Dani Rodrik and Stefanie Stantcheva in Project Syndicate:
COVID-19 has exacerbated deep fault lines in the global economy, starkly exposing the divisions and inequalities of our current world. It has also multiplied and amplified the voices of those calling for far-reaching reforms. When even the Davos set is issuing calls for a “global reset of capitalism,” you know that changes are afoot.
There are some common threads running through the newly proposed policy agendas: To prepare the workforce for new technologies, governments must enhance education and training programs, and integrate them better with labor-market requirements. Social protection and social insurance must be improved, especially for workers in the gig economy and in non-standard work arrangements.
More broadly, the decline in workers’ bargaining power in recent decades points to the need for new forms of social dialogue and cooperation between employers and employees. Better-designed progressive taxation must be introduced to address widening income inequality. Anti-monopoly policies must be reinvigorated to ensure greater competition, particularly where social media platforms and new technologies are concerned. Climate change must be tackled head-on. And governments must play a bigger role in fostering new digital and green technologies.
Taken together, these reforms would substantially change the way our economies operate. But they do not fundamentally alter the narrative about how market economies should work; nor do they represent a radical departure for economic policy. Most critically, they elide the central challenge we must address: reorganizing production.