We all loved the world we used to inhabit, didn’t we? That wonderfully globalised, seamlessly hyperconnected physical and virtual world, driven by fossil fuels and bound together by shiny technological trinkets that tricked us into believing that life easier and convenient? It was awesome. We were mesmerised by it. We believed we were living in the pinnacle of human civilisation, an era of seemingly boundless opportunity and soaring prosperity that nothing could threaten. Most of us still cannot fathom that it was all an illusion, a grand spectacle of smoke and mirrors of the digital kind, mostly of pretty post-card Instagram and Facebook pictures. It was all so fragile that all it took to bring it all down was a microscopic entity that is not even alive. We thought, or were thought to believe that rampant consumerism was all that there was to it, and was all the answer to all our existential problems.
That world was built on the condition of perpetual economic growth which could be maintained only when fueled by limitless consumption. In other words, the only way we could keep acquiring newer and shinier things was to keep consuming to keep the “growth” going – make more, build more, do more, go more, drive more, eat more, spend everything. More cars, more planes, more buildings, more gadgets, more clothes, more stuff, more of everything. Keep consuming and consuming until we have consumed the Earth itself and there is nothing left. We believed that we could created a world where we could consume and consume endlessly without consequence. It was the economic equivalent of selling one’s soul to the devil, and so we did. Unfortunately, it is not possible to achieve infinite growth in a finite system. The laws of our Universe do not allow that. It had to stop somewhere. That world was, is, the very definition of unsustainability, or a system that cannot sustain.
The Coronavirus was an eventual inevitability. It was, like they say, only a matter of “when”, and not one of “if”. Quite many disruptive events in history like depressions, plagues, revolutions and war and war and war were caused by the extractive, rapacious, untenable, unstable and especially unsustainable financial, political and economic practices of the time, and this one is no different. And more often than not, it is not one event but a chain of them stretching over several decades that result in disasters like these, when humanity forgets the lessons of the past and tries to put one above nature. This time, the chain of events that led us to the situation we are experiencing had their origins dating back to seven and a half decades to the last time the world was nearly destroyed. We could follow these events that led to the pandemic today.
1. World War 2 and Keynesianism
After the Second World War, western governments enacted a series of agreements to create a global economic system to aid rebuilding and recovery of nations and masses destroyed by the war. The collection of these agreements (Potsdam conference, Nuremberg trials, Bretton-Woods agreement, Marshall plan etc.) and the new economic era hence ushered in was called the “Post-war consensus“. At its core was the Keynesian economic model – after the British economist Lord John Milnard Keynes – that envisaged economies regulated by government intervention, characterised by regulations, price control, unions, taxes, welfare, duly supported by extensive price controls through the framework of the post-war global currency system. Unlike today, currency values were fixed back then and only changed very occasionally through government intervention (like our petrol prices once upon a time). The US Dollar was as the reserve currency and pledged to the Gold Standard (One ounce of Gold = $35) with all other currencies pegged to the Dollar (or to the Pound, the old reserve currency) at fixed exchange rates. It was designed to discourage or highly regulate global trade and to ensure that reconstruction Dollars are used only for what they were meant to. In all, the post-war consensus could be said to a continuation of wartime price controls.
A Keynesian economy was necessary at that time. People were jittery from all the misery, death and destruction of the past 15 years and had to be calmed down and taken into confidence about their future. Keynesianism confidently projecting stability, security and certainty through visuals of a secured future where Mr.Everyman and his family could live a respectable life on a steady (even if low) salary where pensions, healthcare, education and other basic necessities were delivered by quality government services. It worked, of course, delivering an egalitarian world of stability and niceties but looming government. The idyllic but boring 1950s are still revered in popular culture and civilisational memories as the “golden age of western civilisation“. Of course, with the grey clouds of the Cold War gathering at their horizon, it was in the interest of western governments to pamper their citizens with goodies ranging from subsidised education to free healthcare to affordable housing and all sorts of price control. They needed their populace to be fit and healthy. Still, given all the inequality and uncertainty of today’s world, those times still come across as very preferable, global macroeconomics be damned. However, it would not be long before the structural problems of Keynesianism started to show. The next event in the chain was not very far away.
