The coronavirus pandemic is changing our world in fundamental ways.
These changes are even more defining than those witnessed after World War II between 1939–45, the collapse and disintegration of the Soviet Union in 1991 or the financial crisis of 2008.
This is because each of these occurrences, in fact, accelerated globalisation whereas the coronavirus pandemic will reverse it, perhaps irreparably and permanently.
This crisis has already ravaged economies, destroyed supply chains and exposed the operational inefficiencies in western societies stemming from a poor penetration of state power. The corporate might of western capitalism seems to be amounting to not much at all.
Global capitalism depends on global trade and global movement of men and material. Its most representative icons are global brands.
After this pandemic, we may no longer have viable global supply chains. The world’s largest brands have expanded globally because of distributed supply chains and accessible markets. The world has now seen how Western Europe and the United States of America have struggled in taking effective action. It has also been noted that an excessive reliance on China has now made it impossible for them to conduct business in any normal way whilst the pandemic impact lasts.
Naturally, it is sovereign governments that are acting now and taking the initiative. National boundaries have been sealed. All human movement has stopped and transportation across borders has ceased. This is unprecedented.
This rise of governmental action is in direct contradiction to the free business and globalisation imperative. We need government to manage the environment of business not be in business itself. But the crisis will motivate it to do the latter.
So, here onwards, China is the economy to watch because that is the region that will determine whether globalisation is sustainable. Western Europe and the United States seem to have bailed out of the global economic network and shuttered down. Economic isolation seems the natural consequence and it is only to be expected.
There is a galloping sense of vulnerability. Myopic pragmatism may win over optimistic farsightedness.
Profitability will suffer. Restrictive domestic boundaries and impositions on business operations will mean less incentive to build global brands. Smaller national market opportunities will mean poorer innovations.
Depressed economic activity will also mean a reduction in the productive capacity of the global economy. Therefore, globally orchestrated supply chains may simply become unviable besides being unfashionable. Global brands and global marketing are forces for integration whereas the potential rise of economic nationalism will be in opposition to such international integration. Immigration may be seen with hostility.
The biggest risk is our consequential inability to look at global issues in global terms, e.g. – climate change, poverty, hunger, resource depletion etc.
It is a cruel irony that a global crisis that is mortally threatening, potentially for each one of the 7 .8 billion people on the planet should result in drawing us apart under national flags rather than bring us together as threatened life forms on a small blue planet.
There is a political and economic shock that is leading to a rejection of the concept of ‘one planet for businesses’.
Economic liberalism is far more than being about economics. It has been an anchor for democracy and global diplomacy. Throughout history ‘collectivism’ and dogmatic politics have been pounding weak liberalism. Be it Communism, Nationalism, Fascism or Socialism. Nationalism in the European sense emerged as it supported a modern state and economy. It derives its sense of self from a unified culture and language.
A nation is a social construct before being a legal, political, geographical or sovereign entity. Language additionally creates a unity of significance. Nationalism increases the authority of the state.
A nation state is to power what a corporation is to profit.
Nationalism taps into the human need for belongingness and seeking an object for devotion. This will now increase manifold as the world deals with the existential crisis and then with its trauma.
In a more insular and parochially protectionist world, nationalism will become the default creed. The state will be a pseudo – commercial enterprise. The locus of commercial control will be wherever political power rests.
The biggest job to be done in the world ‘after coronavirus‘ is not to build walls or impede global integration but to make globalisation work for more people than ever before.
If we fail in doing this we will let the virus win.
Disclaimer: The views expressed in the article above are those of the authors’ and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.