Context: The COVID-19 global pandemic is a catastrophe, both for human lives and for economies. Economists cannot predict in what form the economy will emerge from it. Fundamental reforms of ideas and institutions in human societies are always difficult, until a crisis pushes for reforms.
The crisis has challenged the tenets of economics that have dominated public policy for the past 50 years. Here are seven radical ideas emerging as pathways to build a more resilient economy and a more just society.
- The obsession with GDP as the supreme goal of progress has been challenged often by a small number of people.
- Now, Nobel laureates in economics are calling upon their profession to rethink the fundamentals of economics, especially the purpose of GDP.
- A five-point de-growth manifesto by 170 Dutch academics has gone viral amidst the heightened Internet buzz during the lockdown.
- Goals for human progress must be reset as in what should we aspire for and how will we measure if we are getting there?
- Concepts and Indicators like GNH, HDI also can be employed.
Redrawing the Boundaries
- Boundary-lessness is a mantra for hyper-globalists as boundaries impede flows of trade, finance, and people.
- Therefore, removing boundaries is good for global growth.
- However, since countries are at different stages of economic development, and have different compositions of resources, they must follow different paths to progress.
- This premise can explain the breakdown of WTO, in which all countries were expected to open their borders, which caused harm to countries at different stages of development.
- Now COVID-19 has given another reason to maintain sufficient boundaries.
- It believes that globalisation is happening and that local cultures are being eroded primarily because of the expansion of international capitalism and the emergence of a homogenous global culture.
- They also believe that globalisation is a positive process characterised by economic growth, increasing prosperity and the spread of democracy.
Government is good
- The dictum “Government is not the solution, but is the problem”, has been up-ended by COVID-19.
- Even capitalist corporations who wanted governments out of the way to make it easy for them to do business are lining up for government bailouts.
The Market is not the best solution.
- Money is a convenient currency for managing markets and for conducting transactions.
- Whenever goods and services are left to markets, it becomes disadvantageous to those who do not have money to obtain what they need.
- The marketization of economies has contributed to the increasing inequalities in wealth over the last 50 years.
CItizens not Consumers
- In economies, human beings are consumers and producers. In societies, they are citizens.
- Citizens have a broader set of needs than consumers.
- Citizens’ needs cannot be fulfilled merely by enabling them to consume more goods and services. They value justice, dignity, and societal harmony too.
- Economists’ evaluations of the benefits of free trade, and competition policy too, which are based on consumer welfare alone, fail to account for negative impacts on what citizens value.
Collaboration not Competition
- Collaboration is essential for progress.
- From school onwards, children are taught to compete.
- Companies must improve their competitive abilities and nations too should follow the path.
- Further progress, to achieve the SDGs for example, will require collaboration among scientists in different disciplines, and among diverse stakeholders, and collaboration among sovereign countries.
- Improvement in abilities to share and govern common resources have become essential for human survival in the 21st century.
IP belongs to the Public
- We are living in an era of knowledge.
- Just as those who owned more land used to have more power before, now those who own knowledge have more power and wealth than the rest.
- Intellectual property monopolies are producing enormous wealth for their owners, though many were developed on the back of huge public investments.
- Moreover, powerful technologies can be used for benign or malign purposes.
- It is imperative to evolve new institutions for public ownership of technologies and for the regulation of their use.
Road Ahead for a new Paradigm Shift
- There will be resistance to shifts in social, economic, and political power towards those who have less from those who have more within the present paradigm.
- The economic system cannot be redesigned by domain experts devising solutions within their silos.
- Such as, trade experts recommending new trade policies, intellectual property experts recommending reforms of intellectual property rights, and industry experts recommending industry policies.
- All the pieces must fit together.
- Innovations are required at many levels to create a more resilient and just world.
- Innovation is essential in the overall design of the economy. Innovations will be required in business models too.
- Lastly, the redesign of economies, of businesses, and our lives, must begin with questions about purpose. As in the purpose of economic growth, the purpose of businesses and other institutions.
Image Source: The Hindu