Coordinating international economic priorities revitalizes lagging multilateral cooperation.

First, fighting rampant inequality cannot be achieved without fiscal redistribution and increasing the progressiveness of income taxation schedules. Adequate enforcement of corporate taxation, especially multinational enterprises (MNEs), is equally important. Better taxation can redistribute a portion of the rents accruing to big corporations and help build up tax bases, especially in developing countries. Nonetheless, this does not solve structural problems, such as the persistent productivity gap between small and medium enterprises (SMEs) and large firms, which is an important driver of the observed rise in inequality, including wage inequality.

The COVID-19 pandemic not only has increased inequality within countries, but it has also upended public budgets in many developing economies, exposing their sovereign debts to global financial instability. These economies have faced more limitations than developed countries in their efforts to mobilize domestic fiscal resources to respond to the pandemic. This, too, is one more example of the dangerous global divide between the haves and the have-nots. One first step in overcoming this divide was made by the decision of the G20 and the Paris Club to suspend bilateral debt service repayments for a select number of vulnerable developing countries. A much more ambitious multilateral approach to debt restructuring and relief is needed. This should aim at substantial redemption schedules for public external debts of developing economies, along with expanding the use of Special Drawing Rights (SDRs) and Overseas Development Assistance (ODA) to support national development strategies. As stated by Pope Francis, “it is important that ethics once again play its due part in the world of finance and that markets serve the interests of peoples and the common good of humanity2 ”. In fact, we should reaffirm that facilitating good global governance is an essential ingredient for an international environment capable of promoting sustainable development.

A more ambitious approach and rebalancing of the multilateral system are also needed to enable developing countries to harness policy space for structural transformation and convergence. Inequality, in fact, further blocks their successful integration into the global economy. Strengthening international cooperation and providing every country with the adequate means to cope with the current challenges would represent an investment in systemic resilience.

Health and access to medications and vaccines is yet another area characterized by significant inequalities that could pose significant repercussions in the future and dangerous risks for systemic resilience. In the rapidly evolving pandemic scenario, a waiver on World Trade Organization (WTO) intellectual property rules, as proposed by South Africa and India, and supported from the very beginning by the Holy See, would be a vital and necessary step to end this pandemic, by enabling adequate and rapid access to vaccines, diagnostics and treatments for all countries. In particular, given the different technologies and challenges related to COVID-19 vaccines, such a waiver should be combined with ensuring the open sharing of vaccine know-how and technology.

Finally, in the quest for climate stabilization and climate justice, necessary investment in decarbonization of our economies and making sufficient funds available to achieve this end, represent an opportunity to channel resources toward those areas in greater need of industrial restructuring. In addition, it is crucial that we find ways to reconcile climate, industrial and social policy within a strategic and integral perspective. In view of the current climate trends, transformation to a more sustainable economy requires enhancing the ability of countries and economies to adapt to higher temperatures, thus necessitating a better understanding of how trade and development will be affected by a warmer world. Mitigation and adaptation are two sides of the same coin in the fight against global warming, and they need to be complemented by facilitating adequate implementation in developing countries.2

Conclusion

The extreme inequality that has emerged in recent decades is underpinned by an individualistic ideology that has abandoned the notion of the common good in a common home with common horizons. Investment and prosperity have been delinked from notions of a social contract and a commitment to a caring society; rather, today they are perceived merely from the perspective of sources of profit. Pope Francis warned that “[r]adical individualism is a virus that is extremely difficult to eliminate, for it is clever. It makes us believe that everything consists in giving free rein to our own ambitions, as if by pursuing ever greater ambitions and creating safety nets we would somehow be serving the common good” (Fratelli tutti, 105).

In this context, mutual debt has become the glue that holds our increasingly segmented and anxious communities together. However, as more and more households, firms and governments have become dependent on borrowing against a backdrop of slow productivity growth, stagnant wages, and precarious employment, debt has turned into a solvent, corroding the trust and solidarity on which a fair and healthy society depends.

A new ethics of the common good is necessary. It forms the basis for policymaking capable of both tackling the structural inequalities behind our deeply divided and increasingly fragile world and unleashing the spirit of human ingenuity and creativity, which is urgently needed to build back better from the devastation of the Covid-19 pandemic.

Such an ethical approach to development has to be embodied in a new multilateral architecture that would allow us to turn the page on years of selfishness and loss of civic values and culture. Over the last four decades, hyper-globalization has represented the guiding narrative of international relations, in which the territorial power of strong States has become intertwined with the extra-territorial power of large footloose corporations. As a consequence, the international community has been completely unable (or, even worse, unwilling) to put forward comprehensive proposals to alleviate the difficulties of poorer countries and, in particular, of the poorest communities.

Given the overwhelming impact of the COVID-19 pandemic, the call for a global partnership for sustainable development goes well beyond the moral commitment to “leave no one behind”. In an increasingly interconnected world, it also must be rooted in long-term consideration and action related to global public goods, potential spillovers across nations, and, ultimately, to the world’s systemic resilience. In line with this, it is now time to recover the notion of interdependence and to re-build multilateralism around the ideals of social justice and mutual responsibility among and within nations. Only in this way can we hope to calibrate the global economy toward a twenty-first century vision of stability, shared prosperity, and environmental sustainability, and ensure a resilient and prosperous future for all.