May 20, 2020
Covid-19 is the pandemic global health experts have warned about for decades. It is now an immediate threat to individuals, families, businesses, communities and even nations. It is a brutal teacher reminding global businesses of five lessons previously obscured by booming growth. All five apply equally to the less immediately lethal challenge of human caused climate breakdown. Which is an exponentially larger challenge posing the ultimate threat and it increases the likelihood, spread and lethalness of global pandemics. Three of these lessons are reflected in the schematic above created by Oxford University development economist Kate Raworth whose “Donut Economics” influenced the UN Sustainable Development Goals. The three of five lessons Covid-19 teaches that are aligned with Raworth’s re-imagined economic model are: (1) our economy is subject to our society; (2) our society is subject to our environment; and, (3) our global environment is subject to knowable trends including climate breakdown and the pandemic risks it increases. The Covid-19 challenge also reminds of two things that are consistent with Raworth’s new model but not visually represented, namely: (4) the individual enterprise focused multi-stakeholder capitalism the World Economic Forum in Davos and the Business Roundtable in the U.S. celebrated in 2019 is necessary but not sufficient; and, (5) nation states are vitally important and must become competent enough to respond responsibly to challenges like Covid-19 to ultimately be able to triumph over climate breakdown – as we must.
Covd-19’s five lessons all advance what the influential systems thinker, Donella Meadows, would think of as changes to the “rules and constraints of a system” and its ultimate “system goals.” They each also help advance to what Meadows described as a change in “mindset” or “paradigm” (i.e. a change in the fundamental mental models with which we organize information) in: “Leverage Points; Places to Intervene in a System.” In that seminal 1999 essay, Meadows picked up on physicists Thomas Kuhn’s concept of “paradigm change” from his regularly noted 1962 book, “The Structure of Scientific Revolutions”, and argued that those seeking systems change could cause change by proposing to change the “rules and constraints of a system” and, separately and even more efficiently, by proposing change the “goals” of a system. Meadows further argued that even more efficient that proposing a change to the “goals” would be to change the “paradigm” out of which a system’s rules and goals arise. And as Kuhn originally detailed, new phenomena can occur that the incumbent system cannot respond to effectively making a “paradigm change” necessary.
If Donella Meadows were alive today, she might well see both the need and opportunity for our global system to embrace new rules and goals – and even paradigm change – as Covid-19 creates a public health based challenge to a global economic ordering that until recently prioritized commercial market efficiencies over national borders, public health or any popular interest in a more dignified way of living. Because with 100s of millions likely to become infected before relevant vaccines can be tested over months, globally scaled and globally deployed in world now aware that more pandemics are likely, most may come to see the need for systems change. And many may now even be able to see the specific advantages of an explicitly ecological system premised on the need to meet the demands of the inalienable dignity of each citizen, which begins with appropriately supporting their personal health. This could amount to a paradigm change from a market based model of “extraction and exchange” that seeks “efficiency” to an agent based model of “creation and praise” that seeks “dignity.”1
1. Our Economy Is Subject To Our Society
Robert Kennedy observed in 1968 that the Gross National Product measured “cigarettes, air pollution,” as well as “ambulances to clear our highways of carnage” and “everything, in short, except that which makes life worthwhile.” Indeed, the economist Simon Kuznets who invented the “GNP” to plot the progress of the New Deal as it helped lift the U.S. out of the Great Depression, became a vocal critic of the GNP in the ‘60s advising that distinctions had to be made between “quantity and quality of growth” and that “goals for more growth should specify more growth of what and for what.”2 Both Bobby Kennedy and professor Kuznets were right, its only reasonable for social expectations and measures to take precedent over strictly economic metrics.
In a Covid-19 rocked 2020, the dominance of indiscriminate growth as the metric of social health, is being challenged. Business people, health experts and local, state and national policy makers are desperate to revive a global economy stilled by societal reaction to Covid-19 but are even more concerned about their families’ health and the public health that makes their families’ health possible. Suddenly the somewhat esoteric interest that prompted a number of smaller and historical nations such as Iceland, New Zealand, Scotland and Wales to create a “Well-being Economy Group” within Organization for European Cooperation & Development (OECD) that promoted human, societal and ecological health over economic growth for its own sake – has gone mainstream. It has been thrown into high-relief by the public health challenge created by Covid-19 that has prompted a majority of Americans to tell pollsters they would prefer extended social distancing efforts to seek to improve public health and hold Covid-19 at bay instead of trying to return to business as usual despite enormous economic costs already endured.
