The Covid-19 pandemic is a global humanitarian crisis. Each day, countless people contract the disease and die from it, often quickly. If life is the foundation on which human society is built, it follows that human wisdom finds meaning when lives are saved. Covid-19 has initiated a new debate regarding which political system cherishes the value of life more by saving more lives.
On 18 February 2020, The Economist, a magazine that has always waved the banner of liberalism, published an article entitled “Diseases Like Covid-19 are Deadlier in Non-Democracies”. Having analysed the data on all epidemics since 1960, the article articulated that “for any given level of income, democracies appear to experience lower mortality rates for epidemic diseases than their non-democratic counterparts”, because authoritarian regimes “may be poorly suited to matters that require the free flow of information and open dialogue between citizens and rulers”.
The comparison between democracies and authoritarian regimes, such as between the US and China, is unable to explain the Covid-19 situation in the West.
The Economist published the article when the epidemic in the West was much less severe. Today, hard-pressed to support such grand conclusions with empirical evidence, it may hesitate to publish such an article. After all, the Covid-19 pandemic respects neither national boundaries nor political systems.
The comparison between democracies and authoritarian regimes, such as between the US and China, is unable to explain the Covid-19 situation in the West. Western democracies have always been regarded as the model of free speech and free flow of information. How can we explain the severe life-and-death crisis confronting the West, which includes the world’s most developed economies with the most advanced medical and public health systems?
Covid-19 exposes the ills of the West
When Covid-19 began to spread in the US, President Trump declared that the US, being the richest economy with the most robust medical system and the most advanced medical expertise in the world, was safe. In actual fact, Americans did not and do not feel safe because even the greatest economy will be unable to ensure safety for its citizens when faced with a shortage of medical supplies such as masks, hand sanitisers, personal protective equipment (PPE) and ventilators.
The obvious shortage of medical supplies was highlighted on 3 April 2020 in a Covid-19 briefing by Andrew Cuomo, the governor of New York. He called upon manufacturers in New York State to repurpose their organisation or scale up production, promising to provide funding to these companies. Cuomo picked up an N95 mask and said, “It is unbelievable to me that in New York State, in the United States of America, we can’t make these materials and that we are all shopping China to try to get these materials and we’re all competing against each other. These are not complex materials….”
Relative to other democracies, the US has fewer physicians and hospital beds per capita. A report by the Kaiser Family Foundation (KFF), a non-profit US health policy organisation, shows that the US has only 2.6 physicians per 1,000 people, lower than Italy (4.0) and Spain (3.9). While the US has more hospital-based employees per capita than most other comparable countries, nearly half of these hospital workers are non-clinical staff. The US has only 2.8 hospital beds per 1,000 people, similar to that of Canada and the UK, but fewer than Italy (3.2) and South Korea (12.0).
If major complications or comorbidities occur, however, the cost could top US$20,000, which is unaffordable for Americans who do not have health insurance.
However, the bigger problem confronting the US is the severe shortage of medical supplies and equipment. Before Covid-19, about half of the world’s masks were supplied by China. Since the outbreak, China’s domestic demand for masks has increased sharply and many countries have hoarded essential medical supplies. As the US had not made prior preparations for the pandemic, its domestic medical supplies and equipment have very quickly run out.
Exorbitant medical expenses in the US further exacerbate the critical situation. The KFF has reviewed the cost of diagnosis and treatment of pneumonia with complications in the US in 2018. It estimates that inpatient coronavirus treatment costs without complications to be about US$9,700 (about S$13,500). If major complications or comorbidities occur, however, the cost could top US$20,000, which is unaffordable for Americans who do not have health insurance. As they fear being unable to pay the medical bills, they may choose not to be tested or seek treatment even if they are suspected of contracting Covid-19, or they may delay seeking medical treatment, risking serious illness or death.
This situation may not only increase the risk of infection among the general public, but also increase the number of severely ill Covid-19 patients and the burden on hospitals. According to a survey by the US Census Bureau, 27.5 million people or 8.5% of the population in the US did not have health insurance in 2018.
Germany has done comparatively well in getting Covid-19 under control
However, not all democracies are like the US. Germany, for example, is different. Initially facing a shortage of medical supplies, the Covid-19 situation in Germany was severe and the government even withheld medical supplies shipments meant for other countries. Having quickly averted the dire situation, Germany’s Covid-19 fatality rate is only 2%, far below Italy (13%) and Spain (10%). There are many reasons for this. Dr Jeremy Rossman, honorary senior lecturer in Virology at the University of Kent in the UK, believes that one of the critical factors to low mortality in Germany is early identification, which helped to slow the spread of the disease. Germany can conduct up to 100,000 Covid-19 tests each day.
The adequacy of hospital beds is another key factor. Germany has one of the highest numbers of hospital beds per capita in the world, ranking fourth among OECD countries. Germany has 8.0 beds per 1,000 people while Italy has only 3.2. It has approximately 1,900 hospitals, the highest in Europe, with approximately 28,000 intensive care hospital beds.
Economic and social disembedding
Why are both the US and Germany, both developed democracies, so different? Explanations have been offered for the differences in the fight against Covid-19 among various countries, including the measures adopted, leadership and the efficacy of the systems of governance. However, these explanations have overlooked a structural factor, which is economic and social disembedding brought about by globalisation.
The economy is an organic component of the society, and they are mutually embedded within one another. Once disembedded or decoupled, society will be at risk and life-and-death crises will occur.
