In seeking direction and answers in shaping the post-covid-19 age, we are not looking for totally new solutions. Times of crises across history are underpinned by strong undercurrents of change. During these times, we see a shift in priorities and a shift in values. However, the unique historic situation and context of each crisis will impact its potential for systemic change. Our current crisis, covid-19, has resulted in some priorities being fast-tracked — such as basic social welfare and health — and others potentially being placed on the back-burner — such as green initiatives. The net impact of these priority shifts cannot yet be known, but we hope to see the direction of change manoeuvred through a collaborative blueprint. This shift in priorities is the focus of this two-part blog, which sits within a series of Circle Economy reflections on the circular economy and covid-19.
In the dawn of a new circular economic system, we would see a transition to an economy that is resilient, regenerative and distributed. These fundamental traits of circularity have never been more apparent as we view them against a backdrop of an ever more uncertain and complex world. And although the current pandemic has thrust a magnifying glass on the situation, the cracks in the system have long been clear. Embedded deep within the ‘take-make-waste’ tradition of the linear economy lies a toxic cocktail of linear risks. These range from highly dependent global supply chains, material extraction occurring at a faster rate than regeneration and a fiscal model focused on delivering profits and infinite growth at the expense of stability and resilience. As a result, in a resource-constrained world with high-impact mega-trends of rapid population growth and widespread urbanisation, that flawed linear model is no longer fit-for-purpose.
Society, therefore, finds itself at a historic economic and cultural crossroads. Before the pandemic hit we were already occupying a historic time of transition: a paradigm-shifting era. This was namely driven by the fourth industrial revolution — characterised by the blurring of physical, digital and biological boundaries and the prioritisation of efficiency and profit — and the impacts of our Anthropocene age; an existential climate threat propagated and intensified by our growing disconnect from nature and planetary health. These many entangled circumstances and intermeshing social and political realities will lead to unique outcomes in the post-pandemic age.
In order to move forward, we have a choice. Do we press on with a scenario where the economic growth of individual nations is prioritised, or do we pivot toward a model formed around coalitions? In the current model, we see the ascent of protectionist tariff wars, such as the China-US standoff, which was realised across a multitude of items from food to electronics, or the Russia and Saudi Arabia trade-war, which had oil at its centre. In such contests, there are no global winners. In an alternative scenario, blueprints for action can emerge from coalitions between various levels of society and both national and international government. Change begins to be recognised as ‘not necessarily painful, but also attractive’; ever-more substantial political actions are possible within a collaborative approach to rebuilding and restructuring the global economy. So, do we continue to tweak and tamper with our broken linear model, cognisant of the consequences and liable by default, or do we pivot to a new model, such as a circular economy, and with fresh minds and new tools to pursue a desirable and deliverable paradigm shift?
Historic crises that result in systemic change can be analysed through how shifts are realised in key flows such as knowledge, stocks, materials and energy. During times of crisis, such as the 2008 financial crash, the direction in which monetary flows are funnelled can shape outcomes. Following the stock-market crash, a core priority was the resuscitation of financial institutions in the hope the economy could be stabilised — but not revolutionised. However, following the great depression of the 1930s in the US, federal money was spread across a large range of programmes, public work projects and financial reforms. Meanwhile, during the industrial revolution — loosely defined by the ascent of the machine — knowledge flows impacted the class system and a brand-new middle class blossomed; touting new ideals and values not seen previously in society. Such flows in crises occur quickly, ‘fast-forwarding processes that normally take years’.
As the covid-19 pandemic sweeps the globe, there will also likely be a shift in spending priorities as basic services become the sole focus and short-term emergency fixes are amply distributed. Lessons from history, such as after the 2008 crash, also warn us that focus on swift economic recovery is often at the expense of sustainable initiatives. In the US, a mammoth trillion-dollar package was enacted to help the rapidly rising numbers of unemployed; in the UK, the government dishes out payments for workers furloughed due to the pandemic in a bid to avoid, or delay, unpaid unemployment. As immediate social protection — such as benefits for the unemployed — is prioritised in the City of Amsterdam, the Netherlands, what may become of budget allocations for the progressive green agenda?
And now, oil prices are extremely low and, for the first time in history, US crude oil prices have dipped below zero. Governments have the oil industry ‘over a barrel’ — just like they had the banks back in 2008. Global social distancing measures have resulted in a massive demand drop; plummeting oil prices ensued due to a large surplus of the crude material. Against a global backdrop of falling shares of energy coming from fossil fuel use (coal generation in 2020 will decline by 6.8%, which is 20.3% more than previous years), an opportunity presents itself. As oil giants titter on the brink of collapse, do we offer them a lifeline? Or do we ‘let the market decide’ and allow for their failure? This natural creative destruction thereby clears the avenues for other forms of energy; namely renewable and regenerative.
In April 2019, UN Secretary General Guterres underlined the need for ‘no new coal by 2020’ and for existing coal use to be curtailed. And this May, a study published in the Oxford Review of Economic Policy suggested that investments in projects that reduce emissions are the most cost-effective way to boost post-pandemic economies. Now, new investments in the power infrastructure will prioritise renewable over fossil-based power generation. This could potentially lead to the accelerated decommissioning of fossil assets like coal-fired power plants. With the pause button being pressed on coal-plant construction plans, governments have been gifted with a chance to reassess the direction they need and want to turn. Both governments and corporations are traditionally optimised for efficiency rather than agility, writes John Thornhill in the Financial Times, but the priority pendulum may swing towards the latter in light of the demands our ‘fast-moving age’ necessitates.
It is too early to fully reflect on the priority shifts of this crisis. What is clear is that a key condition of change is the mobilisation of capital towards circular economy initiatives such as renewable fuel sources and alternative business models. In a positive step forward, we may have a blueprint: the combination of UN Agenda 2030 (17 SDGs) and the European Commission’s European Green Deal. The Petersberg Climate Dialogue has also committed to continue to work on delivering on the Paris Agreement (to stabilise temperature rise below 2C).
We’re living through a unique moment in history; nearly all global powers have their focus and priorities pinned on the same thing; surviving covid-19. We hope they cast their focus to thriving post-covid-19 too.
Part two of this blog will be published by the end of May and will consider a second vital undercurrent of change; a shift in values. Will the pandemic accelerate value shifts that were already occurring, particularly related to the commons and nature? You can also read about what the pandemic has unearthed about the labour market and the fashion industry.