Once or twice in a century, a major crisis provokes a paradigm shift, a transformation of the overarching set of rules and assumptions that govern economic and social systems. This becomes imperative when solutions that worked in the past are no longer effective, and when new problems threaten to overwhelm social and political institutions. Paradigm shifts are a wrenching 25-30 year process followed by decades thereafter when a new set of rules and assumptions is dominant. The pattern then repeats itself.
A high level of uncertainty is an excellent indicator of the need for a paradigm shift. This was already very high after the financial crash of 2008. Rising disparities in incomes and across regions, global warming and more frequent and costly catastrophes have pushed it higher. When the pandemic abates – and who knows when that will be – we will truly be in unknown territory. Uncertainty can be paralyzing, especially when governments are expected to respond to several overlapping crises. Sector-by-sector problem-solving only provides short-term relief.
This essay is not an outline of what the next paradigm will look like following the Covid-19 pandemic. Perhaps it will be focused on environmental and natural risks; no one yet knows. Instead, this essay is about the nature of paradigm shifts, why crises are periods of rupture, why the 20th century paradigm is ill-adapted to meet 21st century challenges, what those challenges are, and how to better cope with the transition that is already under way.
This study was written by Josef Konvitz, who retired from the OECD in 2011 as Head of the Regulatory Policy Division. He joined the OECD’s Urban Affairs Division in 1992, and led it from 1995 to 2003. Trained as an historian, Konvitz was on the faculty of Michigan State University from 1973 to 1992. He is also an Honorary Professor at the University of Glasgow and Chair of PASCAL International Observatory. Josef Konvitz just published Don’t Waste A Crisis (Fondation pour l’innovation politique, April 2020). He is also the author of Cities and Crisis (Manchester University Press, 2016) which draws on decades of academic study of and professional engagement in managing crises.