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Monday, January 25, 2021
Dr Mah Hui Lim has been a university professor and banker, in the private sector and with the Asian Development Bank.
Dr. Michael Heng, Former professor in Management Science.
PENANG and SINGAPORE, Apr 6 2020 (IPS) - The Chinese word for crisis consists of two characters – “weiji”. Wei means danger and ji means opportunity. Every crisis is pregnant with danger and risks but also with opportunities – for some to make money, for others to learn valuable lessons, and for society to reorient or restructure its priorities, institutions and even the system.
Roosevelt’s 3 Rs policies were relief, recovery and reforms. He implemented large scale public works to mop unemployment, introduced social security safety net which still exists today, tamed and regulated finance by separating investment banking from commercial banking, and set up regulatory watchdogs for the stock market.
The 3Rs led to the eventual recovery of the economy and most significantly to a well-regulated financial system that did not experience major financial crises for over 40 years. Government took on a bigger role in the economy.
The negative aspects of the crisis have been widely covered in the mass media, and would not be repeated.
If there is any silver lining to this dark cloud, it is found in some of the unintended positive consequences of this crisis – carbon emission choking the world is down significantly, traffic congestion has lighten up, crime rates have declined, the mountain of garbage generated has declined, communities have come together to help the afflicted, nature is reclaiming its space.
As one US celebrity who was infected said in his interview it is nature’s way of hitting back at what humanity has done to it. We were supposed to be the guardian and trustee of this earth but we abused it.
Deforestation and the destruction of natural habitat has reduced the space between humans and wild life opening more chances for new forms of virus and contamination. Epidemiologists have warned for decades the potential and dangers of new epidemic but they went unheeded. This is the most serious but, unfortunately, it may not be the last.This multiple crises – health, economic, financial and environmental – is a wake-up call for humankind to rethink its hyper consumerist economy that prides growth above all else, and one that benefits a tiny segment at the expense of the majority. It prompts us to think more seriously about restructuring society to one that is more socially and economically equitable, more respectful of nature and our environment, and restore a balance between non-materialism and materialism.
Since the 2008 Global Financial Crisis, there was a nascent effort to move away from the obsession with GDP growth as the measurement of a society’s welfare and wellbeing.
The small nation of Bhutan spearheaded the alternative concept of Gross National Happiness. But these movements were muted and side lined. This crisis offers us the opportunity to bring it to the fore. Prime Minister Ardern of New Zealand recently said she would prioritise her people’s wellbeing over growth.
Karl Polanyi 70 years ago published the Great Transformation. His great contribution was that markets has existed for thousands of years before the rise of industrial capitalism in 18th century. Markets, where goods and services are exchanged to meet social needs, were subordinated to social, political and cultural norms. But this arrangement was overturned when market was deified to become the only organizing principle in society. Markets in society became the market society.
Polanyi presciently predicted that policies inspired by market liberalism, if unchecked, would result in the destruction of human society, the natural environment, and even productive forces.
Classical market liberalism convulsed in the 1930s with the abandonment of the Gold Standard. But fifty years later, it was resurrected in the form of neoliberalism which has formed the basis of the government policies in many countries since late 1970s.
This crisis lays bare the myth of the invincibility of the market. Market has broken down in a big way and the state is asked to step in to solve this crisis – from bail out of companies, to paying wages of workers, to cutting interest rates, soft and loans to small business guaranteed by the state etc.
There are calls in the US for the President to invoke emergency authority to direct companies to produce vital health equipment needed to fight the epidemic. Once this is over, we should not be going back to business as usual.
Markets will continue to exist and play a part in the economy. But it must be subordinated to society, to be regulated by the state to serve a greater good. For market to function well as a public good, it must not only be free but also fair. Both attributes are equally important, like the two wings of birds. The new economy must prioritise people’s as well as nature’s wellbeing over profit making for a few.
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