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The Economics of Covid-19: From globalization to localization

Cho Hyun-Chul - La Civiltà Cattolica - Sun, Jan 17th 2021


What to do after Covid-19?

“After Covid-19 it will all be different.” We often hear these words. However, people have different opinions about how it will be different, just as people evaluate differently how things were before. How will we act after Covid-19? The answer depends on our views about the pandemic.

One can view the Covid-19 crisis simply as the consequence of a viral infectious disease. In this case, the countermeasures for “after” would be: better prevention of infection, more effective hygiene policies, preventive measures against epidemics, the development of vaccines and related medicine, the revival of economies battered by the pandemic, and so forth. In this view, a viral infection is seen as an unforeseen obstacle that needs to be overcome; and the central and local governments in Korea have been dealing with Covid-19 from this perspective.

However, it is important to view Covid-19 from a social perspective. We will seek to understand how, in human history, viral infections have been caused by the failure to respect the rhythms and spaces of nature. We will analyze the intrinsic correlation between the collapse of the ecosystem and the globalized economy, which seeks cheap labor and resources under the flag of deregulated capitalism that aims to maximize profits.

This growth-oriented mentality has taken root as the ideology of the globalized economy. In this light, Covid-19 is not just an obstacle to overcome, but a warning signal to the notion of economic growth as something considered only in terms of progress and development. In fact, we humans are responsible for this disastrous viral infection. It is not the virus but our own selves that need to be overcome; the system based on greed that makes tools of human beings and nature in pursuit of profits and riches must be fought against in order to safeguard and value the work of creation. Plans about “after” demand a fundamental self-examination of the “before.”

Measures to cope with the crisis from the first viewpoint are necessary, but not enough. The second viewpoint should not be neglected in order to establish a fundamental approach to Covid-19. For it is both a medical problem and an environmental issue. It is about the human problems associated with development and the economy. If we view it only as a disease or an environmental issue, we miss the essential point and will fail to find true solutions. As Pope Francis wrote in Laudato Si’ [LS]: “We are faced not with two separate crises, one environmental and the other social, but rather with one complex crisis that is both social and environmental” (LS 139).

Globalization and pandemic

In order to look at the Covid-19 crisis within the social context, we must pay attention to the close relationship between the outbreak of a viral infectious disease and globalization. Firstly, globalization has hugely increased the speed of infection. When transportation was not developed, such an infectious disease was limited to a regional effect. It was borne by sea trade, but the long period of travel could effectively stop the disease from being spread. However, today, the world is connected by high-speed transportation networks, so that a viral infection can spread rapidly and globally once it breaks out.

Moreover, the globalized economy has abolished regulations all over the world for the sake of capital investment. Reckless mining, deforestation, and other destructive activities have proliferated, and the ecosystem has been massively damaged. Its damage by humans has led to the spread of a viral infection in various ways. Environmental pollution generally promotes the breeding of viruses. Wild animals that have lost their habitats due to over-development move near to human habitats and the likelihood of human contact with viruses has increased.

According to a recent study, the number of animals that have zoonotic viral diseases is 2.5 times greater in areas where the natural environment has been destroyed by development. Large farms commonly play the role of an avenue for the viruses to infect humans. Large-scale monoculture, logging and wildfire destroy forests, which leads to the decrease of biodiversity and indigenous species and ultimately enables new viruses to establish themselves more easily.

Climate change, which has been caused by continuous economic growth ever since industrialization and by our lifestyle dependent on mass production, distribution, consumption and waste, gives rise to changes in the number of animals that are vehicles for viruses. This prompts viral diseases. Global warming causes permafrost to melt, which may allow various kinds of viruses buried in the ice to be released in the future.

In sum, we human beings have facilitated the spread of viruses. Before viruses attacked humans, humans attacked nature. The globalized capitalist system that only aims at the maximization of profits is behind all this. In order to fight against pandemics like Covid-19, hygiene policies and preventive measures directed specifically against the pandemic are not enough. We need to look at what lies beneath the Covid-19 outbreak and have a critical attitude to the globalized economy itself.

