M Adil Khan 24 April 2020
As of April 17, 2020COVID 19, a health hazard of unimaginable proportions has infected 2020 1.9 million and killed more than 150000 and counting. However, Australia’s Chief Medical Officer speculates that given that these official numbers are based on those who have been tested and recorded as infected and as large numbers remain untested and unrecorded especially in developing countries, actual number of both infected and deaths are likely to be at least 10 times higher.
The scourge continues to rage and is at its 5th month, with no end in sight. Its costs are heavy. Along with health havocs, pandemic’s collateral damages in non-health aspects are huge, some of which are more visible than others and some are still evolving.
Indeed, COVID 19 is shaking and reshaping the world at multiple levels some of the changes are likely to last long and some may even become permanent.
While the more visible non-health casualties of the virus are economic fallouts, less visible but somewhat conceivable changes may include among others, distancing from neoliberalism, an economic arrangement – a free market and minimum state political and economic ideology – that dominated our ways of life in the past decades, entailing costly consequences.
The pandemic has revealed more starkly the way in some societies where neoliberalism has been embraced more aggressively, reduced the capacity of states to take care of their citizens when they needed them most. The pandemic has also exposed how poor ended up bearing the brunt of the economic fallouts, deepening further poverty and widening of the gap between the rich and the poor.
As a result, COVID 19 may have brought forward the debate on future of neoliberalism and at the same time, the global economic fallouts that have weakened each nation including the rich nations, albeit variedly, may also alter the existing global economic and political order.
The spectrum of despair and the future of neoliberalism
David Lloyd George, former Prime Minister of UK once called the World War 1, “a deluge, a convulsion of nature … bringing unheard of changes to the social and industrial fabric.” Likewise, COVID 19 is also a “convulsion” which is triggering “unheard of changes” at multiple levels but more so, at economic level, within and across nations.
Without any exception, impact of COVID 19 on world economies are devastating. It is making each nation lot poorer and living standards, lot lower. The virus is also making rich less wealthy and some rich may even cease to remain rich and poor poorer.
Terming the crisis “like no other” Chief of IMF warns that 170 of its 189 member states would experience negative growth. Another projection suggests that more than half a billion would join a billion poor that already exists.
In the ensuing economic downturn, Africa would be hardest hit, sub-Sahara would slid back to extreme poverty and South Asia, a growth powerhouse is also expected to descend from pre-pandemic projection of 6.3 % growth per annum to 1.8% to negative growth, meaning millions would be without jobs, food and shelter.
US economy, world’s largest is faltering, people are losing their lives, their jobs – overall, the mood is one of despondency and hopelessness.
China, world’s largest supply chain economy is also reeling. Because of social isolation and dwindling demand of its products from abroad, many of its factories have been shut though given that the Chinese have tackled the crisis reasonably successfully, it has started to re-start some of its factories and economic activities and in some cases, diversified these activities through introduction of new products that are currently in demand.
However, worldwide overall the prognosis is anything but encouraging, we are indeed marching fast towards a major economic catastrophe which if not tackled proactively, strategically, inclusively and innovatively mass despair is inevitable which could easily morph into major political and social upheavals in most parts of the world.
These evolving scenarios imply that post COVID 19 phase is unlikely to be a period of business-as-usual. Indeed, falling economic conditions, growing inequality, continuing despair and distrust with the existing political and economic arrangements would intensify and the current equilibrium of injustices would certainly be challenged. Questions would be asked about the wisdom of the dominant economic theory, neoliberalism, a fee market capitalism that has since morphed into corporate feudalism and profiteering and contributing to intolerable levels of inequality, marginalization of the state and dispossession of the poor like never. The pandemic has revealed that only countries, both rich and poor, that have retained control of social services provisioning – health, education, social protection – are coping better than those that did not. Whereas those, again both rich and poor, that trusted market to deliver social provisions – US more particularly – are failing to come to the aid of their citizens at a time when they needed them most.