Covid-19 has reminded most that personal and family health are a foundation of life’s most meaningful wealth and, further, that no one can reasonably expect to enjoy personal or family health if public health is not secure. Consequently, the highways of commuters across the U.S. and Times Square, Rodeo Drive and Vegas Strip are all empty as millions make choices that unsurprisingly reflects Maslow’s famous hierarchy of needs. What people think will make them physically safer – and specifically the public health early detection, expertise and guidance that helps them understand how they can be safer – trumps (if you will) for most – but certainly not all – their interest in resuming economic activity. Suddenly, health and family have pushed commercial activity off of its developed economy throne.
2. Our Society Is Subject To Our Environment
The Covid-19 induced freeze in economic activity had hardly begun when the New York Federal Reserve asked researchers at MIT Sloan business school in early March to examine the economic impact of the 1918/1919 Flu pandemic and to specifically investigate the impact of “social distancing” on economic activity.3 That study analyzed the reduction of economic growth in 43 U.S. cities during and following the 1918 and 1919 Flu pandemic and found that those cities that have moved most aggressively with social distancing like measures (i.e. “non-pharmaceutical” public health policy interventions such as banning public and even private events) over long months and the multiple years involved, experienced less of a reduction in their economic activity than those cities that failed to move as aggressively for as long. The report concluded that what undermined economic growth in 1918 and 1919 was the spreading disease and resulting death, injury and fear – not the public policy interventions designed to retard the spread of the disease.
The New York Fed/MIT Sloan analysis reminds us that our society responds to and is shaped by the broader environment it operates in. Municipal ordinances restricting the size of gatherings are not the causal drivers of economic demand destruction nearly as much as a highly infectious virus often spread by the asymptomatic and remarkably deadly to the aged and immune compromised. Similarly, investors and strategists should recognize the financial risks created by human caused climate breakdown are not caused by increased regulation to price carbon, redraw flood and fire maps or re-imagine insurance, agriculture and forestry; they are caused by our climate’s frightening evolution towards a self-accelerating, irreversible, climate dysplasia unlike anything human beings on earth have experienced.
Many like the Center for Climate & Security have recognized the clear and present danger climate breakdown poses to civil order as water stress, extreme weather and pandemic disease increase. Indeed, an October 2019 U.S. War College and NASA joint report requested by Trump’s new Chairman of the Joint Chiefs, found that the U.S. military was woefully unprepared for the challenges climate change creates in increased droughts, floods, extreme heatwaves and cold, likelihood of pandemic disease, forced migrations and electrical grid, food supply and political instability globally. So much so that the report found that U.S. Military was itself threatened with the possibility of collapse because of climate change caused risks “within 20 years.”4 Which seemed too much to imagine until recent reports of multiple U.S. aircraft carriers being idled by Covid-19.
As UN Secretary General Antonio Guterres (a former professor of Systems Communications and three time prime minister of Portugal) recognized when he argued for the adoption of the IPCC Special Report on 1.5 C in October of 2018, it would be “suicidal and immoral” for global civil society to ignore what the IPCC Special Report on 1.5 C found was needed to avoid the worst impacts of human caused climate breakdown. In part, because the worst effects included the likelihood of passing “tipping points” to irreversible, self-accelerating, ecological collapse if we permitted the overwhelmingly human caused rise of global surface temperatures to exceed 1.5 C. 5
3. Our Environment Is Subject To Knowable Trends
Beyond national security experts, business leaders have long recognized the growing risks created by climate breakdown. Since the World Economic Forum’s first Global Health Report in 2006, it has cited pandemics as a top global risk made more likely by increasing forced animal and human climate change caused migrations.6 Which make novel viruses more likely to jump from animal to human populations, to more quickly spread and to be more fatal in increasingly less stable nation states. George W. Bush and Barrack Obama have proved prescient in the warnings they issued when setting up and expanding, respectively, the admiral led Pandemic Response Task Force in the White House (which President Trump disbanded in 2018).7 Their prescience was based in science, not conjecture. It is a reminder that although vast, our global ecology is subject to the laws of physics and chemistry which enables science to reveal trends within it; including an increasingly distorted climate and the rising risks of pandemics. Only the latter of which we are now belatedly addressing with deadly seriousness.
