Covid-19 has laid bare the world’s flawed economic system

For those of us not involved in the incredible, heroic work of the country’s frontline staff during this unprecedented pandemic, many are discovering they have quite a lot of time on their hands. Passively watching the world transform before our eyes, unable to partake in any significant way, is certainly a surreal sensation. It does, however, provoke thoughts about what that world will look like once Covid-19 has run its destructive course.

For all its achievements, the current pandemic has laid bare the flaws of globalisation which dictates the world economy today. Global reliance on China for medical supplies and its subsequent impact on the struggle to manage the coronavirus-induced health crisis is the most direct example. The broader economic standstill brought on initially by the shutdown of just a few significant nations, as companies find they are totally reliant on goods from other parts of the world to operate, reveals the vulnerabilities inherent in a globalised economy.

If it weren’t for his shameful and pathetic response to the crisis in the US, Donald Trump may well have already begun advancing the rhetoric of reshoring manufacturing in America, often held up as one of his main goals. Whilst globalisation has undeniably lifted millions out of poverty and overseen historic rises in living standards, it is hard to imagine that there won’t be huge pressure for many countries to bring back a sizeable proportion of production. National resilience may well be prioritised over lower costs.

Not unexpectedly publications like the Financial Times have found the solution to the crisis in the advancement of globalisation and economic liberalisation. They defended the failure of the European Union to facilitate the free-flow of medical equipment to its hardest-hit countries as a ‘lapse’. Even if this were true, it ignores the extent to which the EU has been a passenger in this crisis. That a terrifying, totalitarian Chinese state have sought to replace them in offering help to European nations and simultaneously expand their global influence is worrying in itself, but also undermines the fabric of the organisation. This pandemic is a test the EU are currently failing. The reinstatement of borders and heightening of national geopolitics has affirmed the primacy of the nation state as society’s fundamental building bloc. Governments have acted outside the parameters of supranational institutions in their attempts to get on top of the spread of the virus.

A renewed nation state framework has also meant increased scrutiny on specific national responses. In the UK, plenty of ire has been directed towards those exploiting the government’s furlough scheme. Most recently Premier League football clubs like Liverpool and Tottenham have, quite rightly, come under fire for using public money to place non-playing staff on furlough. No doubt the logic of their ultra-wealthy owners will be that it is their imperative to use all options available to them to reduce costs and protect value for their shareholders.

It is the same logic used in normal times by multinationals to justify moving their headquarters to offshore tax havens, or to cull staff after announcing ginormous profits. Merely a decade after the global financial crisis, it is difficult not to envisage a kickback against taxpayers’ money being used to line the pockets of the wealthiest again. It will undoubtedly prove a momentous test for the integrity of Boris Johnson’s government, who walked into Number 10 on the votes of new working-class supporters.

Whether the Covid-19 outbreak will lead to a complete reshaping of liberal capitalism is very doubtful. What is more likely though is an increasing economic role for the state, which limits unfettered globalisation and balances the market with a degree of self-sufficiency, in order to mitigate against a pandemic of this scale again. Ultimately, then, this will require a refashioning of the current neoliberal relationship between the state and the economy.

How far any changes will happen without the say so of China remains to be seen. They may yet emerge from this as the predominant global superpower, much like the US after the Second World War. There’s an increasing sense that the next few weeks are crucial in the battle to overcome this horrific virus and will have ramifications far beyond the current crisis. However it plays out, the world will look very different on the other side of Covid-19.

Image: TheDigitalArtist via Pixabay

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https://studentnewspaper.org/covid-19-has-laid-bare-the-worlds-flawed-economic-system/

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