Insights from Simon Mair, Research Fellow, University of Sydney

I am dithering about suitable quotes for this month – what might everyone want? Something light and escapist to offset the endless Corona Virus news or something that seriously addresses the issues that this pandemic raises? My own reading alternates between novels for emotional relief and nonfiction when I can cope with information.

One of the best articles I’ve read recently is titled “What will the world look like after Coronavirus? Four possible futures,” by Simon Mair, a Research Fellow in ecological economics at the University of Surrey. If you’re interested in the full article it was published in the Conversation’s Insight Series.Creative Economic Thinking

Mair’s basic argument is that we need a very different kind of economics if we are to build a socially just and ecologically sound future. COVID-19 has made this ever more obvious. He proposes four possible futures from an economic perspective: a descent into barbarism, a robust state capitalism, a radical state socialism, and a transformation into a big society built on mutual aid and adds that versions of all these futures are perfectly possible, if not equally desirable.

Mair is not specifically addressing the Australian situation, nor is he addressing topics such as flattening the curve, an issue with which the Australian Government is preoccupied. Instead he is providing a general overview of possible alternatives to present day economics, especially of the Keynesian variety. He is interested in developing a different economic mindset. We tend to think of the economy as the way we buy and sell things, mainly consumer goods. But this is not what an economy is or needs to be. At its core, the economy is the way we take our resources and turn them into the things we need to live. Looked at this way, we can start to see more opportunities for living differently that allow us to produce less stuff without increasing misery.The Problem of Wage Dependence

The problem is how to produce less in a socially just way; how to reduce the amount of stuff we make while keeping people in work? At the core of this problem is how to reducing people’s dependence on a wage to be able to live. There has been a broad economic consensus for 40 years derived from Keynesian notions. This has limited the ability of politicians and their advisers to see cracks in the system, or imagine alternatives. Mair argues that this mindset is driven by two linked beliefs:

  • The market is what delivers a good quality of life, so it must be protected
  • The market will always return to normal after short periods of crisis

However, it is feasible to believe that the COVID-19 crisis could result in an expansion of the economic imagination. As governments and citizens take steps that three months ago seemed impossible, our ideas about how the world works could change rapidly.Four Possible Futures

To outline four possible generalised futures Mair uses a techniques from the field of futures studies in which you take two factors you think will be important in driving the future, and you imagine what will happen under different combinations of those factors.

The factors he choses are value and centralisation. Value refers to whatever is the guiding principle of our economy. Do we use our resources to maximise exchanges and money, or do we use them to maximise life? Centralisation refers to the ways that things are organised, either by lots of small units or by one big commanding force. What might happen if we try to respond to the coronavirus with these four extreme combinations:

  1. State capitalism: centralised response, prioritising exchange value
  2. Barbarism: decentralised response prioritising exchange value
  3. State socialism: centralised response, prioritising the protection of life
  4. Mutual aid: decentralised response prioritising the protection of life.

I will attempt to summarise each of these four possibilities, one for each week of the month. We start, therefore with State Capitalism.Week 1: The Future as State Capitalism

Mair suggests that a state capitalist society pursues exchange value as the guiding light of the economy. However, it acknowledges that markets in crisis require support from the state. Given that closing down work places may contain the virus, the state steps in with extended welfare and as we have seen over the past couple of weeks it also enacts massive Keynesian stimulus by extending credit and making direct payments to businesses.

The expectation is that this will be for a short period but it will allow as many businesses as possible to survive. Could this be a successful scenario? Possibly, but only if COVID-19 proves controllable over a short period. Increased illness and death will provoke unrest and deepen economic impacts, forcing the state to take more and more radical actions to try to maintain market functioning.Week 2:  The Future as Barbarism

Mair suggests this is an option it would be best to avoid. Barbarism is the future if we continue to rely on exchange value as our guiding principle and yet refuse to extend support to those who get locked out of markets by illness or unemployment. Businesses fail and workers starve because there are no mechanisms in place to protect them from the harsh realities of the market. Hospitals are not supported by extraordinary measures, and so become overwhelmed. People die. Barbarism is ultimately an unstable state that ends in ruin or a transition to something more stable after a period of political and social devastation.

Could this happen? It could happen by mistake during the pandemic if a government fails to step in in a big enough way during the worst of the pandemic. If support is insufficient to prevent market collapse in the face of widespread illness, chaos would ensue. Hospitals might be sent extra funds and people, but if it’s not enough, ill people will be turned away in large numbers.

The failure of the economy and society would trigger political and social unrest, leading to a failed state and the collapse of both state and community welfare systems.Week 3: The Future as State Socialism

State socialism describes a cultural shift that places a different kind of value at the heart of the economy. The key here is that measures like nationalisation of hospitals and payments to workers are seen not as tools to protect markets, but a way to protect life itself. In such a scenario, the state steps in to protect the parts of the economy that are essential to life: the production of food, energy and shelter for instance, so that the basic provisions of life are no longer at the whim of the market. The state nationalises hospitals, and makes housing freely available. Finally, it provides all citizens with a means of accessing various goods – both basics and any consumer goods we are able to produce with a reduced workforce.

It’s possible that state socialism may emerge if a deep recession happens and there is disruption in supply chains such that demand cannot be rescued by the kind of standard Keynesian policies we are seeing now (printing money, making loans easier to get and so on). Then the state may take over production.

There are risks to this approach – we must be careful to avoid authoritarianism. But done well, this may be our best hope against an extreme COVID-19 outbreak. A strong state able to marshal the resources to protect the core functions of economy and society.Week 4: The Future as Mutual Aid

Mutual aid is the second future in which we adopt the protection of life as the guiding principle of our economy. But, in this scenario, the state does not take a defining role. Rather, individuals and small groups begin to organise support and care within their communities.

The risks with this future is that small groups are unable to rapidly mobilise the kind of resources needed to effectively increase healthcare capacity, for instance. But mutual aid could enable more effective transmission prevention, by building community support networks that protect the vulnerable. The most ambitious form of this future sees new democratic structures arise. Groupings of communities that are able to mobilise substantial resources with relative speed. People coming together to plan regional responses to stop disease spread and (if they have the skills) to treat patients.

This kind of scenario could emerge from any of the others. It is a possible way out of barbarism, or state capitalism, and could support state socialism. We can see this as a failure of state responses. Or we can see it as a pragmatic, compassionate societal response to an unfolding crisis.