The globalized economy

The core of globalization lies in the economy. Globalization has been an integrating process whereby the whole world, with transnational companies and international trade agreements as the center, has become a single economic system based on Neoliberalism. The globalized economy has reinforced free trade, which is based on the international distribution of labor through various international trade agreements and has abolished the various regulations and protection measures that had previously existed to support national industries and the environment. In fact, a major part of world trade consists of trade within industry, that is, trade based on export and import.

In a globalized economy, a so-called “crazy trade” can take place under the name of free trade, in which one imports a product that can be produced in the region, even if it is cheaper to produce locally. Global industrial farmers are a typical example. One can find many cheap agricultural products from other countries on the shelves of large markets in Korea. It takes cheap labor, resource exploitation, governmental subsidies and concessions for foreign products to have a competitive edge over regional products. Transnational corporations do not include in the price of their products the costs of environmental pollution and other costs for which they are responsible, but rather dump the costs on the regions in which their products are produced. Their sole interest being maximized profit, they seek cheap labor and large profits, ignoring the needs of those regions. This results in the degradation of both regional labor and the environment.

If one focuses only on the selected concentration strategy of a small range of products based on comparative advantage, which is the standard of free trade, this makes an economy more dependent on foreign products and the economy becomes vulnerable to external alterations and shocks.

The most vital issue in emergency situations is ultimately food. Due to globalization, a small number of global grain corporations dominate the world grain markets, and the traditional farming industries associated with rural communities are rapidly collapsing. In Korea, for example, the level of dependence of foreign foodstuffs is unbelievably high. Food self-sufficiency around the world is 101.5% on the average, with Australia boasting almost 300%.

As was mentioned above, the globalized economy is deeply related to ecology, especially climate issues. Climate change measures and globalized economic policies have been taking place at around the same time, but separately. In the late 1980s, there began an international effort against climate change. The Rio Earth Summit in Brazil in 1992 adopted the United Nations Framework Convention on Climate Change (UNFCCC), which was to be the foundation for subsequent climate negotiations. The Kyoto Protocol was adopted in 1997. More or less contemporaneously, international trade negotiations were taking place that were to be the foundation of the globalized economy. The North American Free Trade Agreement (NAFTA) was concluded in 1992 and the World Trade Organization (WTO) was established in 1995.

The physical distance between production and consumption gradually extended, and long-distance distribution became the main cause of carbon emission. Global industrial farmers are now responsible for 30 percent of world greenhouse gas emission. Moreover, neoliberalism, the ideological foundation of the globalized economy, led to privatization, deregulation and cutbacks in public spending and proved to be the largest obstacle to climate action that seeks to deal with climate change by cutting down on carbon emission. In the most absurd way, the world sought to work against climate change while fostering the globalized economy that accelerates climate change.[1]

Globalization, a ‘normal accident’

From the above arguments, it can be maintained that deliberations about “After Covid-19” must be fundamentally about globalization. The concept of “normal accident” proposed by sociologist Charles Perrow supports this idea[2]. “Normal accident” refers to an inevitable accident due to interactive complexity and close coupling innate to a particular system. It is an accident that occurs as a logical consequence because the system cannot avoid interaction with multiple unexpected and simultaneous problems. It occurs because of the high degree of interaction among the elements of the main systems constructed by modern industrial societies.

Perrow refers to normal accidents such as those involving the Three Mile Island nuclear power station, petrochemical plants, planes and ships; but it is necessary to look at the globalized reality of the world we live in today from the perspective of normal accidents. Globalization has turned the world into a massive single system with a high degree of complexity and close connections that lead to numerous sub-systems. No one anticipated Covid-19, but it may well be a normal accident that would inevitably happen. In that case, it is normal that it occurred. If so, it is important to reflect on the reality of our globalized world, prone as it is to viral pandemics, and to make an effort to achieve change in that world while responding to Covid-19 as a viral infection.

If one installs safety devices in the present system to try to prevent normal accidents, the level of complexity and connections will increase and so also the possibilities of further accidents. The only way to stop normal accidents is to change the system itself. As a normal accident, Covid-19 sends a clear warning about globalization. In our globalized world, a global disaster should be considered as an unexpected, but inevitable accident. If that is the case, globalization actually is a way to total disaster, unstoppable and unmanageable. Safety devices cannot eradicate its innate dangers. The fundamental countermeasure is to exit from it. There is no other way.