Present crisis has also revealed another ugly aspect of neoliberalism’s contribution to gross inequality, system’s biggest beneficiaries, the mega rich who harbour little or no empathy for the less fortunate have been making private arrangements to buy at an exorbitant price “attentive doctor, faster testing, a luxury spot for self-isolation and even an at-home intensive-care setup complete with a ventilator” at a time when common people are going without tests and treatments and when hospitals are struggling to find even the basic facilities like protective gears, ventilators etc.
In view of the above, if there is one message COVID 19 has given quite loudly, it would be that neoliberalism, an ideology that for last few decades has put market ahead of the state and promoted consumerism and materialism at the cost of social equity and environmental sustainability where the deprived and the disadvantaged have been made sacrificial lambs and numbed our moral sensibility, may have reached its use-by date and the “… the crisis: coronavirus could bury it.”
Shifting world order?
In its 2017 Report, World in 2050, Price Water House divided the world growth economies into two major groups, namely the G7 (5 European countries, US and Japan) and E 7, seven ‘Emerging’ economies, led by China, India and Indonesia.
E7 economies were projected to take over the G7 in 2050 where China would be at number 1, US at number 3 and share of 27 European countries combined would constitute a mere 10% of world GDP.
However, COVID 19 has changed the validity of this projection somewhat though given China’s exceptional capacity to respond to crisis and adjust to changing conditions, it is conceivable that after a slow start, its economy would bounce back with new arrangements and its dominance of the world economy in post COVID 19 period is almost a certainty.
G7 countries especially US where thanks to their over reliance on market which over the years has shrunk the state and reduced its capacity to direct and resurrect the economy coherently and co-ordinately, the recovery may take longer and indeed, with Mr. Trump at the White House who according to Arundhuti Roy is “the effluent of a system that went wrong” the recovery is likely to be even more daunting and when and if it does, there is little or no guarantee that it would resume its position at No 1.
Another important dimension that separates E7 from G7 countries is that while most G7 countries accumulated their wealth through colonisation, occupation, plunder and pillage of wealth of other nations, E7 countries especially China has done so through hard work, innovations and competitiveness and the fact most G7 countries especially US do not know anything better, it is conceivable that competence and not confrontation would count in determining economic supremacy in the future competitive world.
COVID 19 has also unmasked quite vividly the global moral divide – during the crisis while some countries extended their helping hands to assist affected countries, others tightened sanctions to deprive some countries of vital medical supplies to ensure that their dying die. Furthermore, Mr. Trump’s recent announcement under false pretexts, of WHO funding cut – which is a proof that to US politics takes precedence over human sufferings – did not go down very well neither with most Americans nor with the international community especially at a time when the world is looking to WHO for universal guidance and technical support to tackle the pandemic. Six of the seven G7 countries have either regretted or condemned Trump’s decision and expressed their solidarity with the WHO. The Guardian has termed Trump’s WHO funding cut, “…an act of international vandalism.” Indeed, WHO funding cut is yet another example of how much US has lost its credibility even among its own allies which is an indication that its tactic of bullying is failing to cut much ice these days.
These global level changes both in terms of shifting economic prowess and moral divides are sure to redefine the post COVID 19 world order, in ways more than one.
Changing dynamics, shifting world?
Indeed, devastations of COVID 19 have been multifaceted and so are its after-effects – firstly, we may be in for a prolonged period of uncertainty and lives in every country and of every Individual – rich and poor – would be altered at many levels; secondly, the crisis has proven once for all that neoliberalism as the policy framework of economic, social and political organization of societies which reduced the role of state and conceded among other things, vital public utility functions to the market has been a grave mistake and we have been paying grievously since, is asking for change; and finally, by weakening the economic prowess and exposing the moral depravity of the current hegemonic world order – a post-colonial, post war creation – which has only fostered injustices, inequities and violence may have reached its limits and COVID 19 may have paved the way for the world to reflect and reject the status quo of injustices and mobilize for a better, more equitable and a just world order in the coming days!
Dr. M. Adil Khan, is an Honourary Professor of Development Practice at the School of Social Science, University of Queensland, Brisbane (Australia). He is also former Chief of Socio-Economic Governance and Management Branch of the Division for Public Administration and Development Management of the United Nations Department of Economic and Social Affairs (UNDESA), New York.
The article was originally published on counter currents.org.