Blog: "Could Covid-19 be a catalyst for reimagining capitalism?" - Charlie Woods, SUII


Charlie Woods is EDAS's Policy and Practice
sub-group Chair and Director of the
Scottish Universities Insight Institute

Free market capitalism is the greatest source of prosperity the world has ever seen, but capitalism is on the verge of destroying the planet and destabilizing society. The good news is we have both the resources and the technology to build a just and sustainable world – and purpose-driven businesses could be the critical catalyst that drives the kinds of global, systemic changes we need to reimagine capitalism in a way that works for everyone.[1] – Rebecca Henderson

One of the most popular courses at Harvard Business School is ‘Reimagining Capitalism’. Course leader, Rebecca Henderson, and author of a recent book[2] on the subject is hopeful that Covid-19 could be a catalyst for reimagining a more inclusive and sustainable form of capitalism. In a recent talk for Ceres[3]she argues that it could provide the jolt needed to the inertia of business as usual, by providing a stark warning that bad things can happen quickly and without much warning, while also reminding us of how much we depend on each other for our security and survival.

She sees business as having a central role to play in stimulating this re-imagination and making it happen. Although she recognises that markets alone can’t achieve the required outcomes, without the right institutions to provide the legal and regulatory frameworks within which markets operate and the necessary investment in public goods.

Action by individual companies can be an important starting point, demonstrating that it is possible to run a business in a way which respects the environment and benefits society at large while still making money. Co-operation between companies across industries will be critical to scale up the impact, for example in setting supply chain standards and isolating free riders. Finance will also have an vital role to play in investing in firms that are acting sustainably, recognising that it will be impossible to diversify away from risks, such as those associated with climate change, in the long run.

Reform will also needed to ensure the right institutional environment. Henderson identifies the importance of a more participatory democracy and the need to reduce the ability of those with deeper pockets to purchase influence. She senses a growing recognition among far sighted businesses of the need for change in the political environment in which business operates.

It’s sometimes hard to be optimistic given the short term stresses and strains of coping with the immediate health and economic impacts of the Covid pandemic. However, the recovery phase does offer opportunities for improvement. There are reasons to be hopeful that purposeful businesses working alongside public and third sector institutions can build a fairer, healthier and more sustainable society - but they can’t be taken for granted.

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