- The coronavirus crisis offers an opportunity to reshape our economies and implement stakeholder capitalism.
- The Forum endorses six Stakeholder Principles for the COVID era.
- Governments have the "upper hand" and can take the lead on reforming capitalism.
The COVID-19 pandemic is not only a public health crisis that is costing lives and pushing national healthcare systems to the brink across the globe. It also an economic crisis - and one that could portend a recession far deeper and longer-lasting than the Great Recession of 2007-2009.
But the economic upheaval also offers a rare opportunity to restructure or economies and reform capitalism to make it work for a broader swathe of society.
That was the message from Mariana Mazzucato, an economist and professor at University College London, during the Forum's most recent digital International Media Council focusing on the fallout from COVID-19.
"What's interesting about this crisis is it's really revealed so many problems that we have in our current way of doing capitalism. There's different ways to do capitalism," Mazzucato said.
At the Forum's Annual Meeting 2020 in Davos earlier this year, "all the talk was about purpose and stakeholder capitalism," she added. "And I think this is the moment to say, 'Okay. If we're serious about that, let's make sure that we bring that lens of stakeholder capitalism, of collective value creation, to the table in how we structure the details of things like the bailouts,'" Mazzucato argued, referencing recent government financial rescue packages in response to COVID-19.
What is the World Economic Forum doing about the coronavirus outbreak?
Responding to the COVID-19 pandemic requires global cooperation among governments, international organizations and the business community, which is at the centre of the World Economic Forum’s mission as the International Organization for Public-Private Cooperation.
Since its launch on 11 March, the Forum’s COVID Action Platform has brought together 1,667 stakeholders from 1,106 businesses and organizations to mitigate the risk and impact of the unprecedented global health emergency that is COVID-19.
The platform is created with the support of the World Health Organization and is open to all businesses and industry groups, as well as other stakeholders, aiming to integrate and inform joint action.
As an organization, the Forum has a track record of supporting efforts to contain epidemics. In 2017, at our Annual Meeting, the Coalition for Epidemic Preparedness Innovations (CEPI) was launched – bringing together experts from government, business, health, academia and civil society to accelerate the development of vaccines. CEPI is currently supporting the race to develop a vaccine against this strand of the coronavirus.
Davos this past year convened under the theme "Stakeholders for a Cohesive and Sustainable World," with a key focus on how to establish a model of stakeholder capitalism that can address global challenges like societal divisions created by income inequality and the climate crisis.
"The purpose of a company is to engage all its stakeholders in shared and sustained value creation. In creating such value, a company serves not only its shareholders, but all its stakeholders – employees, customers, suppliers, local communities and society at large," Forum Executive Chairman Klaus Schwab wrote in the Davos Manifesto 2020.
Building on that ethos amid the ongoing coronavirus crisis, the Forum - through its COVID Action Platform - joined with members of the business on community on 1 April to endorse six Stakeholder Principles for the COVID era:
- To keep employees safe.
- To secure shared business continuity with suppliers and customers.
- To ensure fair prices for essential supplies for end consumers.
- To offer full support to governments and society.
- To maintain the long-term viability of companies for shareholders.
- To continue sustainability efforts, including to fight climate change.
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At the same time, policymakers and national governments also have a vital role to play in facilitating the development of stakeholder capitalism.
"The current moment is very unique, and my recommendation to governments is you have, for once, the upper hand" to help guarantee a fundamental shift in the system, said Mazzucato.
Still, she cautioned that "it's very important not to confuse big government with smart government."
"We don't just need money to be pouring into the system, we need smart state institutions also to manage it... a smart state to work smartly with smart companies to deliver really important solutions to public problems like this one," Mazzucato argued.