In three weeks’ time, I am going to go to a beer festival, which I am already looking forward to. Twelve different breweries, from ten different countries, will be represented. It will involve tasting sessions, brewery tours, comedy acts, and Q&As with the master brewers.
What about coronavirus? No, don’t worry about that. It is all virtual. You get the beers posted to you in advance, and then you join via Zoom.
Virtual wine festivals, with livestreamed music concerts, tasting classes and cooking tutorials, are becoming an even bigger thing. One of them, in the Palatinate (a winegrowing region in southwest Germany), recently attracted nearly 3,000 “visitors”.
Can such virtual events replace the real thing? Obviously not, which is why most of the makeshift innovations of this type will not outlive the Covid-19 crisis. No computer screen will ever replace the Oktoberfest.
But such interim solutions, however imperfect, are nonetheless illustrative of the amazing adaptability and entrepreneurial spirit that we can see across large parts of the economy.
This is not to downplay the severity of the corona-induced recession, but it is worth bearing in mind that there have been lots of rapid, innovative responses in the face of adversity.
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Pubs and restaurants have shifted their activities to takeaway and delivery services, aided by the government’s decision to temporarily relax panning rules around this. Breweries and distilleries have started to make hand sanitiser. Gyms are offering online classes. Fashion brands have started to make masks and hospital gowns. Cosmetics brands have started to make disinfectants. Taxi companies have become delivery companies.
In other sectors, the changes are less visible, but shifting your entire activity from an office environment to homeworking is no mean feat either.
The retail sector has been holding up particularly well. In the early days, when panic-buying was rampant, you could see plenty of socialists gleefully posting pictures of empty supermarket shelves on social media, which was their way of saying “See? Empty supermarket shelves are not specific to socialism. This happens under capitalism too!”
Pointing out that capitalism in the midst of a pandemic looks a bit like socialism on a good day never struck me as an especially brilliant argument, but in any case, it was a passing fad. Despite everything, supermarket shelves quickly filled up again.
Of course, the public sector is playing an important role in this crisis, too, especially via furlough and emergency loan schemes, which are keeping many households and businesses afloat. Free-market liberals are not being inconsistent or hypocritical by acknowledging this. With the exception of anarcho-libertarians, liberals have always accepted a role for the state, however minimal, and that role traditionally includes civil protection and disaster management. These are the core functions of the state, which small-state liberals can comfortably embrace.
Many see the Covid-19 pandemic as just another crisis of capitalism. This is not because there is anything wrong with capitalism; it is because we interpret everything in light of the prevailing zeitgeist, and that zeitgeist is anti-liberal and anti-capitalist.
There has been no shortage of voices, especially on the socialist Left and the communitarian Right, who claim that they have somehow been “vindicated” by this crisis. Without fail, these people’s recommendations for a post-coronavirus economy always coincide with their old hobbyhorses.
But anyone can play that game. It would be easy for me to point out that Hong Kong, Singapore and Taiwan – liberal, open market economies, where government spending only accounts for about a fifth of GDP – have been the most impressive performers in coping with the pandemic. It would be just as easy for me to point out that the German healthcare system, a market-based system of multiple competing health insurers and multiple competing healthcare providers (most of them private), seems to be coping a lot better than the state-run NHS.
All of this would be true. But I am sure you can find counterexamples or confounding factors if you look for them. And in any case, we should not judge an economic system, or a healthcare system, by how well it copes with an unprecedented pandemic.
Major pandemics are, fortunately, quite rare, and they cannot tell us much about what economic arrangements we should have in “normal” times. I would not trust anyone who claims to have come up with some grand masterplan for a post-coronavirus economy. What will ultimately get us out of the crisis is not grand plans, but the same entrepreneurial ingenuity and adaptability we already see in large parts of the economy.
Dr Kristian Niemietz is Head of Political Economy at the Institute of Economic Affairs