Conventional wisdom now holds that the era of globalisation has ended, and that the world post the Corona virus will see the return of the strong state. But this misses that countries are different. A large number of states will prove unable to meet the expectations of their people.
Take three areas: as unemployment rises and incomes fall, a substantially large number of people will come to seek aid from the state. But many states will prove lacking, including in providing the basics of life-needs for large segments of their people.
Another area is security. Crime rates will rise in the coming months in the countries hardest hit by the economic consequences of the Corona-spread. And again, many states, especially those with weak institutions, will fail this test.
The third area concerns perception. The coming months will see a rise in fear from what the future will bring, and a need from large sections of society to sense a strong state. And here also many states will fail. This will not only reflect weak institutions. Decision making will be confused – for the situation is novel and there is no blueprint for how to deal with exponential demands on national social security systems. The complexities of decision making will be exacerbated in countries where there are acute ideological differences regarding the role of the state and the social contract.
Some observers think social solidarity will prevail. Yes, but up to a point, and largely in societies with high cohesion. But as the pains increase and difficult choices about prioritisations, taxations, and sharing burdens stare societies in the face, decisions on public policy will become fraught. Amidst all of that, many states will gradually lose their standing in the eyes of their people.
The international financial system will exacerbate many of these pressures. Deficits will rise and debt ratios will soar. This will make most countries, who are dependents on (and in) rather than shapers of the financial system, confront the choice of closed markets (and therefore inability to borrow) or accepting conditionalities that many will consider highly intrusive. This will strengthen rejectionist political movements, such as the far-right and far-left.
The concerns here go beyond erosion of democracy and the liberal order. Some countries will crack under these myriads of pressures. The result will be serious declines in the authority of the state. In some cases, states will fracture into semi-independent regions, with only the semblance of belonging to a centre. In others, the competition for state resources, amidst acute economic challenges, could plunge countries into civil wars.
Societies adapt and find new ways of living. And so, new forms of domestic politics will emerge or gain ground. Local authorities and social cooperatives could gain more legitimacy and expand to areas that were traditionally the prerogatives of the state.
However, the biggest consequences of these changes will be in global politics.
In her book “Surveillance Capitalism” Harvard professor Shoshana Zoboff warned against trends that have been growing in the past two decades. The primary trend is the slow encroachment of the tech-giants that have already been orchestrating our digital lives, into our social and economic lives. This encroachment will reach new heights in the coming few years.
These giants are much more than mere technology behemoths. They represent power centres that have been growing for years, primarily in the US and the Anglo-Saxon world, and which in the past decade, have come into marriages of interests with other, older centres of influence. And so, indeed, we have begun to see increasing meetings of minds between Silicon Valley and Washington DC and Wall Street. The point is that, the powers that dominate the virtual world and which is increasingly merging with our real world, are key nods in larger webs.
These tech-giants and larger webs are also mistakenly thought of as driven merely by their financial interests. Again, the situation is more complicated than that. Any serious observer of Silicon Valley, and the wider circles that have played major roles in the development of the current technology cycle in the past three decades, know that the motivations extend beyond making money. Often the drivers are deep convictions about how the global order ought to evolve.
The coming changes will allow these webs of power to extend their reach to how we (the general public) interact, perceive the world, and transact. This goes beyond digitisation and migration to the virtual world. It means turning the nature of these domains from one based on different forms of knowledge consumed and employed by us, to ones based on knowledge of our ways of thinking, patterns of behaviour, and obviously predictions about both. In this model, our thinking and actions – basically, our lives - become inputs and units of a centralised new forms of knowledge, which will underpin this new economy, that is controlled and orchestrated by these webs of power.
Countries will respond differently to this new economy and the major extension of the reach of these webs of power. The US and its close allies, such as the UK, will gain strategic advantage as this new economy takes hold. This is because these webs of power are products of and contribute to the strengthening of their political economy structures.
Other states, such as China and Russia, will see this new economy as a threat. And so, they will try to deny their markets to these webs of power.
Other players such as the European Union will resort to previously unprecedented levels of regulations to try to limit the reach and influence of these webs in its own territory. We have already seen the previous European Commission begin to consider strong regulatory moves against the tech-giants. In the coming years, and as the new economy significantly manifest itself, these regulatory moves will be starker.
Many states will try to adapt to this new economy, accepting many of its features, while trying to circumvent others.
The majority of the countries, however, those that will have failed repeatedly in the foreseeable future in meeting the demands of their people, will have no option but to wholeheartedly embrace the realities imposed by this new economy.
The key point here is that several balances will emerge in different parts of the world concerning the reach of this new economy, and behind it the influence of the webs of power controlling and orchestrating it.
These balances will determine the degrees of transformations we will see in many social and economic areas in different parts of the world – in how we interact (communication and infotainment), how we perceive the world (education and news), and how we transact (currency, storage of value, and wealth creation).
As some countries deny their markets to this new economy, and others impose regulations, and others try to check the reach and influence of these webs of power, there will be confrontations. It is difficult to envisage the nature of these confrontations. But it is safe to assume that we will see attempts at creating competing forms of that new economy, controlled by corresponding webs of power. For example, in China, this will likely be state-dominated. In Russia, we might see a state-oligarchic version. But there will be clashes, that will be manifested especially in the regions of the world where states will be falling and previous social orders crumbling.
Because of these dynamics, observers ought to reflect that, the consequences of the changes that will take place in the coming months and years will transcend the empowerment of some states. The bigger changes will come in a chain of reactions that will initially affect economies, many areas of our lives, the organisation of many societies, and domestic politics. In turn, these changes will unleash new forms of global strategic confrontations.