We are nearly one year into the Covid crisis and, by all accounts, the situation is not yet under control. In fact, in many places it is presenting fresh health and economic challenges. The pandemic and the resulting measures taken to prevent its transmission and support those directly impacted have fundamentally affected our societies. And while it has not been the instigator, Covid has materially amplified some of the pre-existing issues that were polarizing our world.
Looking back, it may be easy to forget the simmering dissatisfaction that pervaded our societies on issues such as environmental degradation and climate change, wealth and income inequality and social inclusion, the digital divide and automation, and geopolitical and trade tensions. These issues have not gone away; some are more pressing than ever. Nor can they be neatly compartmentalized, to be dealt with sequentially while the others wait patiently in the background. Rather, they intersect and compound one other’s effect.
However, due to the immediacy and severity of the health crisis – literally a life or death situation – a new and palpable stress has been introduced into the discourse. Trust between countries, communities and individuals has been badly damaged. Consequently, when these complex and consequential issues, which were temporarily put on hold, come back to the forefront and demand our attention, they will do so within a “covidized” context. It is now irrefutable that no single government, corporation, or individual actor can independently solve the 21st century’s biggest problems. There must be a better way.
The Panel – New Social Contract
I recently hosted a conversation with Raghuram Rajan1 and Samantha Power2 during the 2020 International Monetary Fund and World Bank Annual Meetings. In that discussion, what became clear was that for solutions to pass the test of time and truly engender broader prosperity and resilience, each part of society (governments, multilateral institutions, market participants, individuals and their communities) has an equally important but different role to play, fulfilling very different societal mandates, purposes and needs. The roles must be complementary and work on equal footing toward one objective – a prosperous, resilient and just world – but those roles cannot be the same.
Governments and multilateral action
There is of course an important role to be played by governments and multilateral institutions. International bodies, like the World Health Organization, have been criticised for their response to the COVID-19 crisis. But as Samantha Power noted, if international organisations are not meeting their objectives or fulfilling their promise, “don’t blame the building”. For multilaterals to play their crucially important role, they must be supported by the international community and endowed with the authority to take strong, and at times unpopular, actions. This can only happen if countries are willing to put their weight behind these organisations by providing them with the backing, resourcing and tools that they need to contribute in a more active and decisive manner.
Communities and Civil Society
As Raghu Rajan pointed out, the relationship between the three societal pillars – government, private enterprise and communities – has become unbalanced.3 Communities have been marginalized while the roles of government and the market have grown in both size and stature. This imbalance has led to numerous issues including the demise of small towns, which can be a powerful anchor providing a sense of identity, strengthened through the web of human relationships and interactions. In its stead we are faced with an imbalance that has led to a misalignment in expectations. When campaigners in the UK’s EU referendum pleaded to “take back control”, they were not only trying to win it back from Brussels. They also wanted to pull back power that they felt had been taken away from them individually by a large central government in London from which they were disconnected. Strengthening and empowering local communities will be critical in a world that has tilted too far to the side of powerful institutions.
Finally, the role of the private sector
We also need a strong private sector that acts as a force for good, with a social purpose. At a time when there is so much directional uncertainty for the private sector, our social purpose can be a powerful anchor.
The concept of “purpose-led” is not something new; we were talking about it before the pandemic and many corporates integrated purpose into their strategies long-ago. We have done the same at Standard Chartered. But it is an over-simplification to brand this approach as a move ‘from shareholder capitalism to stakeholder capitalism’. Instead, it reflects a corporate sector that prioritises its long-term interests, by evaluating where and how it does business and with whom, how it engages in its communities, and how it can attract and serve its future workforce. This focus on long-term vitality, prosperity and posterity, is extremely important for the private sector’s ability to thrive and get economies and societies back on their feet.
We’re not out of the woods yet. What is becoming clear is that we are at an important moment – an inflection point of sorts. The decisions we are taking today, whether intentionally or otherwise, are setting the tone and tenure of the relationship we have with one another, with the market and with government. Answers to questions of ‘what should the public sector be doing’, ‘what can the private sector do to complement this’, and finally ‘how should individuals and communities play a larger role’ in order to forge a new social contract will impact our approach to solving Covid and other global problems. In doing so, they will also determine the prosperity and economic vitality for generations to come.
Put differently, it will take more than a “village”. But if that village, working together with cities, countries, corporations, financial institutions and civil societies, sets its sight on a common goal, real and substantial change for good is possible.
1 Katherine Dusak Miller Distinguished Service Professor of Finance at Chicago Booth
23rd Governor of the Reserve Bank of India (2013 – 2016)
2 Professor of Practice at Harvard Kennedy School and Harvard Law School
28th U.S. Ambassador to the United Nations (2013 – 2017)