Measures adopted to slow the spread of COVID-19 have inflicted deep and precipitous damage on the global economy. Governments across the world have had to massively increase their borrowing to try to mitigate this unprecedented financial shock, hoping to prop up viable but illiquid firms for the duration of the lockdown and to see a swift re-starting of private sector activity once restrictions are lifted. The ‘Coronavirus Jobs Retention Scheme’ in the UK, for instance, has seen the government paying the wages of over 9 million workers, part of a package of measures that has helped push estimated government borrowing for this financial year to nearly £190 billion (for comparison, before the pandemic, UK government borrowing for this period was predicted at £55 billion).
With governments stepping in as buyer and lender of last resort, there is currently an unparalleled opportunity to fundamentally reshape the relationship between business and the state, bringing private sector aims and objectives better into line with the needs of society. The unprecedented level of financial aid on offer means that oversight mechanisms are urgently needed by which society can assess and, if necessary, redress, moves by firms which have taken state aid.
This project explores the feasibility of adopting a 'social licence for business’ framework, based on the Enlightenment thesis of 'doux commerce' and social contract theory, and asks whether this kind of framework could help harness the power of the private sector, making it a partner in helping to address the challenges society faces and thereby restoring public trust in business.
The project has four parts:
- A survey of the conditions on Covid-19 related financial support being imposed in different jurisdictions.
- A comparison of the pros and cons of these ‘fragmented’ conditions as against the imposition of a more unified (but also less specific) condition in the form of a social licence for business framework.
- A workshop to gain insights and input on our findings from key stakeholders.
- A final document presenting results in the form of recommendations for policy change.
We are very grateful to the British Academy for supporting this project, under the Special Research Grants: Covid-19 scheme.