A crisis like the one we are witnessing now has a small positive in the guise of an internationally unifying and harmonising effect. Country after country is presently giving up its particular social and economic stance in favour of an all out push to save businesses large and small by forking out loans, grants and by taking stakes in them. The EU had to abandon its rules on state aid and Germany had to kick its balanced budget rules into touch.
While in a number of continental countries employees have been protected in the past during economic downturns, this is now also practiced in the Anglo-Saxon world of hard headed capitalism like the US and Britain to avoid the downward spiralling effect of mass unemployment in the present crises.
The forerunner of this kind of state intervention was the German post-war model of the Social Market Economy. This concept had its roots at Freiburg University, where a group of economics professors concluded in the aftermath of the 1929/30 Wall Street crash that liberal capitalism had failed and needed adjustments.
For fear of another populist Führer emerging on the back of mass layoffs, the model of an unemployment insurance was developed that benefited not only the unemployed with healthy benefits, but also prevented unemployment per se in economic downturns by paying the employers to keep their staff.
It will be interesting to see, how much of this common approach will survive and find its way into legislation in the post-crisis years. A chance for change was missed in the years following the 2008/9 recession. This present crises has all the hallmarks of one at least twice as bad.
Will it lead to more solidarity in the EU? There are some encouraging signs, although the individual nation states are leading in the war against the virus. Maybe that’s the way forward for Europe – leave the nation states predominately to look after their interest and coordinate at the macro level. Britain could quite possibly sign up for a concept like that eventually.
Trump’s America will go straight back to their shareholder first/winner takes all model and any change there to a more sustainable form of capitalism as promoted by the likes of Paul Polman will have to wait until Trump is history.