Science has revealed to us the invisible progress of viral disease and enabled us to send the Voyager space craft beyond our solar system. The predictive power of science required to land men on the moon and return them home and to send communicating Voyagers into interstellar space is impressive. It extends beyond what Irish physicists John Tyndall had available when in 1859 he demonstrated the heat trapping effect of carbon in our atmosphere and helped define and confirm the Greenhouse Effect. Moreover, the best of science is not needed to confirm the shockingly increased and troubling acidification of oceans world-wide over the last thirty years. PH strips are all that are needed. And satellite photography can confirm the loss of most summer ice in the arctic during the same flash of time. So the well predicted tragedy of Covid-19 can be seen as a reminder of the ability of science to identify ecological trends capable of forcing difficult to imagine change.
4. Multi-stakeholder Capitalism is Necessary But Not Sufficient
In August of 2019, 181 CEOs of America’s largest companies signed a statement describing the “Purpose of the Corporation” organized by the Business Roundtable and published in a full page add in the New York Times in an effort led by JP Morgan’s Jamie Dimon. It was a statement that reversed a 1997 Business Roundtable statement declaring service to the stockholder the primary purpose of corporation and instead embraced the need to also, simultaneously, serve customers, employees, suppliers and host communities. With president Trump attacking free trade and “globalists” and Bernie Sanders politics increasingly popular last summer, exceptionally well compensated Fortune 500 CEOs publicly announced that they had discovered the vital importance of customers, employees, suppliers and host communities.
This was a very specific embrace of “multi-stakeholder capitalism” that the World Economic Forum (WEF) which meets annually in Davos has been promoting since before the first “Davos Manifesto” in 1973. This January the WEF issued on its 50th anniversary a detailed update to its “Davos Manifesto 2020” which was presented by WEF founder Klaus Schwab as “a third way” distinct from the “shareholder capitalism” that even the Business Roundtable had specifically repudiated in August and the “statist” development model China’s phenomenally economic growth suggested was an alternative.8 While policy-makers and CEOs dined at Davos, however, a novel virus was spreading through the human population of Wuhan China and may have already begun to spread abroad. It soon came to represent an unprecedented public health challenge that has thrown into high relief what professor Klaus and participating CEOs were missing.
Since the WEF began as the “European Management Forum” it may not be surprising that both in 1973 and 2020 its “Davos Manifestos” hardly mentions nation states or the dominate role of nation states in global civil society and global economic markets. Since the history of nationalism in Europe is exceptionally bloody and the effort to build the European Union was defining to Europe over the WEF’s 50 years, a lack of enthusiasm for nation states is expected. But when an understandable European bias against nationalism overlaps with the short-term interests of global corporations that are primarily regulated by national governments, it is easy to advance models of thought and action that undervalue the needed role of nations. Stakeholder (as opposed to Shareholder) capitalism as articulated by the Davos Manifesto and now the Business Roundtable’s “Purpose of the Corporation” has long been at the heart of the global Corporate Sustainability movement. Which is reflected in Corporate Sustainability’s global standard setters such as the non-profit Global Reporting Initiative (GRI) based in Amsterdam. That the “Davos Manifesto” aligned approach to building sustainable companies and markets respects too little the vital role of nation states may well be a rarest of items that both supporters of President Trump and Bernie Sanders agree on. And Covid-19 has provided a stark reminder to many supporters of Multi-stakeholder Capitalism, that they may be right.
Covid-19 is like an acid test revealing how robust nation states are. Unsurprisingly, some of the most obviously well-organized nations with citizens who self-report high levels of satisfaction with their governments and fellow citizens have performed impressively in managing the risks of the Covid-19. Some of these highly cohesive nations including South Korea, Japan and Taiwan – which also gained experience coping with SARS – have been exceptionally successful in containing Covid-19. Several have been able to keep their large, diverse, economies largely operating with far fewer than 500 deaths in their countries well into May 2020. Highly cohesive nations outside of Asia that did not have experience with SARS, have also fared impressively well in a relative sense as demonstrated by Germany’s success treating all Covid-19 victims without ever approaching health system failure and smaller countries like Denmark, Iceland, New Zealand and Norway’s relative success in effectively containing Covid-19.
