Menu

Global Pandemic Networks: COVID-19 and international business

The arrival of COVID-19 has rapidly brought everything into question. The isolation of huge sections of the Chinese economy and society rapidly hit Global Production Networks (GPNs) and supply chains within which China was deeply embedded. The BBC reported in February that shut-downs in China were already having a major impact. Apple and JCB, among many others, were reporting difficulties, and Hyundai had already halted production outside of China because of a shortage of parts. Jaguar had to fly parts from China to the UK in a suitcase to try and overcome supply chain problems. As the Chinese economy slowed down to a level not seen for years, supply and demand collapsed, triggering a collapse in stock markets across the world.

Plagues and inequality

It is tempting to view pandemics as some sort of natural phenomenon, but epidemics and pandemics happen in a social, political and economic context. This interweaves with processes such as the mutation of viruses, their passage from one host to another and their impact on living organisms. Pandemics intensify pre-existing fault lines in capitalism, and at the most basic level pose the question: defend profits or save lives? This is no joke – discussion has been reported on the political right of calculations of the supposed costs and benefits of keeping elderly members of the population alive.

As the modern plague spread through Europe and then onto North America, economies and populations went into various degrees of lockdown. This meant vastly different things in metropolitan Melbourne compared to the massive ‘informal’ labour markets of the emerging economies, as discussed by Pankhuri Agarwal elsewhere in this issue. The ABC reported on the case of Usha, one of the 42 per cent of Mumbai’s population who live in slums. In Usha’s case there is no ventilation or clean water, and until recently Usha slept in the festering sludge that seeped under her door. Self-isolation here is a cruel joke and stocking up is impossible if you have no money.

The impact of COVID-19 on the gig economy has had geographically contrasting effects. The emerging patterns of ‘deglobalisation’ meant that already vulnerable ‘informal’ workforces in the emerging economies became increasingly so. COVID-19 multiplied this effect manifold. Most emerging economies in Africa, Asia and Latin America were simply not prepared for a pandemic, their governments even less so. Closing down already fragile economies and isolating individuals with no income, food or even shelter was potentially devastating. Medical services, where they existed, were simply not adequate to the task in hand.

Sharing germs in the sharing economy

The ‘flexible’ labour market in advanced capitalist societies, much trumpeted by the right-wing ideologues of the gig economy, came to be seen all too clearly for what it is. If the state does not step in rapidly and extensively, the labour market may come to resemble that of Victorian Britain or, more accurately, Depression-era USA. The growth of GPNs have dominated the global economy and the connected emergence of platform capitalism and the gig economy were both supported by, and dependent on, the neo-liberal revolution that has swept the world economy. The gloating of the ideologues was soon destroyed by COVID-19.

Already on the edge of survival in the labour market, gig economy workers found out that the sharing economy potentially meant sharing germs, finding themselves financially unable to take time off even if it meant putting themselves and others at risk. Amazon workers reported that demand had shot up, with already demanding and unsafe working conditions being tested almost to breaking point. Amazon and Uber are reported as being in discussion with the US Government to deliver at-home coronavirus testing kits, just at the time when gig workers were demanding better safety measures and labour standards. For many, even that choice vanished along with their jobs.

The language of scroungers and dole bludgers (a curious Australian construct) soon disappeared as 380,000 people joined the ranks of the unemployed in one day in Australia and 3.3 million in one week in the US. Huge corporations, especially in aviation, went into a nosedive and nationalisation re-entered political discourse. Even the financial press argued against socialising losses and privatising the profits.

The Australian myth of the global financial crisis was that the country’s relatively benign experience was largely down to massive government expenditure. As with all myths there was an element of truth, but as the 2020 experience shows, in the absence of China driving the world economy, even expenditure much larger than that in 2008 will not have the same effect.

This being capitalism, the suffering from COVID-19 was far from evenly, let alone fairly, spread. Some have done very well out of the plague. In Australia, billionaire store owner Gerry Harvey boasted about the profits to be made from selling freezers and air purifiers. According to Harvey there was “pretty much nothing to get scared of”. Even the Australian Financial Review described Harvey as a “selfish loudmouth”.

Downturns are capitalism’s sorting mechanism, revealing weak business models and stretched balance-sheets. The firms expected to be most resilient post-2020 were unsurprisingly dominated by Silicon Valley and Big Pharma, along with healthcare firms. COVID-19 will not just have lasting effects on society and people’s behaviour. It will also alter the structure of global business.

 

Al Rainnie is Adjunct Senior Research Fellow, University of South Australia. Andrew Herod is Professor at University of Georgia. Susan McGrath-Champ is Associate Professor at the University of Sydney.

Image credit: Alina Grubnyak on Unsplash