‘The pandemic’s impact on major economies has so far been four times worse than that of the 2008 global financial crisis, while entire sections of many developing economies have been wiped out. Any policy intervention should treat the fight against COVID-19 like a war and the hardest-hit economies like conflict zones.’ – ‘A post war playbook for a post Covid recovery’ by Maximo Torero, Chief Economist of United Nation’s Food and Agriculture Organization
For the last four decades or so, the world has gone the way of Neoliberalism, which has exacerbated the march of existential threat of climate change, significantly increased income inequality, and caused risky financialization of the global economy, with volcano-like eruptions, for instance, in the shape of East Asian financial crisis of the late 1990s, and then a couple of years later an even bigger one known as the global financial crisis of 2007/08.
Hence, all the more need for policy multilaterally, and in individual countries to reform capitalism, and revive better spirit of globalization to improve economic prospects
At the same time, with governments taking a back seat during the same neoliberal way, it meant that the world was least ready to face the current pandemic. For one, although the first outbreak of coronavirus was as far back as early 2000s in the shape of SARS, and continued to appear from time to time since, but it not up till the world was grabbed by it in the shape of a pandemic that it realized the problem in the ‘profit over people’ mindset of the capitalism that shaped decisions in general globally.
In her upcoming book Mission Economy: A Moonshot Guide To Changing Capitalism’ renowned economist Mariana Mazuccato, like many others, highlighted the importance of improving capitalism significantly, and given the precarious situation global economy finds itself, she advocates taking a very drastic approach to uprooting the deep entrenchment of the neoliberal-styled capitalism. In this regard, she introduces the book as ‘Mission Economy looks at the grand challenges facing us in a radically new way. Global warming, pollution, dementia, obesity, gun violence, mobility—these environmental, health, and social dilemmas are huge, complex, and have no simple solutions. The book argues we need to think bigger and mobilize our resources in a way that is as bold as inspirational as the moon landing… We can only begin to find answers if we fundamentally restructure capitalism to make it inclusive, sustainable, and driven by innovation that tackles concrete problems from the digital divide, to health pandemics, to our polluted cities. That means changing government tools and culture, creating new markers of corporate governance, and ensuring that corporations, society, and the government coalesce to share a common goal. We did it to go to the moon. We can do it again to fix our problems and improve the lives of every one of us. We simply can no longer afford not to.’
Indeed, a post pandemic recovery requires such a big effort. To start off, a meaningful global multilateral spirit needs to come to the fore to revive economic prospects, and here too, the two most important challenges at hand is to influence rich advanced economies, and big exporting countries of food commodities to undo the strong current practice of ‘vaccine nationalism’ and ‘food nationalism’, respectively. Specifically, with regard to the negative impact of ‘food nationalism’ Maximo Torero in the same article pointed out ‘Rich countries’ policies also contribute to rising food prices in poor countries. While supermarket shelves in the developed world are fully stocked with affordable food, nearly 700 million people globally were already chronically hungry before the pandemic – and more than 130 million could now join their ranks as a result of COVID-19. In countries such as Uganda, the price of basic foods has jumped by 15% since March. People report consuming fewer, less diverse, and less healthy meals – a recipe for future disease.’
At the same time, creditor countries not only need to show greater sense of care for developing countries, in terms of debt relief response both in their own bilateral sense of relationship, but also need to proactively use multilateral forums to influence private creditors to follow the same path. Here, specifically as Nobel Laureate Joseph Stiglitz highlighted in his recent article ‘A global recovery’s leading variables’ that ‘The head of the International Monetary Fund, Kristalina Georgieva, has already called for another $500 billion issuance of Special Drawing Rights, which would be enormously helpful in restarting the global economy… The hope now is that Biden will reverse the US approach, not just on SDRs but also on international cooperation more generally.’
At the same time, as renowned economist Nouriel Roubini pointed out in his article from a couple of days ago ‘A fragile recovery in 2021’ that a K-shaped recovery needs to reversed, whereby the already rich are getting rich at a fast pace through investments in the stock exchange market for instance, while for the majority of the population, operating in the real economy, there is no such recovery happening. Moreover, he highlighted ‘As for emerging markets and developing countries, covid-19 has triggered not merely a recession, but what the World Bank calls a “pandemic depression,” leaving more than 100 million people back on the verge of extreme poverty (less than $2 dollars per day).’ Hence, all the more need for policy multilaterally, and in individual countries to reform capitalism, and revive better spirit of globalization to improve economic prospects.