5. Nations Are Important, They Alone Can Stop a Virus or Regulate an Economy
Covid-19 reminds us that nations not only play a critical role in controlling borders and advancing the public health that all individual health depends on, they also promote a sense of solidarity and shared fate – or fail to – that is required to succeed in times of crisis. Furthermore, it overwhelmingly falls of nations to regulate towards both public health and economic health. Hence it might be entirely fair and appropriate for Kate Raworth in her Embedded Economy model above the title of this article to substitute the legally meaningful term “nations” where she currently uses the far broader but more nebulous term “society.” Because nations are the primary societal system that regulates the economy; and our society will not be able to regulate our economy to operate within the limits of our environment unless citizens see more clearly the role of nations. Nations are the specific legal units that must regulate our economy so that it serves the dignity of a nation’s citizens and operates within the confines of our finite, threatened and life giving global ecology. Nations are the societal organization that must enact a commitment rebuilding better – and specifically “within the donut” in Raworth’s formulation that imagines an inner circle of minimum support for each individual and an outer circle that reflects global ecological limitations.
Progressives even outside of Europe, however, often recoil at enthusiasm for nations. These progressives regularly promote rational thought and associate nationalism with irrational, ethnic, based systems of tribal loyalty. Rarely do they appreciate the role the development of nation states played in the development of contemporary political and scientific consciousness. And, specifically, what the rise of nation states did for the development of scientific and egalitarian cultures we regularly assume today. Which were a vitally important contribution provided by nation states that leading theorist on nations and nationalism such as Ernest Gellner and Jurgen Habermas agree on. And looking to the future, it is clear that the local communities and the global community that environmentalist rightly celebrate, will not be the most important actors in implementing any strategy to “build back better” together if it is done at the scale required. And local communities are vitally important supporting – not leading – actors in implementing the Paris Climate Accords the global community agreed to, but that nations must implement if our children are to have a reasonable chance at a reasonably safe future.
As perhaps the leading current scholar of nationalism, Liah Greenfeld, a University Professor at Boston University reminds us in her recent book Nationalism; A Short History (2019), only two centuries ago many thought aristocrats actually had a distinct, blue, blood. She also argues that the idea reflected in Shakespeare’s historical plays that all the people of England were all part of “the nation,” was a radical sentiment in England that helped the scientific revolution blossom there first. Consistent with Greenfeld’s history of nationalism, neo-conservative wonder kid turned Director of The Center For Democracy & The Rule of Law at Stanford – Frances Fukuyama – recognized in his book length essay Identity (2018), nationalisms need not be ethnically based. They can be – as has been the case in the U.S., France, Great Britain, India, Brazil (perhaps until recently) far more of a “civic nationalism” premised on a shared history and future and a shared, integrating, creed.
This is especially true of the deeply diverse U.S. As the English immigrant Thomas Paine observed in his wildly popular book Common Sense (1776) that did so much to galvanize colonists’ enthusiasm for the American Revolution, Paine saw the revolution no less than “the cause of all mankind.” Which was based on Paine’s enthusiasm for the sort of “creedal based” and “integrating” identity that Frances Fukuyama (whose parents endured the Japanese internment during WWII) promotes in Identity. Which is also aligned with the view of the great Supreme Court Justice Louis Brandeis, who saw America’s “fundamental law” as no less than “to seek to make real the brotherhood of man.” L. Brandeis, The Menorah Journal, Vol. 1, 1915. Consequently, it is possible for the progressive and the scientifically minded to recover an appreciation for the role of nation states and what can be a civic nationalism supporting them. Precisely because “civic nationalisms” play an important role in creating a shared identity that is not dependent on the backward premises or tribe and territory but instead are based on the inevitability of a shared future. Which supports the creation of a shared identity broad enough to allow for individuals capable of meaningful growth and the ability to transcend and potentially improve their received traditions.
