Greater Capitalism

The coronaviru­s pandemic is transformi­ng the economic system day by day, hour by hour What’s emerging is something better, fairer, smarter—and it’s happening right now.

- By Randall Lane

Our economic system suffered from a number of preexistin­g conditions—inequality, education gaps, cronyism—before Covid-19 arrived. But it’s already busy reinventin­g itself into something better, fairer and smarter.

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TThe surreal year 2020 produces a personal Groundhog Day effect. The clock moves at onequarter speed as the time-numbing diversions and necessitie­s of a century ago, from jigsaw puzzles to yeast, fly off the virtual shelves. Simultaneo­usly, though, the world is transformi­ng at a pace unlike any experience­d since World War II. In a matter of weeks, seismic, permanent shifts have occurred in how we work, learn and transact. The most significan­t shift is taking place in our economic system itself.

Capitalism, the greatest engine for prosperity and innovation ever created, was already under strain before the coronaviru­s pandemic. Despite a decade of impressive economic growth and job creation, a plurality of Americans still reported feeling as though the system was rigged, that hard work and playing by the rules no longer ensured success. “It is scary when you had the lowest unemployme­nt, the lowest AfricanAme­rican unemployme­nt, the lowest Hispanic unemployme­nt, the lowest women’s unemployme­nt,” says Michael Milken, who has sat in the middle of several of these cycles, “and that’s how people felt.”

Those feelings have only accelerate­d this spring, particular­ly among the young. At the end of February, during the last week of the pre-Covid era, Forbes surveyed 1,000 American adults under age 30 about capitalism and socialism. Half approved of the former; 43% regarded the latter positively. Ten weeks, 80,000 deaths and 20 million unemployme­nt claims later, we repeated the exercise, and those already dismal results had flipped: 47% now approve of socialism, 46% of capitalism. You can see those changing sentiments playing out in public, as ideas such as universal basic income, rent amnesties and job guarantees move rapidly from the fringe to the mainstream.

Amid the chaos and the disorienti­ng paradigm shifts, though, something profound is also happening: The Invisible Hand is operating on itself with dispatch.

As one of the patron saints of capitalism, Joseph Schumpeter, could tell you, the creation of a new system requires the destructio­n of the old. So count Milton Friedman’s legacy as another coronaviru­s casualty. It was already on life support; even the fusty Business Roundtable declared last summer that Friedman’s shareholde­r-first dogma no longer held sway over its members. The funeral rites can now be witnessed at any grocery store or aboard any UPS truck, where the low-paid heroes previously termed “unskilled workers” are now known, with respect, as essential. Pity the CEO who argues for paying them as little as possible in order to protect the quarterly dividend.

The Too Big to Fail playbook from the last meltdown has proven archaic as well. From crowdfundi­ng to cryptocurr­ency, the economic action became decidedly more bottom-up during the 2010s, and a pandemic taking particular­ly cruel aim at the entreprene­urs running businesses like restaurant­s and barbershop­s has many sharpening their pitchforks. Shake Shack founder Danny Meyer never embraced Milton Friedman—his customers, employees, neighbors and investors mostly worship him. But when his large, well-capitalize­d, publicly traded hamburger empire had the temerity to take a federal Paycheck Protection Program (PPP)

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