The post-Covid world needs a New Economy!- Day #20 (13 April 2020) 21 day #Covid19 Lock down

Day #20 (13 April 2020)

The post-Covid world needs a New Economy!

“where is the rich society that says: ‘Halt! We have enough’?”

― Ernst F. Schumacher,

Small Is Beautiful: A Study of Economics as if People Mattered

A Virus has crashed the economy of the world! Even the last global financial crisis of 2008 would be an ant before this elephant of a crash. The many orthodoxies of the global economic order is out of the window, probably for ever. The learned economists are going back to the books. But the books are as old as the Jules Verne classic Around the World in Eighty Days, where the protagonist Phileas Fogg, when challenged with the possibility of a single accident causing delay and hence the loss of his bet of travelling the world in eighty days, says, “The unforeseen does not exist”. Those days of certainty or as Fogg himself says, “I will jump – mathematically” is finished or probably was just fiction.

Governments and Corporations are no longer perturbed by the weight of public debts nor about budget deficits. They are spending on an unforeseen crisis. Every nation has broken the regulations that maintain a healthy economy and spending, to pay large populations of workers, casual employees, households, businesses and markets, money worth trillions of dollars to help them tide over the crisis. US, Canada, India...are all forced to do this. Large amounts are also being spent on subsidies and even free supplies to affected people - poverty-stricken families, unorganised workers and migrant labourers to keep them running their homes. Corporations are no more looking at their growth lines and are paying their employees to stay safe at home, and sometimes even cutting down salaries of senior management to do this. The true-blue economist has also been, theoretically speaking, quarantined!

Can there be a rebound? Economists have different opinions on the route the global recession is taking, but is certain that the world will go into a deeper economic crisis, as days go by. They are even predicting a depression. This is because even with a high level of economic stimulus, the market with it’s unprecedented crash down, will not be able to gain the confidence to help a rebound. The investments into it will, nevertheless, have to keep going. It is a pandemic, and make no mistake, it demands immediate, assertive response.

I believe the virus attack episode will be remembered in history for the collapse of the economy, more than the number of people that it infected or killed. It will also be remembered for the great act of humanity, to give up on the health of the economy so as to protect the lives of the people.

But there is something sinister to the current economic model, we seem to be so obsessed with, that many nations even waited to take decisive action in fear of hurting it. This economic model thrives on extraction, production, consumption, denudation, pollution, contamination and eventually even extinction or the collapse. The Gross Domestic Product (GDP), the measuring stick for the health of an economy is singularly based on the value of production, and every nation strives for it’s exponential growth, notwithstanding it’s impacts on human life and ecological sustainability .

But Covid19 turned out to be an eye-opener. I always thought the climate change would do the job. Covid outsmarted it. It told us what a crisis of the future looks like. Covid was like a 2-minute eerie trailor of what is to come. It attempts to tell us, emphatically, that we have crossed the planetary boundaries. It attempts to tell us that handling a crisis such as this will be beyond the capacity of present human societal systems – our governments, our economic models, our political organising.

Two important reports need to be brought back to light here. One of them is the 1972 report - Limits to Growth by Donella Meadows, Dennis Meadows, and Jørgen Randers. The second book by the same authors is the 1992 report – Beyond the Limits to Growth. Why I bring these two reports into discussion here is to tell that these reports were much ahead of their time. For instance, the Limits to Growth alerted the world to the limits of the present economic model and recommended that in 1972 if the growth trends could be altered, we could achieve sustainable ecological and economic stability. Both the books were highly influential ones, and got caught into a number of controversies for obvious reasons. Since then, we have had innumerable scientists and authors alerting and warning us of the “Limits” story and later on the “Collapse” story in various ways. The fact is we did not have enough economists, bureaucrats or politicians who could be bothered about it.

Now, it’s time. It is crisis, one after the other. The Climate crisis manifests itself every year in hundreds of places across the world - destroying property, killing people and wiping out livelihoods. Human activities are denuding ecosystems, forests and depleting natural resources at a pace that nature cannot replenish. Deforestation and habitat manipulations are causing biodiversity loss, species collapse and even pandemics like the SARS, MERS, Ebola, Nipha and so on.

The Covid crisis has shown that even a balance between ecology and economy as proposed in the Limits to Growth is probably no more possible. Soon as the health crisis is over, nations will go back to repairing their economies in the only way they seem to know, guided by fossilised economists and financial experts.

So, does the future have a better deal? I believe, yes. I don’t think we would have a choice.

Atleast some proposals for a total re-look at the economy is in circulation in some countries and regions. The Green New Deal,  a package proposed by a few progressive representatives of the US Congress attempts to tackle the twin crisis of inequality and climate change in the US. Though the resolution was defeated in the Senate, it has wide public support and is expected to come back to limelight in the wake of the Covid crisis. Another promising policy draft with a much more potential is the European Green Deal, which is a road-map for making EU’s economy sustainable. It talks about moving to a clean, circular economy, restoring biodiversity, cutting pollution, de-carbonising the energy sector and many more.

It’s also interesting to note that many smaller but significant efforts are being taken all over the world, by various states, cities, villages and even communities to move towards a carbon-neutral or a climate-resilient one. One instance, which I am closely aware of is the Carbon Neutral Villages project of the Government of Kerala which is technically supported by Thanal, the organisation I have an association with.

Another fall out of the Covid19 crisis with a positive turn is the decision by the Dutch Government to embrace the very interesting “Doughnut Economics” model for Amsterdam. This model, developed by British economist Kate Raworth from Oxford University’s Environmental Change Institute was described in detail in her book Doughnut Economics: Seven ways to Think Like a 21st-Century Economist. This model proposes a visual framework for sustainable development – shaped like a doughnut or an uzhunnuvada ( for us!) – combining the concept of planetary boundaries with the complementary concept of social boundaries. I would encourage you to read more about this.

While these are good efforts, I would believe that in a post-Covid world, the new economic proposal should be founded on a deep respect towards nature and a deep commitment to the public good. The fine print would have to address phasing out of fossil fuels, adopting renewable efficient energy technologies and systems, phasing out industrial agriculture, adopting a more regenerative, community and agro-ecology based food systems, eliminating non-renewable extractive, high carbon economic activities such as in constructions, other infrastructure, work culture etc and adopt green investments that fosters a regenerative low-carbon and circular economy.

But, above all this is my absolute faith in the young generation of people, especially the Millenials and the Generation-Z. These are the ones, in their teens and early-20’s. Many of them are already shaking up the present paradigm with their Friday For Futures and the XR protests. But, what is exciting is that many of them are also turning themselves to simplifying their needs and de-clutering their lives, some even becoming Minimalists. That too is something worth watching out for and encouraging. If the Covid and the lock down throws up more such minimalists, then I will gladly live for the change!

“I certainly never feel discouraged. I can’t myself raise the winds that might blow us or this ship into a better world. But I can at least put up the sail so that when the winds comes, I can catch it”.”

― E.F. Schumacher