Can the negatives of the crisis be turned into the positives by taking advantage of the opportunity afforded by the global shock to the system? In international affairs all the signals are turned to red, with the liberal international order crumbling and the 1945 international system challenged as never before. However, at the societal level the green signals are strongest, Valdai Club expert Richard Sakwa writes.
The approach of winter in the northern hemisphere is accompanied by the gathering pace of a second wave of the coronavirus pandemic. In the wake of the Great War in 1918-19 the second wave of the great ‘Spanish’ flu pandemic had been worse than the first, raising fears this year that the coming winter months may repeat that devastating experience. Businesses that survived the first wave, notably airlines, may finally go under in the second as travel restrictions are once again imposed. The International Monetary Fund estimates the pandemic’s economic loss to the global economy at some $12 trillion, and that is only counting the first wave. It is hard to under-estimate the potentially damaging consequences of a second wave.
In certain respects, of course, the second wave is just the continuation of the first. Unless some sort of widely-available vaccine can be introduced soon, then we can anticipate a series of waves stretching into the future. Each stage will test popular reactions. Populations on the whole in the first wave were willing to accept sacrificing their freedom for the common good, but as the epidemic ebbs and flows it will be harder to convince people that new restrictions and hardships are the appropriate response. The Swedish model of voluntary controls, which allows the economy and society to work largely as normal, becomes increasingly attractive. The balance to be drawn between virus control and economic damage is increasingly contested. The restrictions are increasingly perceived to be as economically damaging as the disease itself.
The virus affects various age groups and ethnic communities differently, rendering effective epidemiological management difficult. For example, younger people are more resilient, but nevertheless asymptomatic carriers can infect older people, as happened in the US sunbelt over the summer. For various reasons, reflecting employment, housing and sociability patterns, black and ethnic minority communities in the UK suffer disproportionately.
Life is disrupted at all levels. Whole societies and the global economy work in fits and starts. Businesses that survived the first wave, battered and bruised but still alive, may now go under. Shoppers still fear the high street, leaving stores semi-deserted, while the shift to online sales augurs the end of the old consumer model in its entirety. Students, who in many cases have committed significant sums of money for their education, are taught on-line while being forced to quarantine in dormitories on semi-deserted campuses. The leisure industry including bars and restaurants managed to survive the first wave, usually through various forms of state support such as furlough payments. Employers were able to retain staff, but are now faced with diminishing state support. As winter deepens there will be a growing wave of redundancies, business closures and rising unemployment.
Hanging over it all is the sense of futility. Rahm Emanuel, who served as mayor of Chicago after having previously been President Barack Obama’s chief of staff, is reputed to have stated ‘You never want a serious crisis to go to waste’. He was speaking in the wake of the 2008 global financial crisis, and the idea was that the shock of the crisis would force reforms to financial markets, above all to limit the power of the banks. The growing gulf between various forms of financialisation and the ‘real economy’ would be reversed, attention paid to the real needs of industry and consumers, and some of the egregious excesses in bonuses and risk culture reduced. In the event little was achieved, and the vast sums devoted to quantitative easing in fact were channelled through the very banks that had provoked the crisis in the first place. The crisis did provoke new forms of popular mobilization, including the various ‘Occupy’ movements, but they soon fizzled out. Nevertheless, the agenda of improved financial control remains on the table.
Will the coronacrisis prompt a return to the agenda of 2008? At present this is hard to envisage. The pandemic has so far, in the main, only accelerated and intensified negative tendencies. Early indications of solidarity and internationally-coordinated responses, including calls for a global ceasefire, soon gave way to the reassertion of national egotism as countries struggled to get scarce stocks of personal protective and other equipment. Wars continued, and existing rifts were deepened. The trade war between the United and China has now become a type of new cold war, with mutual antagonism assuming deeper ideological forms. Coronavirus nationalism has added a new layer to the already intensifying great power conflicts.
This is where the concept of a negative crisis comes in. A negative crisis is one in which there are few, if any, positive outcomes. The earlier financial crisis at least demonstrated elements of coherent international cooperation, as the G20 coordinated government policies and countries pulled together. This crisis has only illustrated the further ‘crumbling’ of international order, as earlier Valdai reports have put it. Multilateral institutions have either been marginalized, or even come under attack. The UN’s World Health Organisation was accused by Washington of having been too complaisant with the Chinese authorities in the early stages of the pandemic, and the US declared its departure. The unseemly race to be the first with an effective vaccine, accompanied by accusations of hacking, undermined the elements of genuine cooperation in the search for a way of beating the virus.