Back to USSR, De-globalization, and the “Doughnut Economy”

Where Does COVID-19 Take Us?

By Iryna Lozynska

In 1939, when the world, much like today, was staring into the depths of a chasm, C.S. Lewis said: “The war creates no absolutely new situation. It simply aggravates the permanent human situation so that we can no longer ignore it. Human life has always been lived on the edge of a precipice. We are mistaken when we compare war with ‘normal life’. Life has never been normal.” Ever since the WHO declared COVID-19 a pandemic, Lewis’ elegant words are making rounds across academic and industry publications as we try to make sense of what ‘normal’ is and will be post-COVID. The past might not repeat itself, but it surely enjoys rhyming. As such, through political, historical, philosophical, and consumer dimensions of COVID-19, helpful takeaways may be discerned. 

Political Dimension: De-globalization, Isolationism, Multilateralism and ‘Agile Decoupling’

UN Secretary General Antonio Guterres recently said that “the relationship between the biggest powers has never been more dysfunctional” than it is right this moment. Indeed, fragmented responses to COVID-19 have been delegated almost entirely to individual states, with supranational entities having a hard time pushing out rescue packages. Pandemic momentum is seeing the rise of dis-embedded unilateralism – states lock down borders, states prioritize their own PPE and vaccine investments, and states issue financial supports to individuals and businesses. The State is once again in the spotlight, ‘consumers’ are once again called ‘citizens,’ the notion of ‘public good’ re-emerges, and observers sing praises to Singapore, Taiwan, and Hong Kong’s strategies. As the world shuts down, there is not an insignificant amount of chatter about deglobalization. However, this is hardly the first time such opinions were popular (and it won’t be the last). 

Deglobalization has first popped up as a serious contender to the status quo since the 2008 financial crisis, with Brexit and 2019’s trade wars further adding oil into the fire. Trade, post-Great Recession, has not been growing as quickly as before the crisis, and politically the chorus against open borders has been led by populist storytellers with their thesis that “eliminating international entanglements can make life simpler and less regulated.” In the immediacy of COVID-19, there are already spikes in re-shoring, lots of talk on the importance of supply chain resilience, national agricultural initiatives like Pick for Britain, and help-your-own local merchant programs like Le Panier Bleu.

However, rerouting supply chains is not like rearranging furniture – it’s complex, time-consuming, costly, not to mention the interconnected nature of supply chains means that no product move can be made in isolation. As such, the near future would benefit not so much from deglobalization and retreating multilateralism as it would, according to Gartner, from “managing for a broad range of interconnected risks.” The Brookings Institute echoes this sentiment: “Pandemic prevention and containment requires increased global coordination as well as adaptive, temporary, and coordinated decoupling.” 

Historical Dimension: Food Shortage Anxiety and Lessons from Perestroika

The apocalyptic scenes of COVID-19’s empty shelves have rekindled, in some, the bitter memories of late-USSR, when stores often only had margarine and beech juice to offer, while victims of a centrally planned economy loaded up on salt and matches and fumbled with their rationing cards. The economic reforms of perestroika intended to loosen centralized control, lift restrictions on businesses, private property, and international trade. Instead, they amplified the problems of the command economy and accelerated its stunning collapse.

While similarities between the global pandemic and the last days of USSR might seem to end at the surface aesthetics of empty shelves, in fact there’s a bit more to unpack here, as in both cases (albeit for different reasons) supply chains were messed with. While in the Soviet example the state abolished its monopoly over the economic sector, breaking down supply chains and creating bottlenecks, today’s disembedded unilateralism, attempting to correct critical pandemic supply chains on the fly, may run into similar problems.

The jury is still out on whether food shortage anxiety experienced today by millions self-isolating at home, is warranted or not – there are comforting messages suggesting that the food supply chain system is well in control. At the same time, reports emerge of sick workers, trucking bottlenecks, export bans, and panic buying as reasons to worry about food shortages. While there are many silk roads spanning the globe these days, as governments mull over national rescue strategies not unlike the post-war Marshall Plan, perestroika lessons are highly relevant in our reality. 

Philosophical Dimension: From Endless Growth to Doughnut Economics  

Global pandemic has acted as an intellectual fertilizer, inspiring many popular thinkers to share their musings on where all of this is going. Eminent South Korean philosopher Byung-Chul Han penned a piece on authoritarian cultural tradition, collectivist mentality, and adherence to digital surveillance as main factors behind certain countries’ success against the coronavirus. The controversial Slavoj Zizek (who Han disagrees with) expressed concerns about “barbarism with a human face and ruthless survivalist measures enforced with regret and even sympathy but legitimized by expert opinions.” Italian philosopher Giorgio Agamben (with whom Zizek disagrees) lamented that “a society that lives in a perennial state of emergency cannot be a free society.”

Philosophy and scholarship always somehow trickle into political and business life, and we are already seeing this with Amsterdam’s decision to experiment with the so-called ‘doughnut economy.’ A concept devised by an Oxford economist Kate Raworth, the model aspires to fixate economic activity in the space between the ‘inner doughnut ring’ (minimum like clean water, food, sanitation, housing, energy) and ‘outer doughnut ring’ (ecological ceiling highlighting the boundary of what the planet can sustain). Staying between the rings is the sweet spot for the post-COVID-19 economy Amsterdam wants to build. While this might be an outlier, rethinking the meaning of economic value might be more than a knee-jerk reaction to the moral weight of the jobs versus lives equation. 

Consumer Dimension: New Vocabulary, New Resilience

‘Resilience’ is a key term in pandemic dictionary, and this extends well beyond how we talk about supply chains. Russian pensioners, for instance, are reportedly refusing to self-isolate because they believe having lived through blockades, gulags, and deficits they have essentially proven that their resilient approach to life’s trials and tribulations works better than any mask. While Russia doesn’t score terribly well on FM Global’s Resilience Index, Denmark does – the country’s social feeds are abuzz with ‘samfundssind,’ a pandemic trend-word signifying moral duty to make sacrifices for the sake of public health. Across the Atlantic in Canada, ‘caremongering’ has risen as a word describing a way to help those more at risk of health complications related to COVID-19.

From a tartan company making masks to Dyson manufacturing ventilators to fashion brands making PPE, new words and novel business decisions cross-pollinate to communicate camaraderie, urgency, functionality, safety, and resilience. Many of these novelties will stick while others will fade along with the virus – however, brands that respond to the public’s needs quickly and learn the new vocabulary tend to do well. A study of advertising during the First World War, for example, shows that many of the manufacturers who produced the most eye-catching ads are still in business today – from Burberry trench coats to Gillette razors

Parting Words

This pandemic will be dissected and analyzed by everyone under the sun owing to its unprecedented nature. While forecasts change and projections vary, viewing this seminal event through as many disciplinary dimensions as possible is a solid way to hedge against risk. 

Iryna Lozynska is a Senior Research Consultant at M-Brain Group.

Leave a Reply