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Economics

Post-COVID Capitalism

Oct 12, 2020 Klaus Schwab

The COVID-19 pandemic has shone a spotlight on social, economic, and environmental risks that have been building for the past half-century of neoliberalism. Even amid the deep uncertainties of today's global situation, one thing is clear: it is time to start questioning old assumptions and developing a new paradigm.

GENEVA – No event since World War II’s end has had as profound a global impact as COVID-19. The pandemic has triggered a public health and economic crisis on a scale unseen in generations and has exacerbated systemic problems such as inequality and great-power posturing.

The only acceptable response to such a crisis is to pursue a “Great Reset” of our economies, politics, and societies. Indeed, this is a moment to re-evaluate the sacred cows of the pre-pandemic system, but also to defend certain long-held values. The task we face is to preserve the accomplishments of the past 75 years in a more sustainable form.

In the decades after WWII, the world made unprecedented strides toward eradicating poverty, reducing childhood mortality, increasing life expectancy, and expanding literacy. Today, international cooperation and trade, which drove the post-war improvement in these and many other measures of human progress, must be maintained and defended against renewed skepticism of their merits.

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0 Comments on this paragraph, 12 Comments on this article

Nat Hollywood Oct 26, 2020

Please do not give this sort of rhetoric a platform. The “socialisation” of Capitalism is literally just a far left totalitarian agenda through which the writer attempts to gain control in the name of harmony and care. He seeks to attract both those that favour capitalism and those that favour socialism to his plan for a “better world” with this absolute nonsense and then steer the ship with all on board.
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Robert Goldschmidt Oct 25, 2020

The new capitalism is nothing more than a restoration to corporations of the dictionary definition. This means that corporations increase profits the old fashioned way — by delivering more goods and services, not by price gouging or refinancing schemes. Workers compete with portable and guaranteed medical, unemployment insurance and K-2 through 14 education. Finally, the minimum wage would be high enough to avoid need for government subsidies.
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Robert Goldschmidt Oct 25, 2020

The phrase “free market” fundamentalism is a misnomer — a more accurate term for what the author is describing would be “unfettered corporatism”. The “free market” implies arm’s length competition on a level playing field and is incompatible with the inclusion of “monopolies” in the sentence.
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Victor Kamendrowsky Oct 18, 2020

Our tax and corporate laws were created at a time when capital was scarce and investment risky. That encourage growth at the expense of "externalities."What we have now is a SOCIO- ECONOMIC CANCER. People are dying from pollution, viruses, climate change, loss of employment and meaning. The loss of biodiversity entails a potentially catastrophic loss of bioinformation. We need to act decisively and fast.
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Tom W Oct 18, 2020

That corporations are "social organisms" in a meaningful way is a problem. We should not be encouraging the expansion of corporations' role in the fabric of society, but restricting it. Their business should indeed be business. Their business should not include monitoring workers' activities outside of work (their opinions and political affiliations). Their business should not be making de facto policy weighing important aspects of social welfare (e.g. how citizens should interact with each other with respect to "identity" according to a rigid doctrines). Their focus should be narrow. We should build the capacity of government, regulators, and civic institutions to enforce our shared ethics and ensure laws and regulations are applied consistently and rigorously.
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Dallas Weaver, Ph.D. Oct 15, 2020

We have capitalist market and profit driven institutions like Amazon and Zoom and we also have non-market government institutions like the WHO, CDC, FDA all responding to the Covid-19 pandemic. The response of the non-market government institutions to a new challenge has been slow and often wrong as they try to adapt a bureaucratic based system to a novel situation and change on a time scale dictated by nature and culture.

For example, the FDA at a time when the number of cases was doubling every three days took over 30 days to approve with and "emergency approval" a test already approved by Germany and the WHO. With this time for paperwork processing the problem (number of cases) increased by a factor of 1000 (went from a minor problem to a huge problem while they shuffled paper). Meanwhile the CDC was lying to the people saying that masks don't protect the user while they were trying to take control of the nationwide supply at a time when the CDC testing wasn't working so they had no real data trying to understand this new virus. They were doing what their policies and procedures said to do even when the importance of time (3 day doubling times) was apparent. Even with nearly all well meaning and competent staff, these agencies gave the appearance of total incompetence and cost us thousands of lives and trillions of dollars.

