It was April’s fool day when I started penning down this article.
To mark it how false doctrines that deal with misinformation and disinformation are deceiving and to provide useful insight on how to unveil that.
What this coronavirus crisis has brought to political economy discourse is the destruction of a neoliberal assertion: markets have their own invisible hands and are best left alone to find solutions, quickly and efficiently, to any big problem.
With this pandemic crisis rapidly unfolding, neoliberal rhetoric is ringing hollow and the emptiness of its ideology is completely exposed.
The crisis proved crystal clear that getting through a massive health-cum-financial crisis and its impact on societies and economies is only possible through the strong and visible hand of the state and with the very well calibrated co-operation — among governments, scientists, business and the public.
Moreover, it brought to the fore vital issues of social transformation and urgent need for solidarity, communal action, and public policies to support workers and the poorest faced with lockdowns, unemployment, and economic collapse.
The terms ‘solidarity’ and ‘community of fate’ have become widely used.
For the first time in years we witness high rise in social capital shares represented in widespread trust in government decisions.
People watch at television scientific evidence is released next to reports about political actions.
In an unprecedented way, monitoring real-life developments—the number of infected people or the latest evidence — precedes the reporting of stock markets.
News organs which formerly defended individual freedom against any suggestions to change lifestyles are shifting the moral consensus by condemning the hedonists who still splash out with no interest in the consequences for others or the health system. (Social Euorpe, March 2020 )
More to the point, another key visible feature of this global crisis that makes it unique is the evidence given to importance of institutional capital depicted by the policy response among states with different modes of governance and the credibility and preparedness of the state in each of them.
It was clearly noticeable that Development States of the emerging economies in Asia and the Welfare States of Scandaniavian countries were faring better by far and achieving more efficient policies to combat the disease compared to those of the Neoliberal States in Europe and especially in the United States.
It is a lesson learned in institutional economics.
On the Global Health Security Index (GSHI), a report card that grades every country on its pandemic preparedness, the United States has a score of 83.5 — the world’s highest.
Rich, strong, developed, America is supposed to be the readiest of nations.
That illusion has been shattered.
“Rudderless, blindsided, lethargic, and unco-ordinated, America may end up with the worst outbreak in the industrialised world.” (The Atlantic, 25 March 2020)..
The difference in performance between these three modes of governance has rapidly swept aside ideals of Milton Friedman and Friedrich Hayek of ‘minimum government’ that fuelled the monetaristic and national account based outlook to development economics in the last four decades.
It also washed away the flawed nature of financialised capitalism.
The nation state emerged again as the regulator of the economy that command enormous power.
It was not difficult for many on the Left to welcome such obvious differences in state action, thinking that the crisis is a moment of just transition, the “return of Keynesianism” and the death knell of neoliberalism.
One can agree with such perspectives, since this crisis has led structurally to a war economy condition. Post-war economies as history has taught us usually lead to societal changes.
But one can qualify.
The measures taken to deal with the crisis might also risk resistance which will spur, an authoritarian controlled capitalism, one that embarks on re-engineering political spaces and populations to protects corporate interests while offloading the costs onto the rest of people.
This possible scenario that might happen in many countries (already in Hungary ) is important for us to understand how the images of threats and enemies that will be created in this war economy exceptionality in order to ensure the reproduction of the system and enforce linearity for the return to business as usual.
“America vs. Socialism” was the theme of the Conservative Political Action Conference last month.
Addressing the audience, Larry Kudlow, the president’s top economic adviser and part of the White House’s coronavirus task force made a statement that does not inspire optimism.
For him “The virus is not going to sink the American economy,”.“What is or could sink the American economy is the socialism coming from our friends the democrats on the other side of the aisle. (The Atlantic march 2020).
In my opinion there is no anti-capitalist tone in the air now or in the future, even in the discourse of the extreme left.
But we all should agree that this pandemic global shock is a moment of a radical tilt towards post-liberalism.
The crisis is morphing into a full-blown capitalist crisis.
Countries around the world, north and south economies alike, have not experienced since the 1930’s the combination of a breakdown in global trade, depressed global commodity prices, and a synchronous economic downturn.
Global conditions worsened further as the crisis triggered a panic condition in the money market and a nose diving stock-market collapse and gigantic loss that washed away one-third of its value in one month duration in major industrialised capitals.
The loss in the United States alone translates to the equivalent of one-third of its GDP.
The lockdowns of entire cities and distancing policies that are taken to save lives, bare store shelves, shortage of hospital beds also are carrying an enormous economic and social cost.
Unemployment in the United States spiked from historical low at 3% to reach 32% in the next quarter according to the federal reserve calculations.
Clearly, this is a “whatever-it-takes” moment for large-scale, outside-the-box macroeconomic financial, fiscal and monetary policies and a bottom up social policy.
The world has entered a reality unknown outside conventional wartimes.
In fact humanity is facing another war, but this time on different rules of engagement.
For social scientists, a paradigm shift in their thinking with new tools of analysis is utterly needed.
During the shock months, with the goal to flatten the curve of infections, a lot of measures have to be reactive.
But proactive and foresight-based measures are needed to guide the recovery and to render clear vision on its direction.
This is an important ingredient in times of high uncertainty.
