“Not By Profit Alone,”an online conversation on rethinking work, business, and economy in a post-COVID world, suggested that post-pandemic prospects depend on how governments and citizens deal with social and economic difficulties that were already developing years before the virus struck.

Anujeet Sareen, a portfolio manager at Brandywine Global who moderated the discussion, began by noting that shocks to the economy “tend to put a spotlight on vulnerabilities that already existed.” Since the 2008 financial crisis, uncertainty and instability have lingered, and, Sareen said, “there isn’t a clear sense of what’s next.”

The panelists reflected on possible paths beyond the persistent problems exposed by the present emergency. Ratna Sahay, Deputy Director of the Monetary and Capital Markets Department at the International Monetary Fund (IMF), asserted that despite improved monitoring and regulation of global systemic risk post-2008, the problem of banks that are “too big to fail” has not been resolved.

Indeed, in Sahay’s view, since the 1990s, expanding financial sectors have hindered growth in many advanced economies by spurring boom-bust cycles, diverting talent away from more productive economic activity, and accumulating special “political clout”—all further exacerbating tendencies towards financial excess, income and wealth inequality, and “the disconnect between Wall Street and Main Street” that we see today, when “stock prices are at historic highs,” even as employment rates and household incomes have fallen.

Burgeoning inequality was also a focus of remarks from Raghuram Rajan, the Katherine Dusak Miller Distinguished Service Professor at the University of Chicago’s Booth School and former Chief Economist and Director of Research at the IMF. Though in Rajan’s view inequalities of wealth and income reflect problems developing “for the last twenty to thirty years,” these were ameliorated in the US until 2008 by easy access to credit, enabling investment in housing assets that would (ostensibly) appreciate indefinitely. This path to personal wealth closed for much of the US population in 2008.

At the same time, Rajan emphasized, “a profound inequality of place” has developed in industrial countries. Wealth and power are concentrated in cities like New York and San Francisco, while "places that have lost their main manufacturer partly as a result of trade…have been swept by hopelessness” as local schools and infrastructure have deteriorated and drug abuse has escalated, leading to widespread “deaths of despair” (as recounted in the 2020 book by economists Angus Deaton and Anne Case).

These fractures and disparities are, according to Rajan, symptoms of the loss of community, “the place where people come together to create local institutions,” a factor often neglected by leaders and policy makers whose analyses and prescriptions focus only on the market and the state. Community disintegration, Rajan said, makes it impossible for many in the “underdeveloped” areas of the US to participate in civic life or in national and international markets.

The economic significance of community was also the subject of remarks by Stefano Zamagni, Professor of Economics at the University of Bologna and President of the Pontifical Academy of Social Sciences. Zamagni too emphasized that the most socially significant economic activities cannot be understood or evaluated according to the typical market/state dichotomy or default standards of “efficiency.”

Social life, Zamagni argued, depends not only on state-mandated redistribution of goods and marketized contractual exchanges, but on reciprocal interactions in which participants “give without losing” and “take without taking away.” This kind of spontaneous sharing, which prevails among members of a family, also occurs naturally in other areas of economic activity—such as cooperative ventures, civic organizations, and small businesses, which flourish through the proliferation of personal encounters and commitments.

According to Zamagni, cooperative firms, which have played a central role in the economic life of Italy and other European countries for over 150 years, are not necessarily the most efficient enterprises, but they are "fundamental for community building.” Zamagni argued that at the international level, policy makers at institutions like the IMF and World Bank need to consider the effects of their prescriptions on local communities or risk damaging their “democratic legitimacy.”

The question of how to reconcile the needs and habits of communities, the laws of individual countries, and the still more abstract dictates of global governance was the focus of remarks by all three panelists. Rajan agreed with Zamagni on “the need to reassert democracy” in the economic realm. “Do corporations need a boundary-less world in order to operate,” Rajan asked, “or can they operate really well…with reasonable boundaries, where people have the democratic right…to set up their own rules and regulations?”

Invoking the Catholic principle of subsidiarity, Rajan argued that leaders and policy makers should “push powers down to the lowest levels at which they can be exercised efficiently.” The absence of sensitive coordination of national and international policies with the needs of local communities is evident, according to Rajan, in the problem of “underdevelopment” in advanced industrial economies, where many largely abandoned areas “would not be out place in a third-world country.”

Near the conclusion of the discussion, Rajan argued trenchantly that in the aftermath of the pandemic, the application of indiscriminate “stimulus” would not restore “the areas that have been left behind.” “Development,” Rajan asserted, “is not stimulus—development needs much more careful work on local institutions and local infrastructure, essentially creating the possibilities of local growth.”

The contributions of Rajan, Zamagni, and Sahay all pointed to the formidable demands of rebuilding post-pandemic. The task will require the voluntary initiatives of countless individuals, the creative proposals of businesspeople and local civic leaders, and the attentive flexibility of policy makers at the national and international levels.

The prospects for such a concerted response in the US remain uncertain. Rajan contended that “the policy establishment in the Unites States still does not seem to recognize” the need for targeted and carefully coordinated development programs, instead focusing on massive support to asset markets and on the possible provision of another round of universal stimulus payments.

The contributors to “Not by Profit Alone” did not offer viewers the consolations of facile optimism. What was encouraging about the discussion was the clarity and honesty of the assessments, which reflected the trust of the panelists in each other and in their audience.