COVID-19 Pandemic: Disheveled Economies, Disarrayed Polities and the Future

Published on 7th April 2020

What matters? Welfarism? Free markets? Democracy or just efficient governance systems? Individualism or communalism? The essentialism of the COVID-19 pandemic cannot be underestimated.

The COVID-19 crisis has raptured globalization, disheveled economies, disarrayed polities and reorganized societies on massive scale. Pristinely, a global economic recession is looming.

Economic recessions or crises have always led to fundamental change in politics and revision of the social and economic policies adopted to transition to the next chapter. The COVID-19 pandemic manifests itself as a social, political and economic crisis.

Socially, norms and routines have been altered. People are forced to adjust to unfamiliar lives: working from home; no more feeling of camaraderie from social gatherings; for others, it’s doomsday with their jobs wiped out by the monstrous virus; for some, readjusting to realities of life in the countryside is the new normal; and certainly, worries about the fate of tomorrow dominate our lives than ever before.

Politically, the frivolous nature of greedy politicians has been exposed. Politicians are now familiar with policies and terminologies of a functional healthcare system. State capture by big business is in plain view; financial bailout programmes are mainly targeting large corporations and not small and medium-scale enterprises. Democracy and authoritarian classifications no longer matter. It is how efficiently governments around the world respond to the crisis.

Economically, it’s evident that people should matter more than profits and this ought to be the primacy of policy. Global supply chains are disrupted. Organizations are scaling down their operations and unemployment is set to rise. Living standards are bound to fall and manacles of poverty are primed to handcuff more people. Developing countries are set to rack up more debts. In short, the COVID-19 pandemic has orchestrated a reversal of economic gains.

A Reflection of the Past

History matters, and it matters a great deal! In modern world history, economic crises or pandemics of human nature have often led to political, economic and social reforms. For instance, the deadly Spanish flu that ravaged parts of the world between 1918 and 1920 occasioned public healthcare reforms.

According to Laura Spinney, the aftermath of the Spanish flu prompted governments to adopt policies seeking to provide healthcare for all. Spinney notes that the post-Spanish flu period saw Russia become the first country to establish a centralized public healthcare system, a policy imperative adopted by some Western European countries. Such a healthcare system was fully financed by a state-run insurance scheme. Creation of Sweden’s modern welfare state is significantly credited to the depredations of the Spanish flu.

Across the Atlantic, the federal government of the United States of America opted for employer-based insurance schemes as part of the post-Spanish flu healthcare reforms. In Canada, the topsy-turvydom created by the Spanish flu pandemic led to the establishment of the federal Department of Health in 1919 with the state playing a primary role in advancing public healthcare.

Although information about the origin of the Spanish flu is still unclear, the first official cases were recorded at USA Army’s Camp Funston in Kansas. Large-scale mobilization of troops during World War I is thought to have catalyzed the spread of the flu.

A report published by the Federal Bank of St. Louis in 2007 documents about the economic effects of the 1918 Spanish influenza such as closure of grocery stores, an increase in drug store activities, a rise in demand for beds and mattresses, long hours of work for physicians, and closure of mines among others.

Despite the fact that the report entirely focuses on the American state, its praxis on the significance of the nexus of the 1918 Spanish flu and a modern-day pandemic is engrossing.

Africa also bore the brunt of the Spanish flu with a research study highlighting that in the coastal region of Kenya the virus paralyzed administrative operations, created food shortage, occasioned commercial losses and overstretched the healthcare sector. In South Africa, the flu led to the death of 300,000 South Africans representing 6% of the total population.

In an article published by Reuters Magazine in 2013, Begley warns of how a flu pandemic could trigger a global recession. The news feature is based on a 2008 World Bank report highlighting that the SARS pandemic of 2009 shredded global GDP by $33 billion.

Major economic crises always spark calls for reforms. Notably, the Great Depression resulted in the formulation of the New Deal which largely aimed at addressing the plight of the common Americans. In Western Europe, the economic crisis occasioned by World War II actuated the European Recovery Programme (the Marshall Plan). These two reforms laid the foundation for the Golden Age of Capitalism although Robert Reich in his book, Supercapitalism, refers to it as “Not Quite the Golden Age” since political and economic inequality was evident among women and minority groups.

The economic recession of 1973 changed the global political economy in fundamental ways. Economist and historian Marc Levinson writes that the early 1970s marked the end of the Golden Age of Capitalism with politics moving to the Right. The decline of the Golden Age resulted from stagnated productivity growth. The shift of politics to the Right resulted in a loss in social benefits such as health insurance mostly provided by governments across Western Europe among others. As such, the implications on public healthcare were significant.

The fundamental shift in the global political systems was also embraced by the Bretton Woods institutions which embarked on missions to spread the Washington Consensus gospel in Africa through the infamous Structural Adjustment Policies (SAPs).

Failure of SAPs is evident especially in public healthcare and education systems leading to revision of the Washington Consensus with focus directed to a number of policy issues including provision of social safety nets and poverty reduction.

Financial crisis that precipitated the Great Recession in 2008/2009 led to advocacy for more government intervention in the economy with calls for provision of healthcare for all especially in developed economies. The austerity measures adopted by governments following the recession were germs for emergence of radicalized political movements across the global north.

William Davies contends that the financial crisis of 2008 failed to provoke a fundamental shift in capitalism but the COVID-19 crisis is set to bring about a sea change in the systems of global political economy based on high levels of international connectedness and the spatial nature of the pandemic. Retooling of social and economic life is certain with the pandemic serving as an inflection point “for new economic and intellectual beginnings.”

A Vision for the Future

Economic and political movements will emerge after the pandemic to vouch for reformation of healthcare systems all over the world. Governments and multi-lateral institutions will have to change their priorities and increase spending on public healthcare. Therefore, universal healthcare will emerge as a policy priority for state and non-state actors.

Governments and multi-lateral institutions reluctant to embrace healthcare for all will encounter opposition from social justice movements and disgruntled members of the public.

A paradigm shift in the systems of political economy is also bound to happen. Neoliberalism is set to reform or undergo decapitation. Political and economic ideologies that fashion people over profits will dominate public discourse. Could there be a re-emergence of democratic capitalism or will social democracy be the norm? Will the Chinese political economy model inspire states?

What is the future of big business in the global economy and national politics? Reformation of the healthcare system will most likely be derailed by the Big Pharma. Big Pharma may take hostage of global politics and economics. The intricacies of the medical-industrial complex could go a notch higher.

Globalization will still be fashioned by state and non-state actors as a crucial step towards economic recovery and prosperity. 

Immigration to the most affected countries especially the developed ones is set to take place. The Western world may review its immigration policies and make them friendly. But this will depend on the pace of economic recovery.

Is a new world order in the offing? Too close to call but possibilities are within the horizons; evolution and dominance of the world by the medical-industrial complex and not the military-industrial complex; the dawn of a multi-polar world; dissipation of democratic ideals and enchantment of political pragmatism; and establishment of welfare states.

By Sitati Wasilwa

The author is a political economist and consultant on governance, geopolitics and public policy at Savic Consultants and a youth leader at YMCA Kenya. Twitter: @SitatiWasilwa

This article has been read 2,957 times