the recovery takes shape, a new toolbox of macroeconomic targets beyond GDP growth is required to shape economic development in a direction that considers the planet, people, and institutions.”

She believes that governments and businesses have a role to play in helping to mend the existing social fractures and earn back trust in institutions. How? She mentions four aspects: "The first is formulating analytical frameworks that take a system-based view of risks and their impacts. It is not enough to create frameworks and shelve them for later use: they must be constantly tested and challenged to unearth potential cascading effects and blind spots. Second, governments must invest in high-profile risk champions. These stakeholders should encourage innovative thinking and act as liaisons between experts and decision-makers. The third opportunity is in risk communications – and, specifically, combating misinformation. More can be done at both community and government levels to understand and tackle its spread. Finally, exploring new forms of public-private partnership on risk preparedness can help maximize efficiencies and expedite recovery."

We will, however, only be successful through co-operation. As Børge Brende President, WEF says: “The direction we need to head is toward greater dialogue, co-ordination and collective action. Global co-operation is not a luxury; it is the necessary ingredient for recovery today and resiliency tomorrow.” And the truth is that this pandemic has showed us that people and governments are willing to come together towards a common goal and we have seen clear signs of transatlantic, transpacific, or Sino-European global initiatives.

One lesson that should be learned is that we all depend on each other and whether it is a pandemic, climate change, or inequality, we will either swim or sink together. There isn’t a fixed solution for the problems that are plaguing our society; each context will demand a specific strategy. But the principles are the same: fairness, transparency, and accountability.

To achieve the Great Reset will take a change in mindset. Now, it’s up to all of us to do our part.

References

SCHAWB, Klaus, Vanham, Peter - Stakeholder capitalism: a global economy that works for progress, people and planet. London: Wiley, cop. 2017. ISBN 978-1119756132

BORGE, Brende - How to orient toward global cooperation. Available https://www.weforum.org/ agenda/2021/01/how-to-orient-toward-global-cooperation/

ZAHIDI, Saadia - How to build more resilient countries after the Covid-19 pandemic. Available https://www.weforum. org/agenda/2021/01/how-to-build-more-resilientcountries-after-the-covid-19-pandemic/

WAUGHRAY, Dominic - Why we must build a net-zero, nature-positive partnership. Available https://www. weforum.org/agenda/2021/01/2021-the-year-the-realeconomy-must-start-building-a-net-zero-naturepositive-partnership/

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