5 Predictions for a post-covid world

26 May 2020

Shatadru Chattopadhayay, Managing Director for Solidaridad Asia, reflects on the implications of the COVID-19 pandemic, laying out predictions for what's to come in economic, social, and digital trends.

The impacts of coronavirus are being felt globally (photo reproduced from original LinkedIn article, link below)

Pandemics have often changed the course of human history. In 430 B.C., the earliest recorded pandemic coincided with the Peloponnesian War. As much as two-thirds of the population died. This war shifted power from Athens to Sparta, making Sparta the most powerful city-state in the region. The Plague of Justinian (541-750 AD) brought trade to a standstill and played a vital role in the century-long decline and fall of the Roman empire. The “black death”, which ravaged Europe between 1347 and 1400 was the main reason for the ending of serfdom, and reduced the role of the Catholic Church and heralded the beginning of the renaissance. Smallpox in 1492 wiped out 90 per cent of the population in a short period in the Americas. Yet, the pandemic helped Europeans to colonize the Americas and forever altered the global economic history. The great economist John Keynes wrote in 1930 that exploitation of silver and gold from Latin America was a crucial turning point in the formation of modern capitalism. Similarly, the Spanish flu in 1918 as per some belief (Laura Spinney, “Pale Rider”, 2017) played a role in ending the hostilities of World War-I. It started the norm of universal health care and most importantly, it united India at the grassroots and strengthened the independence movement, which in turn played a crucial role in ending colonialism. 

Psychologists talk about the idea that when there’s an external threat like a pandemic, people start redefining themselves. The previous notions and values which were unchallengeable in the past get easily changed or challenged in what could be called as “moment of the whirlwind”. As the Covid-19 pandemic spreads rapidly across the world, the question arises how our world would look like after we have gained victory over the virus. There could be potentially five fundamental changes which would take a decisive turn from this moment of the whirlwind.

The decline of neoliberalism

Firstly, the Covid-19 crisis is also a crisis of neoliberal capitalism. Joseph E. Stiglitz aptly gave the title to his article “The end of neoliberalism and the rebirth of history” published in November 2019. Four and a half month later and into the pandemic, it seems to be prophetic. As Jason Hickel puts down in his appropriately named book: “The Divide”, hunger and poverty have grown instead of going down over the last few decades. A consensus is building that neo-liberalism has benefitted only the rich and created a significant disparity of income. Today, the richest eight people in the world have as much wealth as the poorest 3.6 billion. It’s an economy of, by, and for the one per cent. The policies promoted lower taxes on capital gains than on labour income, bailouts for big banks but not for ordinary citizens, or tax holidays for large corporations that put small locally owned companies out of business. 

But the Covid responses across the world so far has been exactly opposite to these known patterns. The Governments across the globe are willing to take a massive economic hit to protect the wellbeing of the poorer segment of the society. Demand for more state-control of resources and their equitable distribution is increasing. UK, Denmark and Spain’s nationalised private hospitals are just one of the many starting points in this change. The state is already stepping in to protect the parts of the economy that are essential to life. It includes the production of food, energy, and shelter, for instance, so that the necessary provisions of life are no longer at the whim of the market. Instead of bailing out big banks and big businesses, the USA (and many other countries) are bailing out average citizens and smaller enterprises through loan moratoriums. Senator Alexandria Ocasio-Cortez has given a call for putting public money in the same war footing to fight poverty, unemployment, inequality, ecological collapse – all of which are much deadlier evils than Covid-19. In such a scenario, we might see increased state socialism replacing state capitalism. It means the emergence of a state that provides more than protection from poverty and positively guarantees housing, health care, child care, and education—and public ownership of natural monopolies and financial institutions. 

Increase in labour-owned business models

Secondly, we might see an increase in labour owned business models. Most of the reports on labour suggest that lockdown around the world would lead to a significant rise in unemployment. It is another matter that employment alone is not a good indicator of the situation of the labour even before the Covid-19 hit the world. For example, as per ILO, only 4.5 per cent of Sub-Saharan Africa's working-age population is unemployed in 2017. In the Netherlands, for the same period, the unemployment rate was 5.7 per cent. The real issue is what is an acceptable minimum wage for the workers so that they could live a dignified life.

The economic models followed in most of the developing countries was to focus on reducing unemployment, even if it meant paying poverty wages to the workers. Low wages were justified by both left-oriented and neo-liberal governments, albeit with different reasons, while the multinational businesses benefitted out of it. If we slightly increase the above poverty wages and set it at US dollar 5 per day as some of the scholars (Lahoti & Reddy, 2015) argue, we will have 60 per cent of the world living below the poverty line. 

This 60 per cent of the world population would be potentially worst affected by Covid-19 virus attack and economic impacts due to related lockdown. World Banks recent suggestion of donating $1/day for all poor across the world for a month (Carolina Sánchez-Páramo, April 2020) is a desperate attempt to hold on to the old model. However, the pandemic is likely to trigger a situation where states will favour policies serving the common goods than interests of the financial markets. It will be realised that symbolic increment in wages won't allow the workers to survive the post-covid world. The solution would be to make labour shareholder in the business rather than treating them as an avoidable cost. Impact investments will be on the rise and be on the radar of commercial investors on such inclusive ownership models.

