COVID-19/GLOBAL
Even as 19 countries sat in a state of lockdown, the US president, Donald Trump, and Brazilian President Jair Bolsonaro called for roll backs in mitigation measures. Trump called for the American economy to get back to normal in three weeks (he has now accepted that social distancing will need to be maintained for much longer). Bolsonaro said: “Our lives have to go on. Jobs must be kept…We must, yes, get back to normal.”
In the UK meanwhile, four days before calling for a three-week lockdown, Prime Minister Boris Johnson was only marginally less optimistic, saying that the UK could turn the tide within 12 weeks. Yet even if Johnson is correct, it remains the case that we are living with an economic system that will threaten collapse at the next sign of pandemic..
The economics of collapse are fairly straightforward. Businesses exist to make a profit. If they can’t produce, they can’t sell things. This means they won’t make profits, which means they are less able to employ you. Businesses can and do (over short time periods) hold on to workers that they don’t need immediately: they want to be able to meet demand when the economy picks back up again. But, if things start to look really bad, then they won’t. So, more people lose their jobs or fear losing their jobs. So they buy less. And the whole cycle starts again, and we spiral into an economic depression.
In a normal crisis the prescription for solving this is simple. The government spends, and it spends until people start consuming and working again. (This prescription is what the economist John Maynard Keynes is famous for).
But normal interventions won’t work here because we don’t want the economy to recover (at least, not immediately). The whole point of the lockdown is to stop people going to work, where they spread the disease. One recent study suggested that lifting lockdown measures in Wuhan (including workplace closures) too soon could see China experience a second peak
ECONOMY IS THE WAY WE TAKE OUR RESOURCES AND TURN THEM INTO THINGS WE NEED TO LIVE. THIS WAY WE CAN SEE MORE OPPORTUNITIES FOR LIVING DIFFERENTLY THAT ALLOW US TO PRODUCE LESS STUFF WITHOUT INCREASING MISERY
of cases later in 2020.
As the economist James Meadway wrote, the correct COVID-19 response isn’t a wartime economy—with massive upscaling of production. Rather, we need an “anti-wartime” economy and a massive scaling back of production. And if we want to be more resilient to pandemics in the future (and to avoid the worst of climate change) we need a system capable of scaling back production in a way that doesn’t mean loss of livelihood.
So what we need is a different economic mindset. We tend to think of the economy as the way we buy and sell things, mainly consumer goods. But this is not what an economy is or needs to be. At its core, the economy is the way we take our resources and turn them into the things we need to live. Looked at this way, we can start to see more opportunities for living differently that allow us to produce less stuff without increasing misery.
I and other ecological economists have long been concerned with the question of how you produce less in a socially just way, because the challenge of producing less is also central to tackling climate change. All else equal, the more we produce the more greenhouse gases we emit. So how do you reduce the amount of stuff you make while keeping people in work?
Proposals include reducing the length of the working week, or, as some of my recent work has looked at, you could allow people to work more slowly and with less pressure. Neither of these is directly applicable to COVID-19, where the aim is reducing contact rather than output, but the core of the proposals is the same. You have to reduce people’s dependence on a wage to be able to live.