2. The Nixon Shock
In the USA, Keynesianism reached its peak under Presidents Kennedy and Johnson. The West German and Japanese economies had recovered by that time and were eating into US share in world trade, causing the US Dollar to be overvalued and inflation to rise. As foreign trade couldn’t be carried out in any currency other than the Dollar world governments were fed up of having to hoard Dollars and started to “redeem” the promised Gold against their Dollar holdings. Obviously, the US didn’t have enough Gold to cover all the Dollars everywhere in the world, and inflation continued to rise. To combat this, President Nixon, on August 13, 1971, unceremoniously initiated a set of events that by 1974 would take the Dollar off the gold standard and introduce the “fiat exchange currency system” that we see today, where currency value is determined according to various economic and fiscal indicators of the country. This “Nixon shock”, as it is now called, was the first blow to Keynesianism. It was not enough to end inflation, however, which had by the time of President Jimmy Carter grown into Stagflation which was followed by the oil shocks, recession and social unrest of the mid 1970s, marking the end of the great post-war economic boom. Keynesianism or Bretton Woods had no answers to these crises. With the horrors of war having long since receded into distant memory and eclipsed by current economic realities, it was generally felt that the ancient system of Keynesian regulations and controls were holding the modern world back from achieving real glory through international trade and consumerist awesomeness.
Keynesianism ended when Ronald Reagan and Margaret Thatcher swept to power in massive Conservative victories in the USA and UK respectively. And they immediately got to work dismantling and carting away the ruins of the post-war consensus, ushering in a new era of roaring economic prowess. The new system ushered in was called Neoliberalism and was the antithesis of Keynesianism. The state withdrew from the economy, regulations and controls were dismantled, taxes were massively cut, unions were busted and anything that was privatisable was privatised (mostly in the UK), following Reagan’s bedrock idea of “government has no business to be in business“, a slogan still very popular with many quarters. Economies surged ahead with historically high levels of growth. A brave new world had arrived. The next event in the chain was underway.
3. Reaganism and Neoliberalism
Neoliberalism draws its core ideas from what is called the application of the Laissez-Faire theme to economics. It means to say that things (the market) should be free to run their natural courses, to find their “levels” automatically without “external” interference, especially from the government. Also known as the much-hallowed “free market” theory, it was codified by Adam Smith in the 18th century and has since been the altar at which economic conservatives worship swearing that this was how God meant it to be. Reagan and Thatcher bolstered the theory with their own little add-ons such as “trickle down theory” and “rising tides lifting all boats“. The Reagan years imprinted the “Let the government step out of the way and let the market handle things themselves” philosophy into the American consciousness that it found itself at the core of that cherished American ideal of “Freedom”. The “free-market” theory or the “freedom” to conduct one’s business with minimal or no interference from external forces or governments was intricately woven into the very fabric of the American way of life and consecrated as the foundation of democracy. The message was so strong, believable and obvious that the opposition was literally destroyed. And so came about our present way of life. The world was being remade to look how it does today.
Neoliberalism was inaugurated on the fifth of August, 1981, when Ronald Wilson Reagan, the 40th President of the United States of America, picked up his presidential pen and signed a Presidential order that unceremoniously fired an entire lot of (13,000) unionised air traffic controllers who were on strike demanding better pay and working hours. The order also banned them from federal jobs for lifetime and sacked their union as well. And so, the celebrated former movie star who three decades ago as president of the Screen Actors Guild had famously led a walkout demanding better conditions for movie personnel, ended the might of unions in the USA. Other unions and workers got the message, and the “unions are bad for everyone” propaganda did the rest. Good riddance, they said. Them pesky worker unions are always getting in the way of doing business and generating profits by demanding this and that be done. The bargaining power and force that labour had over capital was irreversibly broken, leading to today, where capital reigns supreme and neither the worker or the consumer has any bargaining power over employers or producers and are duty-bound to submit to their profiteering marches. Then there were other things like massive tax cuts especially for the rich (so instead of the government taking it away, they could reinvest that money and generate more jobs for everyone! Yay!) and most of all, the dismantling of any regulatory structure for doing business, including those that catered to the welfare of employees. Competition is good for consumers because choices will increase, prices will reduce and service will improve, right?