The scaling global pandemic has also reminded us that only a nation with carefully monitored borders, trade and public health requirements can hope to stop a virus. Similarly, only a nation can hope to meaningfully regulate global investors and corporations within their borders to structure a market that respect the limits of our threatened, life giving, global ecology or any other shared values. So as undoubtedly tragic as Covid-19 is, it may be acting as a vaccine to challenge broader society – and specifically nations – to become more robust in meeting what the dignity of each of their citizens demands. In this way, Covid-19 could prompt citizens to see across previously imagined racial, religious and regional lines, to understand they are only as strong as their most vulnerable fellow citizens on whose health the health of their whole nation depends.
Consequently, citizens are being encouraged by the challenge of Covid-19 to realize that the full dignity of every other citizen should be recognized and served; and this cannot be left to individual companies or the market. It is instead the constitutional state that must work to vindicate every individual’s dignity; since its rightly purposed to do exactly that. The hard-won wisdom reflected in Germany’s Basic Law of 1949 is instructive. It begins: “(1) Human dignity shall be inviolable. To respect and protect it shall be the duty of all state authority. (2) The German people therefore acknowledge inviolable and inalienable human rights as the basis of every community, of peace and of justice in the world.”
In the age of increasing pandemics, the benefit of each nation ensuring that each citizen has the health care, housing and work required to flourish, so that the nation as a whole can flourish, may become increasingly clear. In this way, the scaling global killer that is Covid-19 could force societies – and specifically nations – to respond with new systems to provide what each individual requires to be a healthy, contributing, citizen. Which may prove decisively important in ultimately enabling every citizen to be able to turn with most all others to face down the far larger, mounting, existential challenge presented by human caused climate breakdown and to triumph over it – as we must.
- Donna Hicks, PhD at Harvard Kennedy School of Government has proposed in “Leading with Dignity” (Yale University Press 2018) that a concern for human dignity understood to include a dignifying relationship to self, others and our environment, be centered in a new model of management strategy at all levels. At page 25 Hicks discusses “Professor Michael’s Piraon’s extraordinary book “Humanistic Management: Protecting Dignity and Promoting Well-Being” (Cambridge University Press 2017)” and the work being done globally by the Humanistic Management Network.
- Kuznets, S. “How to Judge Quality.” The New Republic. 1962, pp 29.
- “Pandemics Depress the Economy, Public Health Interventions Do Not: Evidence from the 1918 Flu.” SSRN. March 26, 2020.
- “Implications of Climate Change for the U.S. Army.” US Army War College. 2019.
- “Failing to Agree on Climate Action Would ‘Not Only be Immoral’ but ‘Suicidal’, UN chief tells COP24.” UN News. December 12, 2018.
- “Global Risks 2006” World Economic Forum. 2006.
- “Trump Says Task Force Will Shut Down.” The New York Times. May 6, 2020.
- “Why We Need the ‘Davos the Manifesto’ For A Better Form of Capitalism.” World Economic Forum. December 1, 2019.
Jim Boyle is CEO & Founder of Sustainability Roundtable, Inc. For twelve years, Jim has led full-time teams of diverse experts to assist nearly 100 Fortune 500 and growth companies on a multi-year basis in their move to more sustainable high-performance. Specifically, SR Inc has helped world leading corporations, real estate owners and federal agencies to Set Goals, Drive Progress & Report Results in greater Corporate Sustainability. Mr. Boyle led in creating SR Inc’s market leading outsourced Environment, Social & Governance (ESG) services which supports dozens of corporate management teams year over year. He also led in developing SR Inc’s Renewable Energy Procurement Services (REPS), which advises and represents Fortune 500 and fast growth companies across the U.S. and internationally in the development of Renewable Energy Strategies and the procurement of on and off-site advanced energy solutions. SR Inc REPS is a leader in corporate buyer organized aggregated procurement of utility scale renewable energy. Before founding SR Inc, Mr. Boyle co-led Trammell Crow Company Corporate Advisory Services in San Francisco and returned to his native Boston and Trammell Crow Company’s market leading team in Greater Boston where he received the Commercial Brokers Association’s Platinum Award for the highest level of commercial real estate transactions. Earlier, he advised companies on real estate and environmental matters as an attorney at a large law firm based in Boston. Jim is a graduate of Middlebury College where he co-captained the football team and Boston College Law School, who early in his career served as a federal law clerk, an aide to John F. Kerry in the U. S. Senate and on Vice President Al Gore’s campaign for President.