COVID-19 and Globalization

The Risks Posed by Globally Networked Supply Chains and the Need for Their Crisis-Proof Limitation as Displayed by the COVID-19 Pandemic

An Article in the Compendium of Market-Based Social-Ecological Economics

Key issues in view of the neoliberal crisis:
How can we guarantee employment and fair income?
How can we protect the environment effectively?
How should we shape the economic globalization?
What should the economic sciences contribute?
What must be the vital tasks of economic policy?
How can we legitimize economic policy democratically?

Click here for the list of all articles: Compendium
Click here for the German language version: COVID-19 und Globalisierung

Table of Contents

  1. Introduction
  2. Historical Development
  3. Economic and Political Principles
  4. Analytical Presentations
  5. Foreign Trade Principles
  6. Domestic Economic Principles

1. Introduction

Who would have thought that a virus could succeed in making the world overly aware of one of the central risks of the current economic globalization – namely the widely ramified networking of industrial value and supply chains across the globe.

At present, the shortage of various drugs and medical equipment is particularly striking, the reason being that many of the basic materials, components and end products have so far only been produced in a few places worldwide, a large proportion of these exclusively in China. But not only the fight against Covid-19 – the disease caused by the novel coronavirus SARS-CoV-2 – is affected by the shortage, but the entire medical care system.

However, what applies to medical products also applies to all other products. Fortunately, their shortage is not immediately life-threatening. But in any case, the structual flaws of the entire industrial production can only be eliminated once the crisis has been overcome.

The post-crisis period will open up the great opportunity to limit the insane global networking of productions to a reasonable, crisis-proof level. Above all, the highly industrialized countries are in the best position to reclaim strategically important parts of their outsourced productions and to set up new, sophisticated productions domestically according to the same criteria.

With this in mind, the great opportunity must be seized to enhance the autonomy, diversity and geographical distribution of national productions, to promote their conversion to regional and reusable resources, to make foreign trade mutually profitable and, for the purpose of equal opportunities and optimal development of all countries, to establish an independent worldwide trade in intellectual property licences.

I would like to take the opportunity provided by the Covid-19 pandemic to highlight some key articles in this compendium, which analyse the destructive effects of the current globalization and, building upon this, present the principles of a sustainable economic globalization:

2. Historical Development

The negotiation of the post-war economic order in 1944, driven by US expansionism and demand for global resources: Bretton Woods System (English)

The erosion of economic policy powers of nation-states and the emergence of unregulated (neoliberal) global markets: Economic Globalization

The multinational institutionalization of the neoliberal world economic order driven by entrepreneurial expansionism and political blindness: World Trade Organization (WTO)

The illusion that, by means of the European Monetary Union and its rescue at any price, the political integration of Europe could be spurred: Heterogeneous EU Single Market

The de-democratization of Europe being driven forward by the supranational institutions of the European Union: Democracy and European Integration

The attempt of the EU oligarchy of politicians and business representatives to unite the European nation-states in a centrally governed federal superstate: EU: Federal Superstate or Confederation?

The unsuitable attempt of the EU bureaucracy to deprive the nation states, as the all-decisive political level, of their powers: Importance of Nation States in Europe

3. Economic and Political Principles

Timelessly valid maxims and principles of economic and political order:
Maximes of Economic Order
Principles of Global Economic Order
Principles of Regional Economic Order
Principles of Democracy

4. Analytical Presentations

The inexorable, increasingly destructive development of the world economy caused by market deregulation:
Neoliberal Vicious Circle

The simple definition of capitalism and the nonsensical equation of capitalism and market economy:
Excesses of Capitalism

The definitions of two key economic terms and the regulatory blindness resulting from their misuse:
Efficiency and Productivity

The obsessive use of the term growth and the necessary distinction between qualitative and quantitative growth: Expansion and Growth

The impact of economic factors of production and their future-proof, sustainably profitable deployment:
Factors of Production

The dangerous absolutization of economies of scale and economies of scope and their socially and environmentally beneficial application: Scale Economies and Productivity

The conducive as well as the distortive effects of externalities and methods for integrating external costs into the perpetrators’ balance sheets: Economic Externalities

The misleading promises of the neoliberal economic doctrine and its unchecked catastrophic effects:
Neoliberal Economic Doctrine

The illusory dogmas of economic history and the market economy’s promising conditions for full employment:
Full Employment

The constraints and effects of transnationality and the prospect of a sustainable corporate landscape:
Transnational Corporations

5. Foreign Trade Principles

The significance and design of bilateral trade agreements in terms of mutually beneficial trade:
Future-Proof Foreign Trade

Functioning regionality as a prerequisite for beneficial foreign trade based on the combined effect of global bilateral trade agreements: Multi-bilateral Exchange Rate System

The neoliberal reinterpretation of the terms protection and protectionism and their abusive and harmful use:
Protection and Protectionism

The plea for a paradigm of regulated foreign trade in goods and services and an independent free trade in intellectual property: Free Trade in Intellectual Property

The application of the Ricardian Theorem of Comparative Advantage as a basis for modern multinational world trade: Comparative Advantage – Upgraded

The unsuccessful attempts of major industrial countries to achieve lasting advantages in foreign trade by means of unilateral devaluation of their own currency: Currency War and Exchange Rate

The equally unsuccessful attempts to turn one’s own trade deficit into a trade surplus by means of unilaterally imposed punitive tariffs: Punitive Tariffs and Trade War

6. Domestic Economic Principles

The subsidiarity of economic structures as a complement to social and political subsidiarity and a prerequisite for sustainable welfare: Economic Subsidiarity

The arduous way to build and enforce subsidiary economic structures under the prevailing neoliberal conditions in an exemplary manner: Building Subsidiary Economic Structures

Welfare as an economic imperative, and the criteria, conditions and measures to ensure a welfare-oriented economy in the long term: Sustainable Social Welfare

The proficient demarcation between private and public goods to ensure the provision of essential basic supply: Private and Public Goods

Click here for the German language version: COVID-19 und Globalisierung.

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