Can capitalism be reimagined?

Reimagining Capitalism in a World on Fire

A new book says that reimagining is possible. Rebecca Henderson is a well known reference for her studies on pharmaceutical innovation for decades. Beyond pharma, she is recognised by her works on innovation in general. Now, she has released a book on Reimagining Capitalism and this may sound a huge goal. Rebecca provides clear hints about what can be done, and says:

I spend a good chunk of my time now working with business people who are thinking of doing things differently. They can see the need for change. They can even see a way forward. But they hesitate. They are busy. They don’t feel like doing it today. It sometimes seems as if I’m still at the bottom of that ladder, looking up, waiting for others to take the risk of acting in new and sometimes uncomfortable ways. But I am hopeful. I know three things.
First, I know that this is what change feels like. Challenging the status quo is difficult—and often cold and lonely. We shouldn’t be surprised that the interests that pushed climate denialism for many years are now pushing the idea that there’s nothing we can do. That’s how powerful incumbents always react to the prospect of change.
Second, I am sure it can be done. We have the technology and the resources to fix the problems we face. Humans are infinitely resourceful. If we decide to rebuild our institutions, build a completely circular economy, and halt the damage we are causing to the natural world, we can. In the course of World War II, the Russians moved their entire economy more than a thousand miles to the east—in less than a year. A hundred years ago, the idea that women or people with black or brown skin were just as valuable as white men would have seemed absurd. We’re still fighting that battle, but you can see that we’re going to win.
Last, I am convinced that we have a secret weapon. I spent twenty years of my life working with firms that were trying to transform themselves. I learned that having the right strategy was important, and that redesigning the organization was also critical. But mostly I learned that these were necessary but not sufficient conditions. The firms that mastered change were those that had a reason to do so: the ones that had a purpose greater than simply maximizing profits. People who believe that their work has a meaning beyond themselves can accomplish amazing things, and we have the opportunity to mobilize shared purpose at a global scale.

 The titles of the chapters speak by themselves. You'll get the flavour of a great book, and a personal message (in chapter 8). And don't miss chapter 4 on Aetna CEO and the purpose of the firm.

1 “WHEN THE FACTS CHANGE, I CHANGE MY MIND. WHAT DO YOU DO, SIR?”
Shareholder Value as Yesterday’s Idea
2 REIMAGINING CAPITALISM IN PRACTICE
Welcome to the World’s Most Important Conversation
3 THE BUSINESS CASE FOR REIMAGINING CAPITALISM
Reducing Risk, Increasing Demand, Cutting Costs
4 DEEPLY ROOTED COMMON VALUES
Revolutionizing the Purpose of the Firm
5 REWIRING FINANCE
Learning to Love the Long Term
6 BETWEEN A ROCK AND A HARD PLACE
 Learning to Cooperate
7 PROTECTING WHAT HAS MADE US RICH AND FREE
 Markets, Politics, and the Future of the Capitalist System
8 PEBBLES IN AN AVALANCHE OF CHANGE
 Finding Your Own Path Toward Changing the World

QALYs and COVID

Revisiting the Economic Cost of Flattening the Curve

The Incidental economist blog provides information regarding QALY in the current pandemic. Forget the cost per QALY (so difficult to estimate in my opinion) and take only the 6,4 QALYs per death avoided.

It updates previous estimates and says:

The table below summarizes the previous calculations and current updates. Our revisited analysis shows that, as the shutdown continues, the cost per QALY gained increases exponentially due to the exponential growth in the total cost of both forgone productivity and business failure.

We previously emphasized that a key challenge in making calculations of this type is the uncertainty around the data inputs. Six weeks later, this still holds true, particularly for the range of QALY losses without a shutdown, i.e. the predicted corona-related deaths in the absence of intervention.

One interesting aspect of this analysis is that as time goes on, the cost per QALY gained will become higher and higher. This is because the net gains will diminish — the lives saved remains constant, but the offsetting life years lost due to other factors increase — while the costs increase exponentially. The key number that remains unknown is the relationship between the length of the lockdown and the number of lives lost.
In our first post, we concluded that the shutdown would meet conventional standards of cost effectiveness only if the deaths avoided was on the high end of the possible range and the costs on the low end — an outcome that seemed unlikely. Revisiting the issue, it is now clear that the cost per QALY gained from the shutdown will be outside the conventional range of acceptability even at the high end of deaths avoided. How far outside the range the shutdown policy will ultimately prove to be is unknown.

Searching for a healthy ageing

The Biology of Inequalities in Health

The Lifepath research consortium aimed to investigate the effects of socioeconomic inequalities on the biology of healthy aging. The main research questions included the impact of inequalities on health, the role of behavioral and other risk factors, the underlying biological mechanisms, the efficacy of selected policies, and the general implications of our findings for theories and policies. 

 The impact of socioeconomic condition on premature aging is mediated by known behavioral and clinical factors and intermediate molecular pathways that Lifepath studies have revealed, including epigenetic clocks (age acceleration), inflammation, allostatic load, and metabolic pathways—highlighting the biological imprint (embodiment) of social variables and strengthening causal attribution.

