The Novel Coronavirus (COVID-19) presents a unique moment in the history of Modern Capitalism. Can capitalism work if there is a pause? A 2 week shutdown… 30 day… or even a couple months?
What does that mean going forward?
There have been calls for freezing on credit card interest, freeze on rent and mortgages – which all are essential cogs in the modern capitalist machine. So if this freeze is what is needed and we need a collective time out – does that mean the capitalist growth machine of the past century has finally met its match with a white swan virus event.
As Nassim Nicholas Taleb recently said, “such a global pandemic is explicitly presented there as a white swan: something that would eventually take place with great certainty. Such acute pandemic is unavoidable, the result of the structure of the modern world; and its economic consequences would be compounded because of the increased connectivity and overoptimization. As a matter of fact, the government of Singapore, whom we advised in the past, was prepared for such an eventuality with a precise plan since as early as 2010.”
The issue with any single country being considered prepared and declared a ‘winner’ (Taiwan for example), is overlooking the fact their economy and way of life will change, from the global repercussions that will affect all economies and how their travel, tourism, and restaurant industries will have to change.
With climate change also temporarily being slowed down with the economic slowdown, the real challenge we have to face as a global society is still yet to come and solving that will really put our current form of modern Capitalism to a true test. As I said in a previous post, “Free market capitalism as practiced has shown investors and markets ‘want’ many things…” — We need to want a better world, where we address these problems before they become global disruptive issues that will cost lives and a lot more money to solve after-the-fact. We don’t need to completely overhaul our system, we just need to tweak it here and there in order to evolve to the next version of Capitalism for humanity to prosper further.