This is also the time for economists to revisit normatively conventional wisdom of orthodox economic thinking and to provide heterodox perspectives suitable for future sustainable and equitable development for post war situations.
Moments of crisis always have their fear-mongers and skeptics.
The role of progressive public intellectuals is to provide sober analysis.
“Only on this basis could alternatives be proposed, including large-scale measures such value creation through designing industrial policy to address the weakness of production, facilitating a green transition, dealing with income and wealth inequalities, and, more importantly, confronting financialisation by creating public financial institutions”.(C. Lapapavitsas, Jackobin 27 March).
The more outspoken the intellectuals will to find paradigms and instrumental measures capable of holding the system from bouncing back and draw up policy options to steer it forward — into sustainable capitalism and thus more resilient societies which leave no one behind — the more clarity of vision for a new social contract and new relationship between the state, the market, and people and how that will emerge, adapt and consolidate.
The theory of post-liberal change should be holistic.
In fact this is not a health-cum-financial crisis alone.
It is a whole-of-the-system societal crisis.
The social organisation of contemporary neoliberal capitalism was shown to be dysfunctional even from a social engineering point of view.
As we can see right now, as the pandemic rapidly unfolds, the focus is on immediate responses and short-term time horizons.
This is for crucial reason but it is not enough.
The policy responses can be usefully identified from three interlinked terms (short, medium and long) and three main channels (demand, supply and finance supported by new social and institutional capital). However, the challenge should not be framed as simply overcoming a disruptive shock and returning to an otherwise desirable pre-crisis growth path.
To expect life to go back to how it was in 2019 would be wrong.
Rather, it is necessary to align the responses to the pandemic shock in a way that reorients societies and their economies in a more caring, welfare oriented, inclusive and financially stable direction.
Let me at the end of this article outline how the nexus linked twin crises – health and economic – will change societies in many ways in the future.
In particular: First, a major change in the role and the shape of the developed world economy as a result in the post-pandemic war which will be institutionally different.
The nation-state that has taken the lead to combat the disease and spend trillions of dollars will keep its upper hand in social and economic engineering.
Most Western economies will be moving towards a larger role for capable and accountable state.
There will be a return to the welfare state as it was established after World War I, with more state support for essential services, social immune system (decent social welfare system and the alleviation of extreme poverty and inequality), welfare for the out of work, fixed income groups, informal sector workers and the homeless. 
In the aftermath of this pandemic crisis, people will watch and verify the things to be considered the most basic needs of life that moved beyond their reach while the financial market chorus and econometricians assure them that GDP bouncing back.
The crisis will create a sphere of social accountability and active citizenship. There will be a greater sense of social solidarity, collaborating into far reaching participatory democracy and a new social contract The lesson here is urgent and sobering: to rescue societies and economies from the next, inevitable crisis and to foster long term economic growth and equitable development.
There will be a need to reform capitalism, rethink the role of public policy and the importance of the public sector, and redefine how value is measured in society, and to identify which activities are creating value, which are extracting it, and which are destroying it? For the financial sector, there will be a gradual role changing from mobilising resources (and being viewed as an unproductive sector) to generating its own revenue and profit (and hence being seen as a productive sector and vital ingredient of the country’s GDP). Lowering value extraction through rent-seeking was already overdue and cannot be postponed if incomes are reduced massively.
What serves the financial markets will serve the performance of the real economy and society as a whole. (Social Europe March 2020)
Second, there will be a very sharp decline and a change in shape in global trade.
This pandemic will inevitably have an enormous impact on the economy, trade, and consequently on jobs and people’s well-being. Trade is what allows for the efficient production and supply of basic goods and services, medical supplies and equipment, food and energy that people need.
Keeping trade open and investments flowing will be critical to keep shelves plentiful and prices affordable.
Global response will develop to tackle a global challenge of this pandemic since no country is self-sufficient, no matter how powerful or advanced, it may be. (WTO March 2020)
The third change will be paying attention to planetary boundaries and the social green deal.
The challenge for the next few years will be for a commitment to address shared social and environmental problems before they manifest in crises like this one.
Wasteful economic growth based on fossil fuels and the destruction of ecosystems will not continue.
Pursuing recovery plans whose success is only measured by a quick GDP growth return at all costs will therefore be minimised and then avoided.
New differentiated measures of wellbeing and true-cost accounting will be introduced, with respect to the ecological and health impacts of the business models and production chains behind economic activity.
High wellbeing with low ecological footprint will be the new competitiveness benchmark of development vision and applied policies.
Coming out of the coronavirus crisis well can only work with a new generational contract, which acknowledges how solidarity to save lives goes in both directions.
Adding the insights from research on planetary health (relationships between changes in ecosystems and humans) makes this very clear: eliminating animal habitats increases zoonotic spillovers of viruses on to humans and their immune systems, while public health is run down through pollution, low-nutrition food and hazardous chemicals.
New pandemics are to be expected.
The emergence of the virus is linked to humans’ callous treatment of wild and domesticated animals for food and dubious medicinal benefit.
Coronavirus thus shows that current approaches to the trading and consumption of wild and domesticated animals are not only ethically and ecologically problematic, but also highly risky to health and survival of people. (The conversation, April 2020)
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