 There is still a wide gap between social and natural sciences, both on methodological and conceptual grounds. Natural sciences focus in particular on biological mechanisms and outcomes, i.e., they address “zoe” (biological life), while social sciences address “bios” (biographical life), if we refer to the terminology used by Ronald Dworkin. In fact, epidemiologists aim to connect zoe and bios in meaningful ways, though this attempt has rarely become explicit. An exception is the work of Nancy Krieger who proposed the concept of “embodiment.” Biology and biography (124) meet in the health status of an individual, depending on social position at a given age. These concepts start to be incorporated into epidemiological research, via the integration of social contexts and biomarkers in a life-course approach. The results from analyses carried out within Lifepath suggest that the socioeconomic environment, from early life and across the life-course, is an important risk factor for health and exerts its effects via intermediate biological mechanisms.

Great research!

PS. Austin Frakt in NYT Putting a Dollar Value on Life? Governments Already Do

Edward Hopper

What is going on here?

 Radical Uncertainty
Decision-Making Beyond the Numbers

The question ‘What is going on here?’ sounds banal, but it is not. In our careers we have seen repeatedly how people immersed in technicalities, engaged in day-to-day preoccupations, have failed to stand back and ask, ‘What is going on here?’ We have often made that mistake ourselves.

This is precisely the question that Mervyn King and John Kay pose in their new book Radical Uncertainty. Terrific reading for lockdown days. Below, I've selected some statements:

 The difference between risk and uncertainty was the subject of lively debate in the inter-war period. Two great economists – Frank Knight in Chicago and John Maynard Keynes in Cambridge, England – argued forcefully for the continued importance of the distinction. Knight observed that ‘a measurable uncertainty, or “risk” proper, as we shall use the term, is so far different from an unmeasurable one that it is not in effect an uncertainty at all’

The title of this book, and its central concept, is radical uncertainty . Uncertainty is the result of our incomplete knowledge of the world, or about the connection between our present actions and their future outcomes. Depending on the nature of the uncertainty, such incomplete knowledge may be distressing or pleasurable. I am fearful of the sentence the judge will impose, but look forward to new experiences on my forthcoming holiday. We might sometimes wish we had perfect foresight, so that nothing the future might hold could surprise us, but a little reflection will tell us that such a world would be a dull place.
We have chosen to replace the distinction between risk and uncertainty deployed by Knight and Keynes with a distinction between resolvable and radical uncertainty. Resolvable uncertainty is uncertainty which can be removed by looking something up (I am uncertain which city is the capital of Pennsylvania) or which can be represented by a known probability distribution of outcomes (the spin of a roulette wheel). With radical uncertainty, however, there is no similar means of resolving the uncertainty – we simply do not know. Radical uncertainty has many dimensions: obscurity; ignorance; vagueness; ambiguity; ill-defined problems; and a lack of information that in some cases but not all we might hope to rectify at a future date. These aspects of uncertainty are the stuff of everyday experience.
Radical uncertainty cannot be described in the probabilistic terms applicable to a game of chance. It is not just that we do not know what will happen. We often do not even know the kinds of things that might happen.

Our ability as humans to deal with radical uncertainty is the product of our much greater capacity for social learning and greater ability to communicate relative to other species. We are social animals; we manage radical uncertainty in a context determined by the knowledge we have acquired through education and experience, and we make important decisions in conjunction with others – friends, family, colleagues and advisers.
Reference to the ‘wisdom of crowds’ makes an important point while missing another. The crowd always knows more than any individual, but what is valuable is the aggregate of its knowledge, not the average of its knowledge.

CRISPR Technology explained by Dr. Martínez Mojica

El impacto de la tecnología CRISPR en biomedicina.

Sesión científica celebrada en la sede de la Reial Acadèmia de Medicina de les Illes Balears el 9 de julio de 2019 a cargo del profesor Francisco Juan Martínez Mojica, microbiólogo, investigador y profesor español titular del Departamento de Fisiología, Genética y Microbiología de la Universidad de Alicante.

The narrative of pandemics

Pandemics, Publics, and Narrative

This is a book that explains the lived experience of general publics affected by the 2009 swine flu pandemic, establishes an interesting narrative approach to health communications and public health. Good read for nowadays.

In what follows we draw out three key lessons for public engagement with pandemic threats: persuasion narrative and its implications; how individuals addressed themselves to biopolitical citizenship in light of the 2009 pandemic, and; biopolitical metaphors— contagion and immunity— and their association with embodied individualism. We also consider a more general question of what our research suggests for the turn to narrative in public health with reference to the global nature of pandemics.

Just like now.

The transformative power of a pandemic

Humanitarian Economics
War, Disaster and the Global Aid Market

From the chapter of Disaster Economics

Referring to the notion of creative destruction developed by the Austrian economist Joseph Schumpeter in the mid-twentieth century,several scholars argue that disasters stimulate economic growth in the long run. Disaster precipitates the destruction of the old and thus makes way for the new faster than would otherwise be the case (see Chapter 7 on the transformative power of disasters). Based on a Schumpeterian model of endogenous growth, Aghion and Howitt find that disaster accelerates capital replacement
associated with technological change, which increases productivity and generates a positive economic impact. Under endogenous growth theory, the destruction brought about by disasters can be seen as a form of accelerated capital depreciation that leads to the rapid adoption of new technology and infrastructure upgrading, which increases productivity. This is part of the theoretical foundations behind building back better (BBB).

We still don't know if this will be the case with our pandemic.
These are the remaining chapters.

Introduction
1.Reason, Emotion and Compassion
2.The Humanitarian Market
3.War Economics
4.Terrorism Economics
5.Disaster Economics
6.Survival Economics
7.The Transformative Power of Humanitarian Crises