Nobody, anywhere, could have predicted what we are now witnessing: in a matter of only a few weeks the accumulated collapse of global supply chains, aggregate demand, consumption, investment, exports, mobility.  

Nobody is betting on an L-shaped recovery anymore – not to mention a V-shaped one. Any projection of global gross domestic product (GDP) in 2020 gets into falling-off-a-cliff territory.

In industrialized economies, where roughly 70% of the workforce is in services, countless businesses in myriad industries will fail in a rolling financial collapse that will eclipse the Great Depression.

That spans the whole spectrum of possibly 47 million US workers soon to be laid off – with the unemployment rate skyrocketing to 32% – all the way to Oxfam’s warning that by the time the pandemic is over half of the world’s population of 7.8 billion people could be living in poverty.

According to the World Trade Organization’s (WTO) most optimistic 2020 scenario – certainly to become outdated before the end of Spring – global trade would shrink by 13%.  A more realistic and gloomier WTO scenario sees global trade plunging by 32%.

What we are witnessing is not only a massive globalization short circuit: it’s a cerebral shock extended to three billion hyperconnected, simultaneously confined people. Their bodies may be blocked, but they are electromagnetic beings and their brains keep working – with possible, unforeseen political and other consequences.

Soon we will be facing three major, interlocking debates: the management (in many cases appalling) of the crisis; the search for future models; and the reconfiguration of the world-system.

This is just a first approach in what should be seen as a do-or-die cognitive competition.

Particle accelerator

Sound analyses of what could be the next economic model are already popping up. As background, a really serious debunking of all (dying) neoliberalism development myths can be seen here.

Yes, a new economic model should be revolving around these axes: AI computing; automated manufacturing; solar and wind energy; high-speed 5G-driven data transfer; and nanotechnology.

China, Japan, South Korea and Taiwan are very well positioned for what’s ahead, as well as selected European latitudes.

Plamen Tonchev, head of the Asia unit at the Institute of International Economic Relations in Athens, Greece, points to the possible reorganization – short term – of Belt and Road Initiative projects, privileging investment in energy, export of solar panels, 5G networks and the Health Silk Road.

Covid-19 is like a particle accelerator, consolidating tendencies that were already developing. China had already demonstrated for the whole planet to see that economic development under a control system has nothing to do with Western liberal democracy.

On the pandemic, China demonstrated – also for the whole planet to see – that containment of Covid-19 can be accomplished by imposing controls the West derided as “draconian” and “authoritarian,” coupled with a strategic scientific approach characerized by a profusion of test kits, protection equipment, ventilators and experimental treatments.

This is already translating into incalculable soft power which will be exercised along the Health Silk Road. Trends seem to point to China as strategically reinforced all along the spectrum, especially in the Global South. China is playing go, weiqi. Stones will be taken from the geopolitical board.

System failure welcomed? 

In contrast, Western banking and finance scenarios could not be gloomier. As a Britain-centric analysis argues, “It is not just Europe. Banks may not be strong enough to fulfill their new role as saviors in any part of the world, including the US, China and Japan. None of the major lending systems were ever stress-tested for an economic deep freeze lasting months.”