“There are good reasons to be concerned: A sharp drop in the economy has already started, and the worst recession since the 1930s could be waiting for us,” Schwab writes at the beginning of his appeal. The crisis could also further exacerbate problems such as climate change and social conflicts that had started before Corona: some states would take the pandemic as a reason to soften or abolish environmental protection measures. In addition, the total wealth of all US billionaires grew during the crisis, which creates additional frustration with social inequality.
But at the same time, Schwab sees a unique opportunity to virtually reinvent the world as we knew it until the outbreak of the corona virus. All elements of our society and the economy would have to be redesigned: from education to social contracts to working conditions, according to the economist.
“We need a ‘big restart’ of capitalism”
However, this goal can only be achieved if the world unites and acts quickly: “Every country, from the USA to China, has to participate, and every industry, from oil and gas to the tech sector, has to be transformed,” Schwab writes . Aid and immediate measures were not enough to prevent a catastrophe. “In short: we need a ‘big restart’ of capitalism,” Schwab demands. “We have to build completely new foundations for our economic and social systems.”
This requires an unprecedented level of cooperation and an enormous will of all involved. Born in Ravensburger, he found courage out of the misery of mankind with the pandemic. Because it had shown how quickly and radically we could change our lifestyle: “The crisis has forced companies and citizens to give up practically essential practices, such as the many flights or work in the office, almost from one moment to the next.”
Corona crisis shows: vision not an “impossible dream”
At the same time, entire peoples had shown willingness to make sacrifices when it came to protecting the health system or the elderly. Firms that had previously paid little attention to lip service are now supporting their employees, their customers and even their local environment – just as capitalist-oriented capitalism actually provides.
His vision is therefore not an “impossible dream,” emphasizes Schwab. The will to build a better society is clearly recognizable in humanity. But now strong, effective governments are just as much in demand as committed citizens and companies. Because so that the dream can become reality, three things are important.
The three crucial points for the restart of capitalism:
1. Create fair markets
Governments should ensure that the world market is fairer. To do this, they would have to coordinate better, for example in the area of tax and monetary policy, but also in the case of regulatory measures. Furthermore, trade agreements would have to be upgraded and the foundations laid for an economy of general interest. Dwindling tax revenues and the increasing indebtedness of many countries are powerful incentives for this.
Governments should also implement reforms that are long overdue to ensure a more equitable distribution of wealth. Specifically, Schwab suggests the following measures:
- Changes in wealth tax
- No more subsidies for petrol, diesel and kerosene
- New rules for intellectual property, trade and competition
It always depends on the individual case, because the answer to the question of where there is a need for change may differ from country to country.
2. Investments must always serve common goals
The second big point on Schwab’s agenda concerns investments that governments decide – alone or together. Just like now in the fight against the corona crisis: While individual states like Germany and France have adopted economic stimulus packages for themselves and their economy, this is also happening at a higher level. The EU Commission, for example, has published plans that include a 750 billion euro aid fund. There are similar projects in the USA, China or Japan.
This is a great opportunity to target huge sums of money to create more equality and sustainability. Instead of repairing the cracks in the existing system, which are now becoming all the more apparent, the money should be used to build a new, more resilient, fairer and more sustainable system. The same applies to investments by private companies or pension funds.
Here too, Schwab mentions specific investment goals, such as the establishment of a “green” infrastructure in cities. In addition, incentives could be created for entire industries that would like to improve their ecological footprint or management culture, or would like to invest in the social sector (the so-called ESG factors).
3. Make the achievements of Industry 4.0 beneficial to the public sector
Finally, Schwab talks about the “fourth industrial revolution”, i.e. the digitization and optimization of entire industries and their production processes. The additional profits generated by this process should be made available to the public, the expert said.
Schwab thinks in particular of the areas of health and social issues, where solutions to major challenges would have to be found. The Covid 19 crisis had once again shown a first impression of what would be possible: corporations, universities and other stakeholders had teamed up and are now working together to find suitable diagnostic and treatment methods and vaccines against the coronavirus as quickly as possible and to develop.
The digital aids, by means of which infection routes can be traced or which enable remote treatment in the form of telemedicine, are among the achievements by means of which change is already becoming visible. “Imagine what would be possible if such joint efforts were made in every sector,” said Schwab. “The pandemic is a rare opportunity, a small window that we can now slip through by reflecting, imagining and rebuilding the world – and creating a healthier, fairer, and prosperous future.”