The enormous damage wrought by the novel coronavirus suggests that the postwar world order — globalism, a market economy, free trade, and the “economy-first” principle — has gone too far, writes Funabashi Haruo.
Novel coronavirus is rampant. In the space of just three or four months, the disease has spread across the world and the number of infected people has exceeded two million. There is still no end in sight. Just as no-one could have foreseen the current global disaster when a new form of pneumonia in Wuhan was reported at the end of last year, it is difficult at this stage to foresee the post-corona socio-economic situation. However, like all infectious diseases that have gone before, the coronavirus will someday be eradicated. When it is, what kind of world will emerge?
Many experts have been expressing opinions on this. Some predict that the economy will head toward stagflation, a combination of recession and rising prices. Individual countries are implementing large-scale anti-coronavirus measures, coming up with economic stimulus packages on a scale many times greater than the response to the financial crisis in 2008 or the Great East Japan Earthquake in 2011: 2 trillion dollars in the case of the United States, for example, and 108 trillion yen in the case of Japan. In the current situation of increasing dependence on public bonds, will markets be able to digest the level of public bonds issued to finance these costs? Can a collapse in government bond prices and a steep rise in interest rates be avoided? The risk of inflation seems imminent.
Others predict that societies will go even further down the road of digitalization. In countries such as Taiwan and China that have been able to contain this contagious disease to a certain extent, the greater implementation of digital technologies using smartphones is said to have been a significant contributing factor. Such applications include tracking and identifying infected individuals, identifying persons who have been in close contact, and monitoring stock levels of face masks, as well as information sharing. It is easy to frame this as something to be dreaded by referring to IT totalitarianism or the digital surveillance society. However, in wartime a degree of restrictions on individual rights and freedoms are inevitable for the greater good, to safeguard the safety and security of the people. I believe that these trends will proceed irreversibly.
Still others predict further power shifts. When this is all over, there will be a clear contrast between those countries that achieved a reasonable degree of success in suppressing the coronavirus and those that failed to do so. The United States will top the list of countries that failed. The CDC (Centers for Disease Control and Prevention), which is considered to possess extensive powers and is well-staffed, could do nothing to stop the coronavirus. This outcome may be said to be the consequence of the Trump administration’s disregard for international cooperation and hostility toward the WHO and other international organizations under its “America First” policy. The United States’ prestige in the world has been greatly damaged, reminiscent of the way that the bubonic plague in Europe signaled the end of the Middle Ages and the loss of absolute authority of the Roman Catholic Church.
In this author’s opinion, the underlying cause of the spread of the latest novel coronavirus and the enormous damage it has wrought may be the fact that the postwar world order led by the United States, namely globalism, a market economy, free trade, and the “economy-first” principle, has gone too far. The inordinate amount of movement of people and goods between countries may have magnified the damage. Immoderate market-oriented policies may have generated disparities, producing impoverished classes without access to proper medical care, swelling the number of victims. Excessive population concentration in large cities may have created poor living and healthcare environments.
If these underlying causes are scientifically proven in the future, the concept of a post-coronavirus social economy will have to be fundamentally re-formulated. Words such as “public,” “decentralized,” “altruism,” “moderation,” and “harmony” will be key. That it will constitute the demise of the modern era which until now has been led by the West is beyond question.
FUNABASHI Haruo is a historian and CEO of the Sirius Institute Inc.
This article first appeared in the May/June 2020 print issue of the Japan Journal.