Does the disruption created by Covid-19 create opportunities to reset capitalism in the long term, or will inertia prevail? That is the key New Year question as we look beyond the Covid crisis to possible future pathways. Sally Uren and Caroline Ashley of Forum for the Future, argue that what happens next in capitalism could be down to hearts and minds, not the market
Does the disruption created by Covid-19 create opportunities to reset capitalism in the long term, or will inertia prevail? That is the key New Year question as we look beyond the Covid crisis to possible future pathways.
Our contention is that mindsets will determine whether this disruption catalyses deeper change, or is just a swing of the pendulum before the status quo kicks back in. Mindsets, the stories we tell ourselves, our values and our assumptions, are rarely explicit, but they shape how we see the world and what counts as success.
There are three reasons why the terrible chaos created by Covid provides triggers to reset capitalism. Firstly, the state has stepped up. Where publicly funded recovery packages exist, they provide opportunities for public investment on many fronts, from clean energy and infrastructure to retraining workers. Even where funds are short, there are widespread expectations of a greater role for state action to shape recovery.
Secondly, the havoc wreaked by the pandemic means some costs of the transition are already, sadly, being paid. A deep reset of our fuel, travel, fashion and food sectors would have caused massive disruption, but as it is now, workers, firms and shareholders are already experiencing turmoil.
Thirdly and more fundamentally, the onset of the COVID-19 crisis is challenging assumptions about how the economy works and who it works for. This may be good news for the mission to reset capitalism.
In traditional mindsets, economic growth is the aim. People, natural resources, and fossil fuels are put to work to grow production and consumption at maximum efficiency and speed. We impose limits at the edges by outlawing modern slavery and imposing core environmental standards. But in this mindset, people and the environment serve the economy. Assumptions are made that people are separate from nature; that decisions are rational and unemotional; and that resources should be allocated where they achieve the highest return.
But when governments and businesses reacted swiftly to COVID-19, they unwittingly reversed this logic by putting the economy at the service of people. Companies stopped operations, pivoted their factory production, offered services online for free, postponed or cancelled shareholder dividends. Government and business alike flipped their previous assumptions of what success looks like. Profits were sacrificed for health and society.
When, eventually, COVID-19 measures recede, will the deeper shift in assumptions remain to create a healthier balance between people and the economy going forward?
There are promising signs of more permanent change. A host of companies are now committing to regenerative approaches that go beyond reducing harm to renew and restore the health of our ecosystem and society. Mainstream economists argue that efficiency-focused economics is culturally out of date. Doughnut Economics - meeting humanity’s needs without overshooting environmental limits - was recently adopted by Amsterdam for its COVID-19 recovery and is being translated into practical through the Doughnut Economics Action Lab. The public have reacted with fury to social problems that have been known and ignored for years – from repeated police violence against black citizens in the US, the abuse of workers in factories and farms in the UK, or the plight of migrant workers in Asia.
This mindset, which prioritises long-term social and environmental recovery over short term gains, is what Forum for the Future has called the ‘Transform’ mindset in our recent Future of Sustainability report. But be warned, this is not the only emerging mindset. Scanning hundreds of emerging ideas, actions and innovations, we detect other mindsets, also current, and pushing capitalism onto different paths.
A ‘Compete and retreat’ mindset, for example, centres on the belief that there is simply not enough to go around, and that each community, nation or regional bloc must fight for itself. If this mindset dominates, it might lead to nations upskilling their own labour force and investing in their own renewable energy, but it has a grow-at-all-costs mentality which will not reset capitalism.
A ‘Discipline’ mindset prioritises control over privacy, using technology to ramp up surveillance and provide technical solutions to current problems. This could lead to quite a bleak future, in which nation-states and big companies amass power. More positively, it could also see technology used to fix many sustainability challenges, for example, with carbon budgeting and data tracking. But it does not redesign the goals of our systems, nor of consumers or businesses. It may fix carbon, but it is unlikely to fix biodiversity, and won’t sort the unequal distribution of power and wealth.
These alternative mindsets are all currently visible, and are competing, jostling for dominance. So all of us who want to create change should not just focus on company actions and commitments, important as they are, but on swelling the wave that is rethinking the purpose of business and purpose of the economy.
Resetting assumptions about capitalism will need both judo wrestlers and story-tellers. Judo experts use the strength and moves of the opponent to their advantage. So while there are plenty of market players that continue to strive solely for business growth, brand resilience, and optimum margins, the smart movers will use carbon pricing, prioritisation of economic, social and governance risks, value chain transparency, and investor pressure, to nudge their behaviour while they remain living in their own economic paradigm.
The story tellers work on hearts, minds and our ways of understanding the world. They need to reset common understanding of the very goals of our system. Storytellers need to outcompete the darker narratives at play, showing how tech can be used for a different system, not as a sticking plaster on what we have now. They need to depict how human health depends on planetary health, and plant new assumptions that the purpose of business is to deliver value to society, and that profits are very acceptable as the means, but unacceptable as the end.
You can hear more about these trajectories at the Rebuild Better Summit: Where now? happening on 21 January 2021
Forum for the Future is a sustainability non-profit based in UK. Forum’s 2020 assessment of the future of sustainability, From System Shock to System Change, outlines alternative trajectories and mindsets, based on tracking signals of change.
Rebuild Better Summit: Where Now? 21 January 2021
A new year brings with it excitement and hope for what can be achieved – personally and professionally – but as the world still grapples with COVID-19, many of us are left asking: ‘what now?’. How can we emerge stronger from the crisis and set ourselves firmly on a path towards an equitable and resilient future
Join us for the next in the Business Fights Poverty Rebuild Better Series of virtual summits to explore the key trends, challenges and opportunities that 2021 presents. Get access to insights and inspiration during this half-day of interactive events and expert content, curated with our partners, Forum for the Future, Amref Health Africa and Business Partners to CONVINCE (COVID-19 New Vaccine Information Communication & Engagement).
Our first webinar will focus on the health pathways to getting us beyond the pandemic, and the second will explore the mindsets that are key to creating a just and regenerative future. An interactive workshop will give you the opportunity to engage and share perspectives with your peers on the challenges and opportunities of 2021.
Participants will come away with fresh insights, new peer relationships and the opportunity to engage in collaborative action.
Learn more and register for the event here