Abstract
Non-technical summary The thesis of this paper is that the COVID-19 crisis creates opportunities for fundamental change towards a more sustainable economy, for two reasons: structural change in the economy and a change in public opinion. The paper identifies how the COVID-19 crisis accelerates six processes of change that can be leveraged in policy making. With a focus on the Netherlands, it argues for activist government policy because of the tipping-point nature of the economic system in the crisis. Technical summary Structural change in the economy and a change in public opinion during the COVID-19 crisis jointly imply that government choices regarding investments, regulation and taxes can now create stronger synergies of cleaner economic growth and employment creation with ecological, social and financial sustainability. The paper details this for six areas, with examples taken from The Netherlands. High levels of private and (in some countries) public debt may become so unsustainable that this prompts a restructuring of financing systems which are more productive and more in support of ecological goals. In value chains, ICT systems and urban transport systems, forced changes such as more work from home, more cycling lanes and more local production may, once in place, be used as proof of concepts for permanently different infrastructures and organizations. Aviation and energy became dependent on public support, which created financial leverage for enforcing change. Social media summary COVID-19 creates opportunities for change towards sustainability as it accelerates six processes of change.
Highlights
The thesis of this paper is that the COVID-19 crisis creates opportunities for fundamental change towards a more sustainable economy, for two reasons: structural change in the economy and a change in public opinion
Structural change in the economy and a change in public opinion during the COVID-19 crisis jointly imply that government choices regarding investments, regulation and taxes can create stronger synergies of cleaner economic growth and employment creation with ecological, social and financial sustainability
The paper details this for six areas, with examples taken from The Netherlands
Summary
In the first 5 months of 2020, the German car industry experienced its lowest sales figures since 1975. Despite the enormous cost – with a EUR 15 billion fossil fuel fleet waiting to be sold – the industry was strongly encouraged to invest in the production of electrical vehicles (Economist, 2020b; Financial Times, 2020b) This case illustrates that the market changes caused by the coronavirus pandemic are costly, and that they offer opportunities. A second opportunity for change lies in the suddenly increased awareness of the problems of what I have dubbed ‘small-buffer capitalism’ (Bezemer, 2020) This refers to a variety of capitalism which has become dominant over the last few decades, in which pressures to reduce costs, shareholder capitalism, fiscal stringency, tax evasion, labour market deregulation and financial deregulations have combined to produce an economy with small financial buffers, insufficient investment in capital goods and innovation, and too much investment in financial assets and real estate. A first area of reform is the cripplingly high level of private and (in some countries) public debt, which threatens to holds back innovations towards a more sustainable society
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