Corona disruption has and will have health-related, social, environmental and economic impacts. Health impacts pertain to not only the ones suffering and dying from covid-19, but also to the others physically sick left without sufficient care due to the overburdened health care systems, and the mental illnesses emerging and strengthening due to the measures aimed at curbing the pandemic.
The mental issues of the individuals become social problems, when their reach spans from the individuals to his/her vicinity. Social problems include child welfare issues in many families, the mass unemployment stripping many from their source of income, and the general anxiety that has long-lasting implications to how people function during and after the disruption.
At a first glance, the environmental impacts have been primarily discussed through the diminished pollution of regions shut down in quarantine, and through details, like the dolphins finding their way to the clearer waters of traffic-less Venice. However, the drop in CO2 emissions is temporary, and the more long-lasting impacts are yet to be seen: will the rebuilding era see a renewed vigor in pursuing economic ends at the cost of the environment, or will the mandatory rethinking of the economic fundaments pave way for more sustainable solutions, also from the perspective of the environment?
These three types of impacts have inherent value. The life and health of an individual is always valuable, regardless of age, gender or socio-economic status. Social well-being is the corner stone of any civilization, in which individuals can live their lives in peace and sufficient material welfare. The environment sets the ultimate limits within which humans can live.
The economic impacts are qualitatively different. They are instrumental. Economy by itself has no value – in turn, its value emerges from its effects on the individual, the society and the environment. This qualitative difference is vital to acknowledge and remember both during and after the corona disruption. Economy is critically important – but not for the sake of economy, but for the sake of its impacts on the well-being of individuals, society and environment. This means that the survival of the firms is important not because of the firms, but because of what their demise means to humans and societies – and maybe even environment.
Value of firms
A firm is an entity that does not eat, breath or do anything – it is not a living being. The survival of any firm never trumps the survival of even one human being.
However, firms have value through two mechanisms: first, it is a means for procuring the necessary material well-being for the individuals through employment or entrepreneurship, and secondly, its offerings contribute directly or indirectly to the material or mental well-being of individuals or institutions. Making profit is not inherently valuable; instead profits are a signal that the firm produces something that a number of individuals or institutions find valuable enough to want.
In discussing the financial support meant to ensure the survival of the firm, these three distinct things must be kept in mind and acknowledged: 1) are the governments supporting the firms to make it possible for the individuals involved with the firm to maintain their source of livelihood? 2) Are the governments supporting the firms to ensure that their offerings, deemed valuable for a functioning society, continue to be available also through the era of disruption? 3) Are the governments supporting the firm for the firms to be able to make profit?
It is notoriously difficult to ensure the ‘right’ address of any governmental aid, however the priorities should be clear: the government must maintain a safety net for its individual citizens, and consider its powers to save as many jobs as possible. It also has to ensure the availability of critical offerings during times of crises. The firms with fewer jobs and offerings more pertinent in less dire times will suffer most. This is tragic from the perspective of the myriad SME firms constituting a backbone of Finnish economy who will be left to fend for their own in any way they can.
In the sister blog of this one, the people from CCR will today start following the path of eight such companies as they strive to survive and thrive during the ongoing crisis. Join their journey here.
A few words for the entrepreneurs
The wave of bankruptcy seems unavoidable. Many of the firms valuable as a means for making a living to the entrepreneur and to the employees, and as a source of such offerings that are found appealing during easier times do not receive the aid necessary to tide them through this time of stagnation. The impacts of a bankruptcy are dramatic in terms of both material well-being and the human suffering: it is emotionally devastating to lose something one has invested a lot of blood, sweat and tears in.
However, there is something that even a bankruptcy cannot wipe away: the human ingenuity and endurance. If someone has been able to develop a firm and a business once, those capabilities will not vanish. Quite the contrary, living through also the end of the life-cycle of a firm is a notable learning opportunity – while it certainly might not be the first thought, nor consoling at the darkest hour.
There will be a time for rebuilding, a time when individuals emerge from their respective hiding holes to enjoy life and all it can offer. The individuals with entrepreneurial spirit and knowhow will have abundant opportunities for starting anew, for creating new thriving businesses based not only on the experiences of building a business once, but also from the lessons learned about unforeseen surprises. It is difficult to maintain hope when all seems black, but fortunately entrepreneurial nature is often also an optimistic one, seeing opportunities where other see challenges, potential where others see risks. Holding on to that hope and optimism is an asset no external event or actor can ever take away.
Still without the crystal ball, I predict that the firms we will see emerging when the dust settles are more ingenious, more resilient, more sustainable and more valuable to the individuals, society, and maybe even the environment, than ever before.