Analysis, Latest on coronavirus outbreak

OPINION - Just one virus to question them all

20th century economic paradigms have ended up only feeding inequality and aggravating inhumane working conditions

Onur Kanan   | 26.03.2020
OPINION - Just one virus to question them all

The writer is deputy researcher at TRT World Research Centre.


If somebody had predicted a number of months ago that border controls would be tightened, most of the international flights would be cancelled, schools would be closed and streets of cities with millions of people would be empty in the first quarter of 2020, they would have been called “crazy”.

It is mostly because, even though established institutions, countries, and current economic and social systems had their own chronic problems, many things seemed on track on the surface, with people increasing their earnings, countries increasing their GDPs and, of course, globalization being in full force connecting more and more together.

But the impossible has become possible in the last few weeks, and it turns out living in close proximity with each other and being more connected than ever is not always the best thing to have due to “the butterfly defect of globalization,” a term coined by Professor Ian Goldin, an expert on Globalization and Development.

With the outbreak of the novel coronavirus disease (COVID-19) in China in late 2019 and its rapid spread to most corners of the world, we are facing a very rare, fluid and unstable time of distress. Things that seemed significant to countries only a few weeks ago are no longer usual topics of discussion.

Tensions between Iran and the U.S., energy and security problems in the Eastern Mediterranean, the refugee crisis in Syria and many other parts of the world, nuclear threat from North Korea and numerous others are not even covered on the first few pages of newspapers. The speedy spread of the virus has radically changed the global agenda and it already seems like we are living in an apocalyptic world.

We have observed a drastic change from working patterns and consumer behavior to education systems and social behavior. People have started to wear masks, stock up on essential food and hygiene products, cancel public gatherings and travel plans, and work from home, to name only a few of the measures being taken. People initially decided to take these measures themselves or were strongly advised by their governments, but with the situation speedily spiraling out of control, countries began to impose nationwide lockdowns until further notice.

While social distancing, crowd avoidance and cocooning have become the new normal for many people, hand-shaking and hugging are seen as awful things and avoided as much as possible. At first, people using a mask and who did their best to avoid physical contact with others were told that they were going over the top. But as time wore one, the feeling of marginalization disappeared with more and more people feeling the same urge to protect themselves from the outer world. So, it would probably not be wrong to predict that even after all this is over, people will likely continue to hold onto these changes in their social behavior.

But the changes that will probably stick even more strongly are underway in the economic environment and working patterns. Although some believe that the business-as-usual attitude will set back in when the virus has gone, it should be acknowledged that there has been a silent scream for a change for some time now, and this global health crisis might give people the voice they need.

Whenever wealth and income inequality reach alarming levels, a disruptive power emerges to try and strike the necessary balance. Believing that periods marked by overall peace but in which inequality dramatically increased were disrupted by the most powerful shocks throughout history, Stanford historian Walter Scheidel mentions four violent ruptures as inequality levelers – mass mobilization warfare, transformative revolution, state failure, and lethal pandemics – in his book The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century. He mentions them as “The Four Horsemen of Leveling” referring to “The Four Horsemen of the Apocalypse.”

Among these four inequality levelers, today we are about to see the social and economic impacts of a contemporary pandemic, which has the power to change the balance of labor, capital and the supply/demand relationships. Even though the gap between the developed countries and the developing countries has decreased since the Second World War, inequality levels within countries have reached peak levels, and the 2008-2009 financial crisis widened the gap between winners and losers.

Scheidel notes that just as the wealth of the richest aristocrats in the Roman Empire equaled about 1.5 million times the average annual per capita income in the country, we observe almost the same ratio when comparing, for example, Bill Gates’ wealth and the average income of an American citizen today. We have once again come to “that” point where the richest one percent of the world owns more than half of the world’s wealth.

According to the Income Update Report released by the OECD in 2016, the Gini coefficient, which measures the distribution of household disposable income and poverty, reached 0.318 in 2014 [1] on a global scale, representing the all-time high since the 1980s.

Economic results of this new pandemic can be evaluated on macro and micro levels. On the macro level, global markets and manufacturing habits will sustain a hard blow and almost no country will be left untouched. The United Nations Conference on Trade and Development predicts the novel virus is likely to cost global economy $1 trillion in 2020 [2]. However, the economies of the U.S., European countries, Japan and China, which are the largest economies and have already been adversely affected by the U.S.-China trade wars and the exhausting Brexit process, will suffer a far more severe blow due to the global supply-chain interruptions.

In these fluid times, every walk of life becomes poorer and loses money but the rich always have more to lose. So, it would not be wrong to say that the supply chains and global manufacturing habits will be redesigned on the macro level towards reducing inequality.

On the micro level, employees who have to be physically present in their work places and punch a time clock are given so little by a system that measures the quality of their work based on their payroll hours. Millennials are questioning why they make less than their parents and cannot afford to buy a house even though they, in most cases, received better education and have greater opportunities compared to their precedents. The idea was that advanced technology was going to mean less work, thereby giving employees more free time, but the opposite has proved to be the case, just as author William Gibson stated: “The future is already here – it’s just not very evenly distributed.”

For example, 57% of all sick leaves [3] in the UK in the 2017-2018 period were taken because of work-related stress, anxiety or depression, with 44% [4] of these caused by workload pressure, while there were over 2000 karoshi [5] (which can be translated as “over-work deaths”) and work-related suicides [6] in Japan in 2018 alone.

The economic paradigms of the 20th century have come to a point where they are only feeding the inequality gap and aggravating the inhumane working conditions on macro and micro levels. Some had already started to raise their voices and look for alternatives long before the outbreak of the virus. People were never able fully reap the benefits of the advanced technology and the internet of things as they had been promised, and no matter how hard they work and how much they demand, inequality has kept increasing.

Apart from enjoying bits and pieces of technology’s benefits with their smart phones and shiny cars, common people have less and less time for entertainment and less and less money to spend.

But despite that, if a certain individual, group or union had suggested some time ago that working from home should be an option, the players of the established order would strongly oppose that, as many did to the idea of a four-day working week with six-hour business shifts proposed by Finland’s new Prime Minister Sanna Marin a few months ago. Yet, today the demand is not coming from people; interestingly, states themselves are forcing people to work from home.

Today’s virus lockdowns allow us to observe that many people can work from home and many jobs can be done remotely thanks to the Internet. And this is a win-win situation because while the employees do not want to have to commute daily and punch the clock at their desk, the employers will save equipment, space and utilities for those who really need to be physically present in the work place as opposed to every single employee.

Corporations and countries might not be able maintain their growth figures, but maybe they should not under these circumstances. Maybe the parameters by which growth, GDP, wealth and other economic figures are measured should change, too. Maybe the living standards and well-being of societies should be calculated as well.

We do not know how the virus will play out and how all this will end under these uncertain circumstances, but states and companies have already started to rework and redesign the current business models. The First World War had shaped the economic atmosphere of the 20th century, whose institutions were consolidated by the Second World War.

Now we stand to witness the impacts of a pandemic on macro- and micro-level economics in the first quarter of the 21st century. Human beings are extremely adaptive to their changing environments, and they do not hesitate to leave what they have now for better ones once they become available.

It would be wrong to expect these changes to happen overnight right after the outbreak, but it is certain that when the dust settles, it might prove very difficult to take back what has been given to the people, who had been questioning and challenging the established systems already.






