Robert Misik in conversation with James Galbraith
The global Covid-19 pandemic has effected a revolution in world economic affairs. The liberal (or more properly, neo-liberal) economic systems of Europe, North America and Latin America have handled the crisis poorly. China, Vietnam, South Korea, Taiwan and Cuba have done remarkably well. Why is this so? What does it portend?
James Galbraith argues that it was precisely the most celebrated features of the liberal Western systems – decentralization, post-industrialism, the hegemony of finance and advanced technologies, reliance on markets, willingness to trade public health against economic objectives – that brought them low in the face of the pandemic. Success occurred in those countries that mounted an immediate, centralized public health response, that could effectively lock down in whole or part, that were willing to sacrifice all economic activity temporarily to public health, and that dominated the production of basic manufactures such as personal protective equipment and so were able immediately to underpin behavioral mandates with material capacity. It was a matter, in other words, of whether it was possible to mobilize the whole society to protect public health, or not.
Looking forward, the new Biden administration in the United States will launch a large, coordinated public health initiative, together with patchwork fiscal assistance and income support, to get the United States through the immediate crisis. Success is far from certain. And in the aftermath, even if the pandemic is contained over the next year, the American (and European) economic model will face a profound restructuring in three major areas: the advanced sectors, which provide US strength in world trade; the services sectors, which provide the jobs; and the financial sector, as unpayable private debts will have to be written down.
James Kenneth Galbraith is an American economist, with a chair at the Lyndon B. Johnson School of Public Affairs, the University of Texas at Austin. He has advised political campaigns in America and governments in China and Greece. He served in the early 1980s as Executive Director of the Joint Economic Committee of the United States Congress. His father, John Kenneth Galbraith, was one of the most celebrated economists of all time, and a participant and adviser in US governments from Roosevelt through Kennedy and Johnson.
Robert Misik, Author and Journalist