As bad as it might get, people move on
Right now the economy is on life support with the coronavirus lockdown bringing demand to a standstill. The longer people stay in their homes and businesses remain shut the more damage that is done to the economy. Unemployment is already shaping up to be a massive problem. Frankly, at this stage, it's hard to know what will be left when we crawl out of our caves. Rebuilding the economy will be a tough slog that will take many years.
A common theme emerging in the news and media feeds I am reading is words to the effect of "coronavirus is challenging capitalism." Coronavirus is definitely raising serious questions about how we organise our economies. At the more extreme end, those comments and news are stating that coronavirus signals the end of capitalism.
Much as I would like the economy to have a greater mix of socialism and a little less capitalism, in practice this seems very unlikely for several reasons.
1) Power and money dynamics aren't changing
The people with power and money are the same people. If anything coronavirus is going to further concentrate money in the hands of those who have it. Many of the blue-collar workers in the economy face several months of low to no work with the economy in lockdown. Low-wage workers in hospitality, accommodation etc. face a similar fate. Many of the workers at most risk are the ones losing out. Granted service workers are keeping the economy alive right now, and they will retain jobs, but those jobs are not well paid.
The luckiest people in this crisis are government and private sector white-collar workers who can make a good wage working from home. Wealthy people will take a hit with the fall in the share market. But so long as you have cash in the bank, its possible to weather the storm and ride the market up in the years after the crisis.
2) There are significant barriers to municipalisation
Governments require money to take control of assets. Where are they meant to find that kind of money when they are raising debt for big infrastructure projects? Changing the ownership of major sectors in the economy is probably the last thing on the minds of policymakers right now. Governments and taxpayers will be left with a big bill when all is said and done, but it won't be from taking over the means of production.
3) Ownership isn't changing
Last I checked no ones been talking about changing who actually owns capital. People who own assets will still own them and will work to protect them. Shareholders will still retain their shares in companies, and if those companies recover you can expect that it is the shareholders that will benefit. Sure some companies, particularly airlines, are getting government bailouts and that may come with handing over a slice of the pie, but it isn't a fundamental change in system.
4) Government response will dampen the blow
To have a real revolution in the economic system you will need a large number of dissatisfied people. We are seeing governments respond to coronavirus by bringing forward spending programmes to create jobs and bring the economy back to life. This will alleviate much of the economic pain and dissatisfaction. Without a doubt, the economy will be in a tough place and there will be dissatisfied people, but if governments can make meaningful progress addressing the suffering it's unlikely to boil over.
5) People will forget
This is the killer. As bad as it might get for the economy and those at the bottom during coronavirus, in a year's time, people will move on. 2020 will just be thought of as a terrible year for people's health and the economy. We will laugh as we remember how bad it was and crack jokes about surviving 2020. Action that begins today will stall as people remember they have mortgages, families and jobs to attend to. This is just being realistic. It is much easier and enjoyable to chill out and watch Netflix than storm the Bastille.
To wrap up
There is more we could talk about like the trouble of fighting vested interests or that voters are typically conservative or the fear of the alternative, but I'll park that for another time.
Without a doubt, coronavirus has shone a light onto some of the deep flaws in capitalism and illustrated the importance of welfare. The economic system is on shaky foundations. The system is struggling with a massive fall in demand and output associated with people staying at home. Since the Global Financial Crisis (GFC), economic growth has been driven in large part by governments printing money and low-interest rates. Despite the shaky foundations, it seems unlikely that we will have a fundamental shift in the economic system. Coronavirus won't be the straw that breaks capitalism's back.
However, we will be in a very different world when lockdown ends which is potentially conducive to a change in the system. Millennials in particular, who have seen two massive crises in their short careers, should be pushing for change. So if you do want to change the system, now is the time to mobilise. Short of revolution, changing the system requires people to vote consistently en masse for a different world. If I was to put money on it though, at best we will see the needle shift only a little bit more to the left.
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