October 16, 2020

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Capitalism was not working well before Covid. It is a system with unique capacities to build cohesive societies capable of surmounting problems, but the sort of capitalism that we have encouraged during the past four decades has done the opposite. Given the unprecedented scale of the current shock, will coronavirus accentuate these failings, or trigger remedies?

At its best, capitalism generates “adaptive communities”, a simple-sounding phrase that packs a lot of meaning and is key to how we will get through the current crisis.

We have evolved to belong to community. Humans are a distinctively pro-social mammal: we want to be part of a group and to win the good opinion of its other members. Small communities happen naturally, but large ones have to be organised. Rousseau was the first philosopher to see the advantage of cooperating at scale in a community: hunting solo we could only catch rabbits, whereas hunting together we can catch stags.

Successful businesses and public bureaucracies do not just rely on formal hierarchy, they build themselves into communities that achieve a purpose. Similarly, successful cities, regions and countries rise beyond just being places where a random collection of individuals happen to live, to being purposive communities. So how does a community become capable of acting together for some shared goal?

The surest way is through dialogue and trusted leadership. Dialogue is a particular form of communication, and usually takes the form of narrative: the style that all of us have evolved to master. It engages everyone, so that all members of the community can participate and co-own the outcome. It flows back and forth between equals who aim to understand each other, in contrast to instructions flowing down a hierarchy. And it presumes mutual regard between participants, not indifference or worse.

Dialogues tend to build a common understanding of a situation, a common sense of identity that can co-exist with our other identities. But above all, they can create a sense of common obligation that encourages us to put these collective purposes ahead of our own individual interests.

Trusted leadership is valuable in building new common purposes quickly, such as we suddenly all needed with Covid. Again, humans have evolved to be distinctive. All other mammals have only one style of leadership — dominance. We are a mammal species and so unfortunately there are plenty of dominant leaders around. But uniquely, we have evolved an alternative style of leadership, through behaviour that demonstrates that the community comes before self: self-deprecating humour and self-sacrificing actions that win people’s trust. Dominant leaders see themselves only as commanders-in-chief; trusted leaders can also be communicators-in-chief.

That combination of community dialogue repeatedly achieving common purposes, plus a trusted leader who can guide the dialogue rapidly into new common purposes is, I believe, why Denmark has handled Covid-19 so successfully. Other than for a brief initial lockdown which signalled the new common danger, it has kept its schools open and had among the smallest hits to its economy, while also suffering among the lowest excess deaths.

What Denmark has achieved this year is part of a repeated pattern of achieving common purposes, which is why on all the indices of wellbeing, happiness and living standards, it is the most successful country in the world. And it is currently led by Mette Frederiksen, a working-class single mother who easily relates to people: when she says “we”, everyone is willing to listen, and so she has been able to build the new common purpose of containing Covid without damaging the economy.

She did not need a doctorate in virology to understand what everyone needed to know and to do. We all need to know whether we have Covid, hence the government providing mass track-and-trace. And we need to protect our neighbours: if young, that means getting on with our lives while staying clear of the old; if old or vulnerable, it means taking neccessary precautions to minimise risk. The genius of Denmark is not big science, but fast common purpose.

Communities need to be adaptive, though — and again, evolution has come to our assistance. We are distinctively imaginative, starting in childhood. We dream up situations which would be improvements on our present life — I remember as a kid dreaming of something like a mobile phone that I could use to chat with my friend. Currently, in Silicon Valley the dream seems to be “if only we had flying cars”. And then we use those imaginations for creative ideas: my kids now have those phones, and they are every bit as much fun as I had imagined (albeit a parental nightmare).

Of course, it is much easier to dream than to create, and so an existential condition of humanity is that we attempt goals that we do not know how to achieve. Both our ambition, and the vagaries of life, keep plunging us into unknowable futures: a condition now recognised as radical uncertainty. Globally, we have had two massive episodes of it in the past 12 years — during the Financial Crisis of 2008 and with the onset of Covid. No one knew what to do, and that is why we need to be adaptive: if we don’t know, we need to find out as fast as possible. How can we do that?

The knowledge needed for good decisions comes in two forms, expert and tacit. Expert knowledge is what I am supposed to have as a professor of economics. Tacit knowledge is what you get from experience doing a task in a context. Expert knowledge without tacit knowledge is dangerous: the arrogance of experts is a menace. But it is designed to be shared — teaching it is part of my job. In contrast, tacit knowledge is very hard to share — you learn it by doing it, and it is very particular to context. So, for rapid learning, it is more effective to share expert knowledge down the hierarchy, than to drag tacit knowledge up it. The implication is when an organisation needs to adapt, the right form of governance is devolved.

But if we don’t know what to do, fusing expert and tacit knowledge is not enough: we also need to experiment. We need as many experiments as possible and so they should be done in parallel, a further reason why an adaptive organisation needs devolved governance. When all decisions are taken at the top of the hierarchy it often leads to doing the same thing everywhere, or to differentiation by crudely drawn central criteria. Devolution enables teams in different parts of the organisation to use their creativity and so will naturally lead to differing approaches.

Some will work better than others, and yet again evolution is on our side: we are uniquely good at imitating the success of others within our community. But for imitation to work, we need devolved decisions within an encompassing community, not separation into rival communities. Everything should not be decided in Brussels or London: decisions about common purpose need to be taken at the lowest level possible, both for a strong sense of common obligation, and for rapid learning. But to share that experience we need the encompassing identities as well: European and British.

Before Covid, government had retreated from a pragmatic quest for common purposes within a community, to dogma-driven disputes between rival identity groups. Equally, business had retreated from being our primary organisation for purposeful innovation to overcome practical problems, into a scramble for short-term profit that often causes more problems than it solves. Capitalism wasn’t working.

The post-Covid world will inherit all the previous problems and add more. So, we will need adaptive communities more than ever, in our businesses and in our polities.

Will we get them? I am hopeful. The rise of individualism has weakened our societies but it is now being discredited, the ideas which claimed to justify it now being refuted. Greed is Dead, co-authored by John Kay and I, is part of a tidal wave of work by communitarian intellectuals looking at the new evidence, among them Raghu Rajan’s The Third Pillar and The Tyranny of Merit by Michael Sandel.

And we can all see before our eyes the manifest damage that the loss of community has wreaked. Covid has brought us face-to-face with the need for common purpose and a way to remake capitalism for the better. In Britain, one of the most over-centralised countries in the world, the Government issued commands but felt obliged to open a portal for volunteering.

The scheme revealed a strong residual desire to contribute to community, so that while the Government expected 250,000 people, more than twice than figure volunteered just on the first day. And yet Westminster had no idea what it might do with them. In contrast in the USA, where individualism has been rampant for longer, people’s initial response was to queue outside gun shops. Not “protect your neighbour” but “shoot your neighbour.” And the America political “debate” we watched with disbelief? Not dialogue, but shouting down.

Covid can bring us to our senses; or it can complete the process of tearing us apart.


Paul Collier is Professor of Economics and Public Policy at the Blavatnik School of Government, Oxford University. His latest book is Greed is Dead: Politics after Individualism (with John Kay).