Meanwhile, as someone who used Skype for meetings, I noticed Zoom seemed to be responding to the extremely rapid demand increases and their service just got better when the time pressure was critical and now I have a much larger number of Zoom meeting that are getting better all the time. I also noted a massive increase in delivery capacity and Amazon was getting orders to my door even faster than before the pandemic, even as their demand was going through the roof. Even Home Depot and Walmart rapidly responded by getting everyone wearing masks and distancing along with basic biosecurity, while rapidly hiring enough people for the demand increases.

Meanwhile our well meaning institutions like the DMV in California fell apart with lines around the block and a reservation system that didn't work. The appearance of incompetence was being viewed as just incompetent as their software accepting the required documents didn't work correctly.

The conclusion of this article that we need to put our profit driven, investor owned, market responding institutions under control of the well meaning political/bureaucratic class through more regulation, rules, undefined stakeholders, etc. may be a big mistake. Allowing "everyone who is willing to “co-shape” the future" to have an input independent of having real skin in the game (ie money, jobs, and their futures) will turn our fast responding private sector into the DMV type institution.
- Barry Rosenfeld Oct 18, 2020
  
  The situation you describe largely is the result of starving the public sector of resources for 40 years. "Cost-cutting" and an aversion to inventory (stockpiling) is fine for private businesses with short-run horizons, but detrimental for public entities that have to provide for outcomes that can be anticipated, but whose incidence cannot be predicted. Should a country should cut back on military spending until a war begins? Moreover, as you know, costs are only one aspect of "efficiency" and "effectiveness".
  - Dallas Weaver, Ph.D. Oct 18, 2020
    
    I didn't go into the reasons why government agencies become incompetent at handling new problems with time, but it is not because of the budgets for the CDC, FDA, DMV, etc. Also, note that similar incompetence evolved in large monopolistic/oligopolistic private institutions like IBM, that "owned the world" when I was a young man, that failed when they faced the competition from the PC and Apple.
    
    Large monopolistic institutions, like all government institutions, store more and more of their institutional knowledge in the form of policies, procedures, rules, and regulations over time. This methodology of decision making and management allows complex decisions to be made utilizing much of the information from past decisions and mistakes, much like Ford eliminated the very high skilled mechanics from automobile manufacturing and allowed simple workers that know which way to turn a wrench to build a very complex product.
    
    This system can work well when not subject to change and most problems are repeats and can be shoved into the correct organizational boxes. In competitive situations like occurs in competitive markets of true capitalism, someone in some unrelated industry makes a change that ripples through which creates a new problem that requires a complete modification to fit the new situation. In a competitive situation, failure to adapt rapidly will result in the death (bankruptcy) of the institution, and everyone is motivated to put aside the little turf battles to win the war for survival.
    
    For an example of the bureaucratic policies killing a rational COVID-19 response, just look at Mask usage. The CDC, FDA had created rules that masks are a single-use item and these rules can apply to all pathogen (on exposure, put it in the hazardous waste disposal), however, in the SARS-CoV-2 case these same institutions had and published information that this virus can be inactivated by heating to just 140ºF for 30 minutes allowing reuse of scarce masks, but that would violate their rules. Simply making a citizen personal protective equipment (PPE) package of old clothes, hats, scarves, and quality masks like N-95 and sanitizing (not sterilizing against all pathogens) against this virus by putting the PPE in a home dryer for 30 minutes on high and the masks in a toaster oven or home oven on low the citizen can have the personal protection of front line doctors, with full PPE protection that these agencies know works very well.
    
    By continuing the single-use requirement and not allowing thermal sanitation, they helped create a mask shortage where, to protect the supply for medical personal, they lied to the public that masks won't protect the mask user (90% of the mask market was industrial, not medical) as they took control over the supply. Each Covid-19 case required 10's to 100's of masks that could have been safely reused in Covid-19 wards with heat treatment. If the citizens were given the proper information on heat treating and masks being protective for the user, those masks being used and reused by citizens for months would have prevented the spread in the first place.
    
    To cover their lies about masks protecting the user, when they switch to saying masks helped they spun the shift by saying masks protect the other guy, not the user. It is much more difficult to appeal to "protecting the other guy" than to the self-interest of protecting yourself and your family.
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