Such models were already visible in the form of public ownership as a viable strategy after the 2008 financial crisis. Employee ownership is advancing in Britain, Scotland, and many other nations and includes companies like the John Lewis Partnership, the largest department store chain in the UK with 2018 revenue of £10.2 billion. The company's 85,500 employees are all partners in the business, and each has a voice in how the company is run through a democratic system. The US cooperative sector—businesses owned by the people they serve—represents more than $500 billion in revenue and employs 2 million people. Such models would increasingly become more mainstream. What Abraham Lincoln stated: "Labour is prior to, and independent of, capital. Labour is the superior of capital, and deserves much the higher consideration" should gain momentum in most of the developing countries.

Transformation of the energy sector

Thirdly, the post-Covid world may spark off a Fair Energy movement. New Delhi and 13 other Indian cities feature on a list of the world's 20 most polluted. As per the estimates, more than a million Indian die every year because of air pollution-related diseases. Industrial smoke, vehicular emissions, burning of trash and crop residue, and construction and road dust are the major contributors. Even though the culprits were known, the powerful construction and car lobbies have always managed to duck any fingers pointed at them. But as an unintended consequence of the lockdown-Delhi's 11 million registered cars were taken off the roads and factories and construction were ground to a halt. The air quality index (AQI) of the city has regularly fallen below 20 where Delhi residents used to celebrate 200 AQI previously. The skies are suddenly a rare, piercing blue. Even the birdsong seems louder.

It is not just Delhi but the toxic megacities such as Bangkok, Beijing, São Paulo and Bogotá, have all reported an unprecedented decline in pollution. The experience of alpine weather, clear skies and fresh air could be a trigger to create a popular democratic demand for clean air in India and elsewhere. Sofar, the pollution agenda remained in the realm of NGOs and courts. It was never a peoples movement. However, the post-Covid world may see a democratic movement for clean air as a fundamental right. Such a movement will act as a countervailing power against the existing lobbies desperately waiting to return back to business as usual. It will, in turn, may accelerate the transformation of the transport system that runs on electric batteries charged on Fair Energy-that is renewable energy.

Reorganisation of food supply chains

Fourthly, the food supply chains would be re-organised following the principles of wellness and wellbeing. The food industry today is dominated by the mega-corporations who control the world market from the field to input business to the supermarket shelf. Over the last two decades, these corporations promoted cheaper, fast to prepare and mostly unhealthy food sourced from farmers far away. As a result, the rich people eat organic fruits and salads, in the slums and ghettos the poor gorge on Twinkie cakes, Cheetos, hamburgers and pizza. The earning model was to sell “more food at less price”. Naturally, due to this more with less model, the returns for the small farmers fell significantly. To maintain the supply at a low price point, increasing food volumes became the mantra to “feed the future” population of 9 billion. No one questioned why this emphasis on productivity when reports suggest that existing world’s food production could feed 12 to 14 billion people – nearly double the current population of 7.5 billion. 

But the post-Covid world may see a change in consumer food consumption behaviour significantly. It may even lead to re-organisation of the way food is produced and traded. People are expected to eat more healthy, locally produced, safe, and home-made food to boost-up their immunity even at a higher price. There would be shorter and localised supply chains which would incentivise farmers to produce higher quality, healthy food while taking care of the environment. Today consumers in developing countries pay more for imported products. Future consumers would be willing to pay a premium for local produce. Such a process would invigorate domestic supplies and demand, circulate money within the community and boost the local economy mitigating risks of economic and financial contagion. 

Revolution in digital regulations

Fifthly, accelerated use of digital applications will create a new social and economic order. The Covid-19 lockdown has intensified our dependency on the Internet and Communication Technology (ICT), mobile apps, social media and it is changing how we live, work, and communicate. Though most of these technologies were always there, people are now forced to use it in such a way that it replicates to a large extent their old ways of living life. As millions get used to the new normal of locked-down life, our digital lives may never be the same again. The post-Covid life for the urban educated middle class and the villagers-both would be surrounded by Artificial Intelligence (AI) like never before. 

Countries like India have seen 100 percent increase in rural data consumption during the period of lockdown and in just 40 days started consuming more data than urban areas. Governments from across the world are rolling out AI-driven mobile applications using cameras, drones, face recognition, thermal imaging, and location trackers. It won’t be easy for the governments to suspend its newly acquired tech and surveillance powers which will have deep ramifications in terms of democratic space. On the economic front, a steep decline in cash usage is expected to continue amid the growing popularity of digital payment platforms and as people avoid physical contact during the coronavirus pandemic. Indian digital payment increased by 42% during the 40 days of lockout. On the other hand, China has gone to the extreme of conducting tests of the state-run digital currency E-RMB to counter dollar monopoly.   

The private sector won’t be left behind. In many countries where data rules are robust or are poorly implemented, the corporations will get the opportunity to exploit “free” data from the people and then would sell them information which is developed from their own extracted data.   

Such penetration of data in all spheres of human life would possibly create a grassroots level movement for Fair Data. There is already a movement in the wake of the lockdown in the US about freedom vs safety, similar challenging questions will intensify when we discuss privacy, government surveillance and safety. The Fair Data movement which was already taking shape before the world was hit by Covid-19 would lay down new rules for data usage. These Fair Data rules would potentially change the way trade works through better prices, decent working conditions and a fairer deal for farmers and workers in developing countries.

Covid-19 is still rapidly expanding, and none of the predictive models can accurately describe what lies ahead of us. If there is one silver lining on the cloud of this pandemic, it is that it provided us time from business as usual and allowed us to think about what future we want for ourselves, for our society and the entire species. While we can make these predictions based on connecting the pieces of evidence which are already there, it is appropriate to acknowledge there are too many unknowns and too few certainties.

This article originally appeard on LinkedIn.

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