Further Reflections on "The New Economic Insecurity" Conference at Ditchley

By Sarah Doyle


In June 2020, the Ditchley Foundation convened a conference on The New Economic Insecurity. The conference explored the potential of the COVID-19 pandemic to reinforce pre-existing economic insecurities, as well as its potential to make possible a rethinking of the conditions of economic insecurity. Discussions were grounded in an understanding that economic insecurity exists by design, and raised questions about how to invest in a recovery from COVID-19 that leads to fundamentally different economic outcomes.

One theme related to the role of government in shaping the behaviour of corporations. Where public funding or partnerships are directly contributing to a company’s success, governments could push for higher standards of social and environmental responsibility. What incentives or requirements could governments deploy as they seek to support and partner with businesses through the recovery, to help shape economies that work for more people? What should the quid pro quo for public investments in the private sector be as we seek to build back better?

This piece outlines some initial thinking on these questions, grounded in the Canadian context, which could inform future Ditchley conversations.

The case for new forms of public-private collaboration

Governments around the world are spending hundreds of billions in response to COVID-19, to meet immediate health and safety needs, to contribute to bringing an end to the pandemic, and to help people and businesses weather the storm. Some – including Canada – have committed to spend billions more to build back better and deliver on the promise of a future economy that is resilient, inclusive and equitable. The size of this challenge is undeniably massive. But so is the opportunity to rethink the role of governments in shaping our economy, and the role of businesses in benefiting society.

A keystone of “building back better” should be collaboration between governments and businesses. In Canada, we’ve seen the public and private sectors join forces to help small businesses move online, launch the COVID Alert app, accelerate vaccine research, and retool factories to produce personal protective equipment and ventilators. This type of collaboration could be extended to more fully engage businesses in building back better. Specifically, governments could do more to channel private sector innovation into solving our most acute social challenges, incentivize the creation of good jobs and inclusive workplaces, and promote structures for distributing wealth more widely. Canada and other countries have an opportunity to leverage the billions of public dollars flowing into the private sector to achieve these goals.

Governments invest in establishing the conditions for business success. This includes directly subsidizing business activities, such as R&D, training and (in the current context) paying wages, with a view to enhancing business contributions to job creation and economic growth. But the economic benefits of these investments are not being widely shared. The net worth of Canada’s wealthiest families is orders of magnitude higher than the median. Only some are benefiting from good jobs and pay, and certain groups, including women, young people, and BIPOC, have been disproportionately impacted by job losses prompted by COVID-19.

Strategies for engaging businesses in building back better

Now more than ever, governments should be looking for opportunities to maximize the public return on investments in the private sector. There are at least three areas where quid pro quo strategies could be more ambitiously and systematically deployed – and which future Ditchley conferences could help to further unpack.

First, governments should mobilize businesses and innovators to help solve challenges that matter to people. They could do this by redirecting innovation investments to focus on the development and commercialization of new products and services that respond to big-picture challenges such as COVID-19, food insecurity, dementia, and carbon emissions. As Dr. Mariana Mazzucato, an economist at University College London, has argued, governments have a role to play in shaping markets to “[tilt] the playing field in the direction of the desired goals.” Adopting challenge or “mission-oriented” innovation policy would link supply-side investments in stimulating innovation with demand-side policies to open markets to innovation — including through procurement and regulatory reform — benefiting innovative firms and yielding economic gains, as well as better social and environmental outcomes.

Second, governments could require companies that receive public funding above a certain threshold to commit to public reporting on policies, targets and data collection in areas of public interest. For example, to build towards more diverse, equitable and inclusive workplaces, companies could be required to report on the demographics of recruitment, hiring, pay, promotions, and board representation, as well as on decent work and employee benefits. In this way, governments could incentivize companies to contribute to a more just labour market, and accelerate a shift towards enhanced transparency and accountability.

Finally, governments could require or incentivize new governance structures and partnerships that better share wealth. This could include wider use of community benefits agreements and requirements for community-based hiring and employee up-skilling. To rebuild local economies, governments might also broker partnerships between companies of different sizes, higher education institutions, and unions to advance place- and sector-based strategies that meet the needs of workers and employers. In addition, they could provide incentives for transitioning to models of employee ownership and governance, for example through employee ownership trusts or employee seats on corporate boards. In some cases, governments might consider taking an equity stake in the companies they invest in.

Rethinking the roles of government and business

While these ideas are not new, the opportunity for governments to ignite new forms of public-private collaboration – to shape the goals of innovation, as well as how companies grow and compete – has never been greater. The COVID-19 pandemic has revealed and exacerbated existing economic inequalities. It has also thrown wide the Overton Window. And it has demonstrated the power of partnerships that mobilize the resources and acumen of the public and private sectors. As governments seek to rebuild, hundreds of billions will be spent. This adds up to an opportunity to rethink the roles of governments and businesses in shaping how our economies function.

Increasingly, business leaders agree that there are bottom-line reasons, as well as public-interest reasons, for businesses to invest in delivering value to employees, consumers, communities and the environment. Canada’s businesses can and should contribute to building an economy that works for everyone.

A future Ditchley conference could explore these areas in more depth, with a view to developing a playbook for governments that are seeking to more effectively engage businesses in building back better.

Potential questions for further exploration:

Mission-oriented innovation policy

  • What are the barriers to mission-oriented innovation policy, and what is needed to overcome them? Specifically, what policy reform would be needed to facilitate uptake of innovative products, processes and services in key markets, to enable economic, social and/or environmental impact at scale?
  • What missions might correspond with pressing global social or environmental challenges that demand innovative market-based solutions, with different countries’ existing industrial strengths, and with domestic as well as global market opportunities?
  • How much of existing innovation and industrial policy could be redirected towards social and environmental missions?
  • What spillover effects might these investments have?

Public reporting requirements

  • In what areas of corporate social and environmental responsibility would public reporting requirements be most valuable?
  • How could public reporting be leveraged to support the shift to more equitable, inclusive and sustainable economies?
  • What might hold companies back from engaging in public reporting, e.g., on diversity, equity and inclusion, on metrics related to decent work, or on carbon emissions?
  • What should the thresholds be, in terms of public funding or company size, for such requirements to kick in?

Governance structures and partnerships to better share wealth

  • What features of current corporate governance may be contributing to short-termism or a skewed distribution of wealth?
  • What can we learn from existing models of employee ownership and governance? What incentives would catalyze wider adoption of promising models? What pitfalls should be avoided?
  • When should governments take an equity stake in the companies they invest in? When shouldn’t they?
  • What is needed to establish place and sector-based partnerships for rebuilding local economies? What roles could government, companies, service providers, academic institutions, and unions play in building these partnerships?

Sarah Doyle is the Director of Policy and Research at the Brookfield Institute for Innovation + Entrepreneurship (BII+E) at Ryerson University. 

These reflections were informed by Sarah Doyle's participation in the June 2020 Ditchley Conference "The New Economic Insecurity."

A version of this piece was also published in the Toronto Star on November 7 2020.

The conference rapporteur Steven Pearlstein's report on the conference.