Speaking of air traffic, one of the greatest transformations effected by Reaganomics was on the aviation industry, not just in the USA but the world-over. Aviation was a very different place until 1978 when the US administration passed the Airline Deregulation Act. The USA at the time had more than 50 airlines in a heavily regulated industry where the government fixed fares, routes, schedules etc., that every airline was ensured a profit and growth. It was not unlike our contract-carriage bus services. Reagan thought all this was bollocks. In the de-regulated airline industry players were free to do as they please with respect to operations and pricing as long as they adhered to safety norms. Fast forward 40 years and we see four decades of bankruptcies, bailouts, mergers and acquisitions having resulted in four mega-airline corporations ruling the American skies as a quadropoly, a cartel virtually accountable to no one – passengers, employees or governments, fixing fares and slots and routes among themselves for their maximum profits only that gets drained by cutthroat executive fatcats and shareholding robber barrons. And of course, they also approach the government for bailouts when things get tough.
The basic doctrine of Neoliberalism is that nothing, no matter what, including anything and anyone or their welfare, should come in the way of generating profits and “maximising wealth of stakeholders”. Anything goes in the name of profits, the best way to achieve which as almost a natural consequence is to translocate business activities to a location of lower cost (more profits). So, off went America’s hallowed manufacturing plants first to Mexico, then to South America, and since the Boeing 747, the Far East, with East Asia first and China since the early 1990s, leaving the desiccated corpse of the American Middle Class, which flourished on the back of unionised factory jobs in its wake. And this is how China rose. The rise of China can be directly attributed to America trying to “increase share holder value” by the means of cost arbitrage. And the plight of those ex-unionised workers and all? Well, nothing matters in the face of profits, remember?
It is here that we move on to our next event. As it turns out, it was the globalised Neoliberal doctrine built by the Nixon-Reagan axis that created the extractive and arrogant political and economic behemoth we know today as the People’s Republic of China.
5. China
The China story begins in 1956 with the death of the Soviet dictator Joseph Stalin. The first thing Nikita Khrushchev would do after securing his seat in the Kremlin was to denounce Stalin and Stalinism, proposing a new “benign” interpretation and application of Marxist theory in its place. This angered fellow traveller (and then dirt-poor) China, which would ultimately lead to a doctrinal schism between the two Communist powers. President Richard Nixon lost no time trying to turn this rift into an opportunity to gain some leverage in the Cold War, and in 1972 landed up in China, breaking 25 years worth of accumulated ice between the countries. Today it is generally agreed that it was this historic visit that laid the foundation of the globalised world we live in, viruses and all, the equivalent of Vasco-da-Gama landing in Kerala or Admiral Perry showing up in Japan.
China-US relations only improved dramatically from there. Just about when Reagan was introducing his Neoliberal policies, China under Deng Xiaoping was parallelly enacting a set of policy changes trying to open up to the world in the form of a centrally-controlled Communist market economy. “We have a lot of land and a lot of people. You can save a ton of money if you were to come and build your factories here.” This policy came of age exactly when the Cold War was ending. As the threat to shipping and trade that hung over half of the globe was lifted and with the champion of capitalism now calling all the economic shots, there was nothing to prevent large-scale globalisation as envisaged by Reagan and Thatcher. China was at the right place at the right time and it all nicely fell into place, turning into the world’s factory and symbiotically leeched off western technology to develop its own versions.
We would never know, but it is possible to imagine the China we see today as the result of a long-term Kissinger doctrine, the mutated outcome of a project to gain leverage during the Cold War. It was obvious that the US considered China as a strategic counterweight to the USSR in Asia. Imagine if China were to be “developed” a strong “market economy” and consumerist freedoms despite being a Communist country and right next door to the USSR? That would really show who is boss. For this to work though, China would have to be developed as an economic powerhouse on the lines of Japan and the South Asian Tigers by rewriting rules and building infrastructure and rapidly urbanising while leaving behind old Communist dogma. The long term plan would of course project it as a cheap global manufacturing destination that would achieve the twin goals of counter-balancing the USSR while also effecting Neoliberal economic goals. Secretly, the west would’ve also hoped that in the long term, a developed country and a market-driven economy would loosen the party’s control over the Chinese people and give in to democratic reforms. We know how all that went.
