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Necessary changes in the economic system in the face of COVID19

The COVID-19 pandemic has drastically affected the economies and lives and has challenged the tenets of economics that have dominated public policy for the past 50 years. Such a situation necessitates the redesign of economies, businesses, and lives. 

The idea of De-growth:  Traditionally, GDP has been considered the supreme goal of progress. The given scenario, where even the richest countries are failing to contain the damage of the pandemic, calls into question the prominence of GDP as a goal. 
 Goals for human progress must be reset. There is a need for better measures to gauge human development.  A five-point ‘de-growth’ manifesto by 170 Dutch academics has recently gained a lot of attention. 

The idea of national boundaries:  Boundarylessness has been often promoted by hyper-globalizers based on the argument that boundaries impede flows of trade, finance, and people. They have argued that removing such boundaries would be good for global growth. • The author argues that boundaries between countries are good.  Since countries are at different stages of economic development and have different compositions of resources, they will have to follow different paths to progress. The presence of boundaries allows them to do so.  The breakdown of the World Trade Organization serves as an example of the importance of borders. Under the WTO, all countries were expected to open their borders, which caused harm to countries at different stages of development, and their reluctance has been a drag on WTO negotiations.

The necessity of the government’s role:  The recent past has witnessed the growing importance of the market economy, leading to the subsequent decrease in the government’s role. Capitalist corporations have wanted governments out of the way to make it easy for them to do business.  However, the current crisis has brought to light the critical role of the government in critical times. Governments are having to bail out businesses. This calls for higher roles for governments in any future system. 

Limitations of the market economy:  Market economy, though it allows for higher efficiency, leads to unequal access to resources.  • Those who have money and power can acquire goods and services from the markets, while the poor do not have money to obtain what they need. The “marketization” of economies has contributed to the increasing inequalities in wealth over the last 50 years.  There is a need to evaluate the emphasis on the market economy. 

Justice and dignity:  There are inherent differences between a consumer and a citizen.  Citizens have a broader set of needs than consumers. Citizens’ needs cannot be fulfilled merely by enabling them to consume more goods and services. They value justice, dignity, and societal harmony too.  Traditional economists’ evaluations of the benefits of free trade and competition policy are based on consumer welfare alone and fail to account for negative impacts on citizens.  Citizen welfare must be the objective of progress.  

Importance of collaboration:  The faith in “Darwinian competition” which propounds the principle of the survival of only the fittest, fails to recognize many deficiencies in modern societies and economies.   Competition must be restrained and Collaboration must be promoted. This could involve collaboration among scientists in different disciplines, and among diverse stakeholders, and collaboration among sovereign countries.  Improvements in abilities to share and govern common resources have become essential for human survival in the 21st century. 

Public ownership of IPR:  Recently, there has been an increasing emphasis on recognizing intellectual property rights as a means to promote innovation and development.  The author calls for recognizing intellectual property as belonging to the public for the following reasons: o The current era of knowledge accords more power and wealth to those who own knowledge. Intellectual property monopolies are producing enormous wealth for their owners, though many were developed on the back of huge public investments. o Powerful technologies can be used for benign purposes. The author calls for evolving new institutions for public ownership of technologies and for the regulation of their use. 

Way forward: 

Structural changes:  Unlike the financial crisis of 2008, which was basically a crisis of liquidity in the system wherein the solutions were obvious, the COVID-19 crisis has revealed structural weaknesses in the global economy, and would require structural changes in the system. Though currently global attention understandably is focused on relief and recovery, it is equally important to redesign the entire system for resilience. 

Integrated approach:  The economic system cannot be redesigned by domain experts devising solutions within their silos. There is a need for an integrated approach to redesigning the system where the new policies complement and supplement each other and increase the effectiveness of the changes. 

Innovative approach:  Innovations are required at many levels to create a more resilient world. Innovation is essential in the overall design of the economy.  Innovations will be required in business models for business survival. 

Basic changes:  Changes will be necessary for human life patterns, work and consumption habits, and human 

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