The economy was originally an internal component of the society. However, with the rise of modern capitalism as well as globalisation since the 1980s, the Western society has twice experienced major economic and social disembedding. The first wave of disembedding of the domestic economy and society came about when modern capitalism regarded the economy as an independent domain with its own behavioural patterns, with which governments should not interfere. With globalisation in the 1980s, the second wave of disembedding occurred at the global level. With global capital flows causing countries to lose their economic sovereignty, this phase of globalisation is therefore also known as “hyper-globalisation”.
Survival of the fittest
In his book, The Great Transformation, Karl Polanyi described the first wave of disembedding. Two changes occurred in the late 18th century and the first half of the 19th century.
The first change occurred in the economic domain, where rapid industrial expansion altered the relationship between commerce and industries. Production involved large-scale capital investment, and producers were disinclined towards government control of the supply of input and production channels.
The second change, closely related to the first, came about with the rise of economic liberalism. As an ideological system, economic liberalism asserted that the market could self-regulate. On this basis, it lent justification for a series of new public policies as well as promoted market regulation of land, labour, and capital, giving rise to the British laissez-faire economics. While Scottish economist Adam Smith defended the free market with the “invisible hand”, English economist Thomas Malthus later accepted poverty as part of the natural order.
In the US, many advocate saving the economy over people’s lives, underlining the elevation of the free market to an unprecedented level by neoliberal economics since the 1980s.
Social Darwinism, which applied the biological concept of “survival of the fittest”, also had a huge impact on economic liberalism. Disembedded from society, the economy became an autonomous and immutable “natural order”, and the society had no choice but to conform to it. To this day, this view remains popular. In the US, many advocate saving the economy over people’s lives, underlining the elevation of the free market to an unprecedented level by neoliberal economics since the 1980s.
Indeed, economic liberalism had promoted economic development, for which the society paid a huge price. This was a phase known as “primitive capitalism” where people were slaves of capitalism. The society’s misery was comprehensively described and analysed in the works of Marx, Hugo, and Dickens. In that age of turbulence, the tragic and inhuman nature of capitalism led to the emergence of the socialist movement in Europe.
The socialist movement transformed primitive capitalism to welfare capitalism, which ultimately resulted in social democracy or democratic socialism in Europe today. Clearly, this transformation is the result of social struggle and not of economic and capital development. The welfare society, where the government provides medical services, education and public housing through taxation policies, safeguards the interests of both capital and society.
Europe — the stronghold of social democracy
Socialism was born in Europe, within which the Nordic countries have become the stronghold of social democracy. Germany, the most typical that strikes a balance between society and economy, boasts a “social market economy”. Among the democracies, the US, as the stronghold of capitalism, has most fervently rejected the welfare society. President Obama had wanted to implement some reforms of a European socialist nature (such as Obamacare, to make healthcare affordable to the underclass), but Trump abolished it as soon as he took office.
The Western welfare society did not realise the mutual embeddedness of the economy and society but solved the problems caused by their disembedding, so that they reached a state of equilibrium.
Although there are calls in the US to learn from European democratic socialism, and in fact the US has a need for democratic socialism, it remains a capitalist society where its entire system revolves around capitalist interests. This explains the vast differences in the fight against Covid-19 between Germany and the US, as earlier discussed in this article.
The Western welfare society did not realise the mutual embeddedness of the economy and society but solved the problems caused by their disembedding, so that they reached a state of equilibrium. However, economic globalisation in the decades since the 1980s has led to a greater degree of economic and social disembedding. The main feature of globalisation is the rapidity of the global flow of capital, technology and talent. Neoliberal economics has supported this wave of economic and social disembedding, as in the previous wave.
Today, no government can claim to possess economic sovereignty.
The individual has gained little from globalisation
Global (or supranational) economic and social disembedding has caused countries to lose economic sovereignty. Today, no government can claim to possess economic sovereignty. Globalisation has resulted in economic and social disembedding within sovereign countries, as well as significantly facilitated the free allocation of production factors globally, thereby creating huge amounts of wealth.
What is the outcome of globalisation? Many are asking today about the gains made by the individual, the society and the country. There seems much clarity that apart from the rare few who became extremely wealthy due to globalisation, the individual has gained little because of unequal income and wealth distribution. The society has gained nothing because the middle class has continued to shrink and the society has become increasingly divided. Likewise for the country, unemployment has increased and tax collection has diminished.
The fight against the Covid-19 pandemic has highlighted the cost of life as a consequence of international division of labour. Although the Western developed economies are all facing shortage of medical supplies, it does not mean that they lack the capacity to produce medical supplies. They have simply stopped doing so. Globalisation has led developed countries to move many low value-added production lines or industrial chains to developing countries with relatively inexpensive labour and land, and undemanding environmental protection requirements.
Facing debilitating supply shortages, many developed countries are unable to save the lives of their citizens.
Under peaceful circumstances, the global market can function normally and benefits can be reaped through international division of labour. However, when a crisis like Covid-19 strikes, all governments focus on domestic needs and the global and regional markets become non-existent. Facing debilitating supply shortages, many developed countries are unable to save the lives of their citizens.
While the economy and society may be disembedded, the society and politics cannot because political power in a democracy is derived from the society. Society and politics are deeply and mutually embedded through the “one person, one vote” system. How can governments solve the problems caused by economic and social disembedding? In a globalised world and without economic sovereignty, governments have no effective way to restrict the global flow of capital, technology and talent. Some economists have put forward the idea of a union of all governments; however, this is utopian because governments evidently divide, not unify, the world.
The only way is to change the manner of globalisation. When developed countries which champion globalisation cannot even save the lives of their citizens, the very essence of globalisation must be seriously questioned and reviewed. This is exactly the reason for the current heated debate about the future of globalisation. Regardless of the policy outcome of this debate, it is a certainty that large-scale life-and-death crises will recur as long as the disembedding of the economy and society continues.
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