By Khalid Zaka
The COVID-19 pandemic has caused a significant dent in many developing countries' economies and severely impacted the developed-world's economies.
In the U.S. between February 19 and March 23, the S&P 500 index lost one-third of its value.
The S&P 500, or merely the S&P, is a stock market index that measures the performance of 500 large companies' shares listed on stock exchanges in America. It is one of the most followed equity indices, and many consider it to be one of the best representations of the U.S. stock market.
U.S. unemployment has risen this year from 4 percent to about 16 percent, the highest rate since 1948. The U.S. gross domestic product is expected to drop by about 10 percent in the second quarter compared with the same quarter a year ago.
Investors appear to be more interested in tech giants such as Alphabet, Amazon, Apple, Facebook, and Microsoft. These tech giants now constitute about one-fifth of the S&P 500 index. It's been forecasted that world goods trade may shrink by 10 to 30 percent this year.
The COVID-19 pandemic has shown the vulnerability of the neoliberal model of capitalism. Because of this model, countries are not self-reliant but are economically interdependent.
China, because of its socialist past and contemporary state-run capitalism, was able to control and manage the pandemic. In contrast, Europe and the U.S. are struggling to do the same while figuring out plans to revive the economy.
There are various conspiracy theories regarding the origin of the pathogen: whether it originated in a laboratory in Wuhan or elsewhere, or originated naturally in the wet market of Wuhan, or was transported to Wuhan by the U.S.
In any case, COVID-19 has heavily dented economies and raised questions regarding the post-pandemic world.
Is the neoliberal model no longer applicable?
A system that only maximizes profit is prone to abandon the well-being of its citizens. Two iron dictums rule capitalism: maximize profit and reduce labour costs.
In such a system, research and resources are directed to develop and produce the commodity that is more efficient and profitable. Under such conditions, spending on health care and other social sectors are considered a burden on the economy. Only a meagre amount of GDP is spent on health care.
If the neoliberal model is generating superior profits and extending control across the globe, why would the elites want to change it? Instead, they are making serious efforts to make maximum the use of artificial intelligence to maximize profits and retain efficient control over humanity.
The elites may use slogans of nationalism, anti-immigrant sentiments, and hate against China to channel people's anger to disguise the true form of neoliberalism.
Will the pandemic sharpen the U.S.-China conflict and make it antagonistic, which can lead to proxy wars or a full-fledged war between the U.S. and China's allies?
There was a time when the world was divided between two opposing ideologies: socialism and capitalism. After the collapse of the former USSR and the adaptation of capitalist approaches by the Chinese government, the world became unipolar. The U.S. emerged as the sole leader of the capitalist camp.
Currently, there is a conflict within capitalism. Now, the opposing parties in this conflict are using one another and collaborating with each other. We could even say the opponents cannot live without each other yet want to kill each other.
The U.S. was the unchallenged leader of the Empire before 1980. China came up surprisingly fast after 1980 and posed a challenge in technology, defence, and the economy. The U.S. has brought forth Donald Trump to put a stop to it.
China has taken this relatively calmly and retreated on some fronts because it has realized that it does not have political and cultural clout—and a sufficiently broad united front—even though it might be able to meet the challenge in technology or finance.
It needs more time, but the U.S. does not want to give it more time.
While it's true that China, Russia, Europe and many developing countries are against U.S. hegemony, there is no cohesive camp. The self-centered policies of China and Russia, and especially their role during the Middle East onslaught by the Empire under U.S. leadership, was opportunistic. It did not win them a leadership role in the world.
Of late, China and Russia have offered weak and silent support to Iran and Venezuela, though Russia has provided more determined support to Syria.
It appears that the Empire is now based more on political and military control rather than technology and economic strength, and this makes it weak.
The main damage to the U.S from COVID-19 is not the number of deaths, nor the loss of production. It lies in the exposure of the poverty of a large section of the U.S. population, especially among people of colour and African Americans in the big cities. Without this poverty, they could not have selectively died to nearly the same extent.
Some say that the Empire has three pillars on which it stands: a strong economy, military might, and international social recognition as a world leader that can help nations in times of calamities.
There is no doubt that the U.S. has one of the biggest war machines of the world, eminent and cutting-edge technologies, and a high percentage of GDP. It is also true that Wall Street still dominates in world market with regard to wealth.
However, because of neoliberal policies, a significant percentage of Americans have lost their jobs and social and economic status. The U.S. government's handling of the COVID-19 pandemic, and the impression that's been created on the international scene, has dented America's status as leader of an Empire.
This Empire, under the leadership of the U.S., has taken its lesson from the history of the Second World War. It does not want to repeat its past mistake of allowing its adversary to grow, like Germany did back then.
However, these matters are not entirely within its control. History proceeds because of the contradictions generated, and not because of U.S. policy.
China's desire is to capture all trade routes, become the world's number one economy, and the sole leader of the world without having a war with the U.S. and Europe.
So far, the Chinese government has been successful in avoiding proxy wars or direct military conflicts. However, the dialectics of contradiction indicate the sharpening of the U.S.-China conflict, which may turn into proxy wars.
The Chinese base in the South China Sea, China's process for claiming Taiwan, and Southeast Asia could be the potential hot spots for these proxy wars.