Localized economy

After Covid-19 must involve a process of transforming globalization into localization. Just as in globalization, the essence of localization is in the economy; localization does not mean a disconnection between the various regions of the world. A localized economy aims at a reasonable level of self-sufficiency, but not total. It aims at producing and consuming locally as much as possible, according to local needs. Common sense would suggest that , the most rational economic system is one that produces what locals need by using local resources.

A localized economy can solve many problems caused by the globalized economy. Firstly, it reduces the possibility of a normal accident on a global scale by moving from international interdependency to local dependency and from close international connections to loose connections. A worldwide viral pandemic is an example of a normal accident that can be prevented in this way.

Secondly, a localized economy reduces the distance between production and consumption, which diminishes an  unnecessary aspect of international trade and the need for the energy consumption of transport.

Thirdly, in agriculture, small-scale local farmers would replace global industrial farmers, and organic farming would replace chemical farming. People would have easier access to local produce than to commodities from the other end of the world, whose producers they do not know. A localized economy makes it possible to secure a reliable, long-term food supply.

Fourthly, it pays attention to the preservation of the local environment, unlike the globalized economy that seeks profits in other parts of the world. Economic self-sufficiency depends, moreover, on energy sufficiency. Replacing fossil energy with such renewable energy sources as solar and wind will thus become an important aspect of localized economies. As a consequence of all this, the possibility of a global viral infection should be drastically reduced.

Localization and the Church

All the beings in the world are the creation of God, and all the creatures in the world form “a sublime communion linked by unseen bonds” (LS 89). The fundamental bonds among creatures are the order of creation implanted by God in the world. This order of creation demands from us a respect for and regard toward nature as well as to human beings. With its deregulated capitalism concentrating on the maximization of profits by way of cheap labor and a lack of concern about natural resources, the globalized economy has become a process destroying the order of creation.

In this sense, localization, which reverses the tide of globalization, needs to be a process of restoring that order. The preservation of the order of creation means the realization of justice, and the peace that results from justice (Isa 32:17; Gaudium et Spes, 78). Localization is a process that leads toward establishing justice, peace and the integrity of creation. It therefore stands as a challenge to Christian life and the Church’s mission today.

Moving from globalization to localization means a fundamental transition that demands reflection on and a radical change in our lifestyle of mass production, distribution, consumption and waste management. Localization means an exit from the growth ideology that rules today’s economic situation, but that exit will surely be along a bumpy road. For example, one of the main issues of localization, energy transition, is usually discussed in terms of the “growth paradigm.”

Those who promote the transition from fossil fuel to recyclable energy mostly do so under the premise that we will continue to live and consume energy as is now the norm. But is it really possible to transition to recyclable energy that is sufficient to sustain our current lifestyle? Even if it is possible, would it be feasible to reduce greenhouse gas emissions to a sufficient level to reduce climate warming if we use huge amounts of energy to make the transition happen? Moreover, the energy transition would be limited only to electrical energy, which represents less than half of the world-wide energy consumption. In the end, localization inevitably calls for reduction of production and consumption.

Globalization seeks growth, but localization requires moderation. It demands realization that “a decrease in the pace of production and consumption can at times give rise to another form of progress and development” (LS 191). There must be a transition in personal consciousness in order to reduce the speed of the expanding world. Indian scholar Vandana Shiva has rightly said that if the world is to change, “we should become what we want the world to become.” Moderation is an essential element.

Moderation means respect and accepting limitations. It accepts the limitation that comes from the limits of nature and makes us humbly admit our own limitations. The problem is that moderation and frugality have become both unpopular and unfamiliar in today’s compulsive and obsessive culture of consumerism (cf. LS 203). It is unthinkable to expect the government and political parties to establish policies based on moderation because they are subject to the voters’ favor. It is not so different for civic groups, which are run by civil volunteers. In the environmental movement, “transition” grabs attention but “frugality” is pushed aside.

The Church needs to have a long-term view of today’s reality. Even when other social agents do not raise a voice, she should cry out to the world for moderation and frugality. God wants humans to preserve the world, which He sees as “good.” At this moment, the world is being damaged to an irreparable level, due to the climate crisis and other ecological crises. The globalized economy and growth ideology are at the roots of the ecological crisis, and Covid-19 is the result. The Church’s call for moderation and frugality is nothing but a prophetic cry for life. Not every nation has the same responsibility and burden for this issue. The Church should urge rich countries, which benefit more from the globalized economy but are more responsible for environmental destruction, to take the lead (cf. LS 193).