India would’ve been an alternative to China, but Nixon/Kissinger’s hatred towards India was not an exact secret. Let us not forget that in the first Shanghai Communique the USA had openly reaffirmed its support to Pakistan over Kashmir.
The rise of China also gave rise to the Supply Chain. And it was this one event that finally led us to where we are today.
6. The Supply Chain
It is only providence that a chain itself finds place in our chain of events. You see, the presence of core facilities is never enough to guarantee total dominance which can be achieved only through a robust logistical supply chain. If is not continuously and uninterruptedly fed with its constituents, a factory (raw materials, components, parts, plans, tool sets, machinery, manpower), an IT park (tech graduates, skilled professionals, computing hardware, power and internet, high-tech devices, leisure options, business accommodation, mass transport), or an army (arms/ammunition, food, water, clothing, equipment, replacement troops, spare parts) will not be able to output at peak efficiency (assembly lines or software projects or battlefronts). Of course, the most basic constituent of any economic powerhouse are the presence of modern, fast, free-flow transportation medium (roads, highways, railways, waterways, ports, airports) that ties supply chains together. Absolute supply chain efficiency will be indistinguishable from magic: a constituent part or a tool will appear right there right when you reach for it, not earlier, not later. A reason why Nazi Germany lost World War 2 was because they never really wrote into their calculations on how to keep the Wehrmacht supplied. Frozen soldiers do not fight well. China learned from history. They didn’t just build factories or even supply chains but all-inclusive, integrated massive production ecosystems that input raw materials in one end and spit out finished goods from the other. It is only that the Coronavirus was one of those products.
Our world had become so intimately interconnected and interwoven that distances and geography didn’t seem to matter anymore. And in such a world, everything gets transmitted across borders, knowingly or unknowingly, especially those things we cannot see and piggyback on unsuspecting humans. And since nearly every such supply chain originates in China, it was only a matter of time.
Given how efficient the supply chains we built were, it was impossible for the pandemic to not happen.
And today, fifty years of Neoliberalism and globalisation has created a net of hyperefficient global supply chains of raw materials and goods being procured, produced, assembled, shipped, sold and delivered across the globe, working so seamlessly as if it is magic. And it wasn’t just goods. Peak Neoliberalism dictated that even geographical boundaries should not come in the way of consumption. So, with the supply chain of goods grew the supply chain of people as well. The most defining feature of the past decade was this international travel frenzy driven by the global megatourism and corporate travel industries and fueled buy the craving for peer approval on social media. Suddenly, everyone was up and about. Super carrier airlines, cruise liners, mega-airports and internet-linked facilitators like Uber, AirBnB (and social media) etc. made travel easier, faster and more accessible. Foreign holidays became more commonplace than visits to Grandma. Most of Europe was reeling under overtourism. It somehow became normal that people fly across continents to attend two or three hour business meetings (“video conferencing? Are you joking? That would never work!“). Do not have money to consume? No problem, debt is available for several generations ahead. Just buy, buy, buy, consume, consume, consume. Nothing stops you from enjoying your life! This endless cycle of consumption ensured these supply chains kept going.
In short, a long drive towards perfecting consumption has led us to the pickle we find ourselves in. We wanted more and more shiny things and life for most of us was one long holiday. It wouldn’t have been possible to keep consuming like this at the expense of nature, because that is the law of the Universe which we cannot change unless we become a super-advanced civilisation that can change the laws of thermodynamics at a whim (but such a super-advanced civilisation wouldn’t want to change those laws because they would understand its ramifications and why those were created in the first place. Let us go back to unsustainability. Everyone assumed that virtual meetings wouldn’t work, but it turns out they work fantastically well. There was a way to business to be conducted without executives having to burn jet fuel every two weeks. Though everyone gets stuck in traffic every single day of their lives in every single place on the earth, no one would want to switch their cars for the sake of public transportation. And it is the same for many, many other systems. We weren’t ready to give up some of our own “pleasures” for the sake of the health of our civilisation. And now here we are. When we built a consumption economy that was solely placed on burning fossil fuels alone this is what we got. There are a few people who hope that things will get better from now on. I have no such hope. The world will bounce back like a rubber band stretched taut, to its old ways as soon as a cure is invented, back to its old ways on the path to its irreversible, utter destruction.
