The collapse of the economy was going to happen anyway. The irrational bull market in the NYSE was completely decoupled from the real economy. Besides, world debt had reached equally unmanageable heights. However, I think it’s good that, instead of a pure financial crash that makes governments rush to save the banks, we have a wide‐ranging economic collapse that forces governments to think more broadly about how to save businesses of all sorts and the vulnerable people without a proper safety net.
So, the collapse was necessary as a wake‐up call for politicians and economists. And it comes when there is already an understanding of the need for stakeholder capitalism across a wide range of business and political leaders. This could be the end of austerity and of this long turning point. It could be the beginning of deployment shaped by seriously proactive governments tilting the playing field towards a Smart Green New Deal, and sustainable global development.
On top of that there might be three possible changes in behaviour that will improve environmental and social sustainability:
This is a typical case of the Chinese character for crisis being the same as that for opportunity. Let us not waste it!
For the US in particular, the only advanced country without a free universal health service, the lesson is obvious. Let us hope they will learn it and act upon it.
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Carlota Perez is author of Technological revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages. She is Honorary Professor at IIPP-UCL and at SPRU-University of Sussex (UK). She is Adjunct Professor at Taltech (Estonia) and Academic in Residence at Anthemis UK, the funders of the BTTR project.
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Great to read your perspective and agree that this crisis could be the catalyst for fundamental and positive shifts. How do we avoid that it doesn’t?
Professor Perez, I appreciate these initial thoughts on the ramifications of the current pandemic, and eagerly await your deeper insights about how this may become an opportunity for a profound change in our understanding of the role government and society in this new tech age. I have heard you recently talking about how the Financial Crash was a missed opportunity for a proper resetting of the agenda… Perhaps this will be the disruption on the scale of WW2 that will bring about the needed break with the post-war consensus and a debate about public/private hegemony more suited to societies today…
On the one hand it is too early to make sweeping generalisations about a new world that we can’t yet analyse. On the other, lasting change for the better will need vision and leadership, and good decisions will come from leaders having a sense of direction and mission. A crisis is a dreadful thing… to waste, as they say.
I very much look forward to hearing your thoughts on some of the new thinking that might emerge from these testing times, and, perhaps more importantly, the mechanisms by which a positive consensus can be achieved.
Kindest wishes, Richard, in the UK