Jesus’ life was that of simplicity and moderation. Today’s globalized economy pushes humans to co-destruction by seducing us to seek unlimited riches through economic growth. Increasing social inequality, damages to the ecosystem and outbreaks of viral infection are the inevitable by-products of the economic growth that we are pursuing. Given this reality, simplicity and moderation must be an important characteristic of Christians who follow Jesus today.

The Old Testament tradition of the Sabbath enlarges our understanding of moderation and motivates us to preserve this virtue (LS 71, 237). The sabbath tradition involves self-reflection and care for others. The “rest” on the seventh day (Gen 2:2-3) is God’s “contemplative rest” (LS 237) focused on His creatures. The sabbath, in which human beings share in God’s rest (Exod 20:11) is a day to reflect on our life and our activities and to find meaning in them. The Exodus event reminds us that liberation is the spirit of the sabbath (Deut 5:15), and the sabbath periodically reminds us of our duty to guarantee the dignity and equality of the socially marginalized and to respect and care for all creatures. In short, consciously to stop working on the seventh day is an act of voluntary self-limitation for oneself and others. Jesus Christ is the model of that voluntary act. The incarnation and the cross are the events of kenosis (cf. Phil 2:6-8), the essence of self-limitation. As a faithful continuation of the incarnation, Jesus’ life ended in the death on the cross.

Christians who are now living in the time of viral infection and the ecological crisis must realize that the life of voluntary self-limitation is an important way of following Jesus. Ecological conversion is a determination to respect and protect our neighbors and nature by following Jesus (cf. LS 217). That conversion gives rise to a life of simplicity and moderation with the conviction that “less is more” (LS 222). The sabbath’s spirit of frugality and conservation resists globalization and promotes localization. In this regard, moreover, religious life lived under the vow of poverty gains special meaning today. If religious orders realize the meaning of poverty anew in terms of localization and live the vow faithfully, they will contribute enormously to promote the life of moderation and frugality both inside and outside the Church.

Grassroots movements have played an important role in localization. Local agriculture is a representative case. “Farming with faces of farmers” in Japan, “farming with reservation” in Europe, the “movement to connect farmers with consumers” in the U.K. and “Community Supported Agriculture” (CSA) in the U.S. are examples of local agriculture that protests against globalization and promotes localization.

Local agriculture connects local farmers with their consumers and uses sustainable cyclic farming methods in order to preserve nature in the local area. It raises the issue against the problems of global industrial farming and awakens local inhabitants to the meaning and importance of their local habitat. From this point of view, The Catholic Farmers Society and Movement for Our Farmers in the Catholic Church in Korea are meaningful endeavors.

It is important, too, to be in solidarity with local farmers outside the Church. Consistently raising issues aimed at solving the problems of globalization and forming public opinion so as to influence individual nations and the global society at large are essential tasks of localization. The global networks of the Catholic Church can perform an important function by connecting and unifying localization movements around the world.

In order to transition fundamentally to localization, a social and personal awakening to a “good life” (buen vivir) is necessary. It is a realization and conviction that a good life begins with respect toward our neighbor and nature, who are connected in a fundamental bond in the order of creation. More people are beginning to realize that globalization, despite its promises and prospects, has a negative influence on both people and nature and needs to make room for more localization.

We will see our neighbors and nature with different eyes and act differently if we have a greater sense of belonging to our local community and local environment. Then more people will try to live the good life in their local community. Christians and the Church must make an effort to bring into reality the good life by being in solidarity with the good people in the world in order to preserve the order of creation. This is a slow but sure way toward localization, which will gradually bring about change in the world that the Covid-19 pandemic requires of us.

DOI: La Civiltà Cattolica, En. Ed. Vol. 5, no. 1 art. 10, 1020: 10.32009/22072446.0121.10

[1] N. Klein, This Changes Everything: Capitalism vs. The Climate, New York, Simon & Schuster, 2014. See in particular chapter 2.

[2] Cf. C. Perrow, Normal Accidents: Living with High-Risk Technologies, Princeton, Princeton University Press, 1999.

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