“Economic Rebound” and “Destabilizing Oscillation”: Why realistic radicalism is essential
File Photo: Key worker Arefaine (L), 60, from south london at work as a security guard for Iceland supermarket in London, Britain, 06 April 2020 (issued 07 May 2020). Britons are now in their sixth week of lockdown due to the Coronavirus pandemic and Health staff, teachers, employees of supermarkets, bus drivers, and many others are essential workers who keep British economy operating during the SARS-CoV-2 coronavirus pandemic which causes the Covid-19 disease. EPA/ANDY RAIN
ΣΧΕΤΙΚΑ ΑΡΘΡΑ
Given the rapid, unprecedented in a sense changes in present time, international organizations and local institutions constantly adjust their predictions with respect to the impact of coronavirus on national and world GDP. Initially estimates ranged around zero growth, but currently they moved towards ominous forecasts, including double-digit recessions. This makes the present period comparable to the two world wars and the greatest economic crises in modern history.
At the same time, perhaps in order to counterbalance a well-justified pessimism and fear felt by citizens, workers and producers, many analysts refer to the “economic rebound” to convince for the impermanence of any negative effects. Indicatively, in the recently revised forecast of the European Commission’s Directorate‑General for Economic and Financial (DGECFIN), Greece will go through a profound decrease -9.7% of GDP in 2020, into a correspondingly dynamic recovery +7.9% in 2021.
- Regardless how realistic the pious desires of an economic rebound are and how quickly this will emerge, economists may overlook, some of them deliberately, another possible macroeconomic outcome, similar to another natural phenomenon that of destabilizing coordinated oscillation! On 12 April 1831, Broughton Bridge collapsed, reportedly due to mechanical resonance induced by troops marching in step.
Obviously, the similarity of the above phenomenon to the actual contemporary situation has to do with the fact that even an induced temporary oscillation of GDP may have severe economic effects when this is coordinated for almost all economies worldwide. If we take into account the significant structural weaknesses of the world economy, the risk of a collapse is more than obvious. After all, the deepening spatial and social inequality and the continual expansion of the over-accumulation of financial capital (in other words of the “financial bubble”) provoked the preexisting signs of a global economic recession, long before the pandemic.
- On the other hand, even if we accept that the structures of contemporary world economy are sufficiently stable, the risk (if not the certainty) of a profound social and political imbalance remains, as a result of the caused, albeit temporary, economic fluctuation. Even if we fully recover in terms of per capita GDP, it is unfortunately very likely that a few million workers and self-employed people will be hardly affected. The depth of the socio-economic inequalities and the excessive centralization of capital (absorption of small and medium-sized businesses by oligopolistic structures) that will be caused will be the basis for an even deeper systemic crisis.
At this point, it is important to clarify the following: I do not defend the cynical position that any effects on the economy can counterbalance the protection of human life. However, the political mix we use to tackle the consequences of precautionary measures and the extent to which we are able to counter those who use this situation as an opportunity to further centralize their capital is obviously a point of criticism for national and international policies.
The required policies will be discussed in a very important international teleconference “Systemic Crises triggered by Contemporary Pandemia & Progressive Way-Outs” on Friday, May 8, 2020, organized by the Association of Economic Universities of South and Eastern Europe and the Black Sea Region (http://www.asecu.gr/)[1]. As a prelude to my contribution to this conference, I would like to mention the need for two levels of intervention:
- In the short term and at the national level, the necessity of a horizontal, socially fair and economically efficient distribution of the burden cause by precautionary measures, in all productive classes and levels of concentration of wealth and capital.
- In the medium term, an internationally coordinated monetary expansion (directly and indirectly) and the utilization of the opened fiscal space to launch a global economic development, by financing public infrastructure investments and public or private productive investments, countervailing spatial disparities and serving socioeconomic and environmental sustainability. [2]
Perhaps the most important feature of modern times is the acceleration of changes – technological, social, economic and political. The pandemia of coronavirus, if nothing else, contributes to their further acceleration, albeit temporarily. Creativity and courage in shaping radical, progressive ideas must be intensified accordingly. History nether stops, nor does it automatically lead to improvements – therefore, either we will shape history or we will suffer the lack of progress.
(*) Dean of the Faculty of Economic and Political Sciences in Aristotle University of Thessaloniki,
President of ASECU http://www.asecu.gr, Member of BSEMAN Coordinating Committee –
https://bseman.net, President of Institute for Social Research Dimitris Mpatsis
http://www.ikempatsis.gr/, Director of the Laboratory ILABSEM – http://ilabsem.web.auth.gr/.
[1] Live streaming in https://www.auth.gr/video/27875 – for an interactive involvement please apply in https://docs.google.com/forms/d/e/1FAIpQLSdDzCurmE3YRaU0tbQOzjYquLkiE5VxbvsT39qhygghpwhIlg/viewform?usp=sf_link
[2] For more details on the specific policy plan see the article “Policies for a New Global Regulation” in “The Press Project” (co-author Themis Tzimas) https://thepressproject.gr/politikes-gia-mia-nea-pagkosmia-rythmisi/ as well as the paper of, Zarotiadis G., “Relieving Inflation or Palliative Self-destruction?”, Journal of Stock Forex Trad 2014, 3:4 DOI: 10.4172/2168-9458.1000133.
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