“Only a crisis - actual or perceived - produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around.” said the economist Milton Friedman. Right now, the world is in grave economic crisis. The IMF has predicted a 3 per cent contraction in the global economy. In India that figure is pegged at 4.7 per cent. Currently, barring a few nations, the ideas cupboard looks stale and worn.
The world has been hurtling into a crisis for over a decade now. The crash of 2008 saw the export of America’s regulatory follies to a slew of countries. It ended with some facing bankruptcy, others facing austerity, and yet others with toxic assets. The resultant economic downturn led to the rise of reactionary forces across the world that demanded jobs for locals, shuttering of outsourcing, and reduction of trade. The economic crisis caused by the COVID 19 pandemic may just well be the straw that breaks the camel’s back – in this case, the current global system.
This year marks the 75th anniversary of the end of the Second World War, and the establishment of a new world order that would ensure peace in our times. The war was the culmination of centuries of fault lines between the European powers. Bound by blood ties, and greed, the cabal of European monarchs had colonised much of the world, committed genocide on some peoples, and enslaved the rest. And, then they began eyeing each other’s possessions, went to war, doomed their economies, and then fought some more; bringing more misery to their people, and the people they colonised. It was this corroding edifice that came to an end with the Second World War.
The post Second World War era saw the methodical dismantling the system that existed before. It saw the end of colonialism, rise of independent states, adoption of social welfare, of labour rights, the rights of minorities, gender rights and more. The next half a century saw all these being adopted, in one way or the other, across the world. It is not that wars or revolutions, or bloody civil wars did not exist, but they were mostly contained locally, allowing people to get on with their lives. It has been an era of exceptional prosperity worldwide, with billions lifted out of poverty. The 2008 crash threw a spanner in the works, reducing public spending, welfare, and spending for greater social good.
In the post COVID-19 era, the focus needs to shift back to greater public good. A starting point for this would be an overall focus on social infrastructure – public healthcare, housing, schools, universities – all the areas that have been facing massive gaps in funding. Undertaking of a massive public works campaign has been the sure shot way of moving countries out of deflation into the path of growth. Right now is not the time to worry about balanced books, nor is it the time to worry about the debt to GDP ratio. Now is the time to rebuild the economy by creating a vision for tomorrow that is more equal and equitable.
Cities such as Mumbai and Delhi need to decongest their horizontal slums and build vertical housing that is built around the needs of communities. Slums were prevalent in the west – Europe and America – until the end of the Second World War. The rebuilding of the shattered world economy was built on the foundation of providing social infrastructure for all. However, India must take care that we do not recreate the vertical ghettos that were created in the west, and have become the epicentre of social upheaval – rather they need to be built to allow communities to live and thrive, and build social capital.
As people lose jobs, and as businesses shut down – the need for a safety net becomes even more apparent. Many nations have begun transferring cash to their citizens, to help them cope with the fallout of the pandemic. However, the aftermath of the pandemic is going to be long and difficult – especially with economies contracting. Universal Basic Income (UBI) needs to become a reality, sooner rather than later.
And, finally, as humans encroach more into the wild, cleaning forests, blow up mountains, and redirect rivers, the chances of more such zoonotic diseases – diseases that spread from vertebrate animals to humans - increases. Prevention of environmental degradation needs to be taken up on a war footing by governments. The focus on renewable energy, environmental protection and lowering emissions must be at the front and centre of every government’s revival policy.
The problem is that most of the world systems are geared towards the prosperity of banks, large corporations and conglomerates, and this elusive term called ‘growth’. Growth is seen as the increase in profits, increase in valuation, and increase in capitalisation, not necessarily better social infrastructure. Unlike the immediate post war era, growth is not seen in terms of larger public good. It is not seen as investment in hospitals, or education, or public infrastructure. It is seen in terms of making the oligarchs who control the world’s capital even richer. It looks at taxing the growing middle class, and letting large corporations pay tax nowhere. The way deregulation has wreaked havoc on the social systems across the world has been both ruthless and relentless. As Jacinda Ardern, PM of New Zealand points out, “Economic growth accompanied by worsening social outcomes is not success. It is failure”. And, it is this failure that the post COVID world order needs to redress.