Possibly the most disagreeable consequence of the crisis would be the expanding role of the state to the detriment of individual liberties and privacy. Cutting across political ideologies, governments in countries like China, South Korea, Singapore, Italy, Israel, and Mexico, are harnessing surveillance-camera footage, mobile and credit card data to trace the movements of people and establish virus transmission chains.
Digital surveillance tools are being used by governments to enforce social control, turning technologies upon their own people. China has forced its citizens to download an app in their mobiles that assigns an automatic colour code indicating their contagion risk and then determines who would be allowed in public places.
The social contract on the balance between public safety and personal privacy are getting altered irrevocably, preparing the ground for invasive institutionalised forms of snooping by the State. In what may become the new normal, the State as an entity of governance may increasingly become a surveillance state.
A crisis of this magnitude and spread cannot be handled except without the overarching authority of a centralised power, and it has necessarily enhanced the role of governments across all continents and extended their control over the economy. Even before the crisis, the world economies were slowing down, but now, all economies are falling into severe recession.
The US economy has been estimated to contract by 4 per cent in the first quarter of 2020 and as much as 14 per cent in the second, while the economies of the 19 Eurozone countries are predicted to shrink by 15 per cent in the first quarter and 22 per cent in the second. In India, the growth is estimated to plummet to 2.1 per cent in the current fiscal.
The global economic meltdown of 2008 may pale into insignificance compared to the present crisis. When economic activities will start expanding will depend on when the virus runs out its course, about which there is no light at the end of the tunnel yet. To prevent economic collapse and millions of job losses, governments necessarily have to intervene. The US Government has just announced a $2 trillion stimulus package worth 10 per cent of their GDP, while the UK, France and other EU countries are promising credit guarantees worth 15 per cent of GDP.
The stimulus packages are going to boost the overall government spending to well above 40 per cent in the advanced economies. India has so far announced a Rs. 1.7 lakh crore aid package for the affected people (less than 1 per cent of GDP), which is likely to be boosted by more stimuli for the corporate sector which are reeling under the crisis. In an effort to thwart government and corporate bankruptcy, Central banks are cutting down interest rates globally and printing money.
In India, the RBI has cut the repo rate by 0.75 per cent, the highest in a decade, and CRR by 1 per cent, releasing additional liquidity of Rs 3.7 lakh crore. At a time when economic policymaking looks uncertain in every country, it is indeed time for the State to act decisively. But, as The Economist has pointed out, if history is any guide, once the crisis is over, the States are unlikely to relinquish the grounds that they have occupied.
Every past crisis had led to an expansion of the States’ capacity and enlarged its role, to discharge which they needed to raise more taxes. Crisis always makes States grow, and in the current pandemic, without some coercive power, they won’t be able to enforce lockdowns or prevent an impending economic collapse.
Earlier the Government’s drive for compulsory Aadhar-bank account linkage prompted the Supreme Court to intervene, but without such linkage now, it would be impossible to transfer the aid money to the accounts of individual beneficiaries. The more difficult it becomes to arrest the spread of the virus, the more the State’s power increases, which meets with approval and acceptance of the citizens. They won’t mind submitting themselves to the state’s surveillance supposedly for their own good.
The possibility of a neartotal collapse of the economy in many countries, at least in the short run, will cause severe fiscal strains upon governments and debt crisis for the corporates, which in turn would spread the contagion across the financial sectors, with manifold increases in the non-productive assets of banks and financial institutions. Stock markets will continue to be rattled and remain volatile for a long time before settling at an equilibrium level. All this will make the governments assume more powers and control over the economy with the consent of their citizens.
Initially, these powers will be claimed to be temporary, as the US President has assured that government intervention is not a government takeover and that its purpose is not to weaken but preserve the free market. But once it has tasted blood, it will be very difficult to make an almighty State give back the liberties it has appropriated from its citizens in any country. As The Economist rightly observes, “The forces encouraging governments to retain and expand economic control are stronger than the forces encouraging them to relinquish it, meaning that a “temporary” expansion of state power tends to become permanent.”
Hysteresis, an effect seen in magnetism, also applies to the economy, making an event persist in the future even after its causes cease to exist. Thus, following a recession, the unemployment rate may continue to rise even in a growing economy, and even if State power has been expanded only to tide over the crisis, it may be difficult to rescind such expansion. One consequence of this may be the resurgence of the public sector, reversing the trend of globalisation and destatisation.
All over the world, withdrawal of the state from the ownership and distribution of the means of production has now been the norm. Massive programmes of privatisation and strategic disinvestments are driving economic reforms in almost every country, including India. In response to the growing demands from the public, as States will tend to become autarchic and the public sector is likely to reassert itself, assuming responsibilities like production of “strategic” commodities like medicines, medical equipment, etc.
Once it expands, hysteresis may set in here too, leading to further rollback of globalisation. In their book, The Narrow Corridor: States, Societies and the Fate of Liberty, Daron Acemoglu and James Robinson argued that for ensuring the liberty and rights of people, a strong state counterbalanced by a strong society, is essential. While a strong state is a prerequisite to ensure law and order and deliver public services critical for empowering the citizens to make and pursue their choices in life, a strong, mobilised society is needed to “control and shackle a strong state”.
In the process the country often enters a narrow corridor where state and society compete with each other, the state expanding its capacity and trying to control the society, and society in turn mobilising more and wresting more liberties from the state. A powerful state often tends to become despotic and move out of the corridor suppressing individual liberties and repressing society.
The danger of this in the post Covid-19 world is very much real, and shackling this monstrous Leviathan would be one of the biggest challenges to civil societies all over the world to reclaim the hard-won individual liberties. Every crisis comes with some opportunities, and Covid- 19 is also no exception. The fortunes of alternative plant-based ‘vegetarian’ meat-based industries in Asian countries might surge, where the demand for pork and cattle meat has nosedived after the coronavirus outbreak.
Apart from the animals, this will be good news for the planet too, since meat consumption poses a serious environmental threat as methane produced by cattle contributes significantly to global warming. The plummeting demand for oil the world is currently witnessing may usher in a healthier climate. The virus has driven home the point that a society built on greed, cruelty to animals, inequality, conspicuous consumption and waste at the cost of Nature is not sustainable and we must build a society that is based on balance, foresight and compassion before the next crisis hits us.
Such a society might also ensure the improvement of workers’ conditions, with higher social protection, sick pay and other benefits, fulfilling the Marxian dream. The world has changed many times before, but the changes have always been gradual. It is changing again now, but this time it is changing abruptly, unrecognisably, in ways that are unwelcome. Perhaps the worst will still spare us, but it will not be the same world anymore. I pray that I am proved wrong.
(The writer is a commentator. Opinions are personal)