The pandemic opportunity

The pandemic has thrown a wrench into the global economic machine, curtailing growth in many parts of the world. Governments and businesses are now directing all of their energy toward restoring the old normal and the pre-pandemic growth rate. And yet, our policy mantra really should be the opposite: ‘No going back’.

After all, in the pre-pandemic world, we were hurtling toward the very end of human existence on this planet, owing to climate change, the concentration of wealth in fewer and fewer hands, and the development of artificial intelligence (AI) applications that will render more and more of the remaining hands redundant.

Scientists have long been warning us that runaway global warming will sharply limit our time on this planet. The countdown has already begun. Humanity has made itself an endangered species. It would be suicidal to return to the pre-pandemic world. Why should we get back on a track that will lead us off a cliff?

Now that so much of the economy has stopped, there is no better time to reorient it in a different direction. The pandemic has created an opportunity to chart a new course to a world defined by three zeros: net-zero carbon dioxide emissions, zero poverty, and zero unemployment.

Redesigning the system is our only option. We are prolonging a party in a burning house, celebrating economic growth and our technological miracles, and dancing to songs of prosperity. The songs keep us complacent about the fact that our party is what started the fire.

Young people around the world realise this and have been trying to shut it down and extinguish the flames. Teenagers have been marching and demanding change. Some openly accuse their parents of stealing their future. Governments at least have shown awareness by announcing net-zero targets, just as businesses have signed on to the Sustainable Development Goals.

But how much of this is real, and how much of it is public relations? A true commitment would entail a fundamental change in our economic thinking, and an end to pursuing GDP growth for its own sake. This new thinking would force us to acknowledge the dangerous world we have created and compel us to address the steady accumulation of wealth at the top, which comes at the expense of so many at the bottom.

As matters stand, governments continue to follow their usual politically safe path. They are announcing environmental goals, but not acting with any apparent urgency. No country is showing any real concern about wealth concentration or AI. It has thus fallen on ordinary people, particularly the young, to mobilise against a broken status quo.

Capitalism is based on the assumption that human beings are driven by self-interest. This nostrum will need to be reformulated to reflect what human beings are actually like. I would say that people are driven partly by self-interest but mostly by collective interest.

The assumption that only self-interest matters is what led economists to lay the intellectual foundation for corporate profit-maximisation. But once one acknowledges the role of collective interest, this model no longer holds. We will need a new framework for business.

A firm driven by collective interest doesn’t need the individual profit motive; rather, its success hinges on whether it provides financially sustainable solutions to collective problems, and its profits are therefore plowed back into its business. This is not merely theoretical: I have created precisely this kind of “social business” in my own work.

Would this approach spell the end of capitalism? No, because profit-maximising businesses would still be able to function side by side with social businesses. It would be up to individual firms to decide which model to embrace. Someone could choose to engage in profit-maximising business, social business, or both – either separately or at the same time. Both types of businesses would participate in the same marketplace under the same regulatory authorities.

Obviously, people are not driven solely by personal profit. If they were, there would be no such thing as charity. Likewise, ‘investment’ is not limited to uses of money that maximise personal profit. Regardless of whether one buys the shares of a profit-driven company or of a social business, one has made an investment.

People who invest in social business do not doubt that making money could bring them some happiness; but they recognise that investing to help others (a collective interest) would bring them even more. Those who share this outlook will actually prefer to invest in social businesses.

Ultimately, these value judgments are rooted in our minds – that is where one finds happiness and recognises its true source. I, for one, can find many uses for my money. I can donate it, keep it under the bed, buy lottery tickets, invest in social businesses, or invest in profit-maximising businesses. But it is not obvious how I should decide between these options, because maximising happiness is not the same thing as maximising profit.

The old assumption behind capitalism has fooled us on many levels. Worst of all, it has made us believe that happiness can be measured by how much money we have. Under the old system, all citizens are supposed to stay busy maximising profits and paying taxes, with those government revenues going toward solving whatever common problems the country faces.

But the government’s involvement in solving social problems has itself led to political polarisation. Some argue that governments should minimise taxes and steer clear of addressing problems that should be left to markets to sort out. Others argue that the government should take more responsibility for solving social problems, with taxes rising to whatever level is needed.

But either way, there are no circumstances in which individuals should remain mere spectators. We all must bring our own creativity to bear on social problems. Once citizens become active in addressing shared challenges, results soon follow.

* Muhammad Yunus, a Nobel Peace Prize laureate, is the founder of Grameen Bank