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04/01/2020

Covid-19 and the end of the Washington Consensus

Covid-19 and the end of the Washington Consensus

Global leadership and hegemony changes hands just about every 100-150 years. When that change takes place, the backbone of the global system shifts as well. Important milestones such as the Treaty of Westphalia of 1648 and the French Revolution are examples of such changes in the 17th and 18th centuries. In the 19th century, Great Britain emerged as the dominant force of Europe starting with the post-Napoleonic Vienna Conference (1815). The US became a new global leader, influencing the world in every aspect, from football to the English language, to textiles and seafaring.

20th CENTURY US LEADERSHIP

The British carried out World War I with the help of loans from the United States, and, even though they had won, their economy had collapsed. After the war, the era of empires came to a close and the rise of socialism in Russia and Kemalism in Turkey had begun: the oppressed nations of the world were awaking. The League of Nations (which was founded by the British) had failed to prevent World War II. Although the UK and the allies managed to come out on top, London had to accept the global leadership of the United States. This was especially the case when it came to economic power. The United States, which surpassed Britain in production in 1890, had emerged as an economic giant after World War II. The era of American hegemony had begun. The Soviet Union was the only element of balance that could have prevented it, especially when it came to nuclear technology. As a result, the world enjoyed a period of relative stability until 1989 when the Berlin Wall collapsed in the last years of the Cold War under the threat of mutually assured destruction and nuclear weapons. The population and wealth of the world have increased dramatically since then.

In the 1970s, the population was 3.5 billion, at the beginning of the 21st century, it was 7.5 billion. In 1971, the United States consolidated the dollar’s position in international trade with a rather sneaky move. In the 1970s, the neo-liberal economic system shifted gears. The hygiene, medicine, food, telecommunication and transport sectors had developed so much that after the 1970s, the Atlanticist global economic system had begun to see the growing world population as a potential consumer mass to be tapped.

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THE POST-COLD WAR ERA

After 1989 and the disintegration of the USSR, US hegemony began to impose neo-liberal capitalism all over the world under the banner of globalization. In the age of unipolarity, the maps changed dramatically and many governments were overthrown. As state authority shrank, privatization and giant corporations experienced their golden age. Meanwhile, the financial-capital sector grew more than it had in its entire history. As the system began to produce money out of thin air, finance prevailed over production, consumption prevailed over rationing and material pleasures prevailed over the spiritual and moral.

The masses have been transformed to the extent permitted by broader geopolitical theories, becoming perfect consumers. After the collapse of the USSR, Russia also became a capitalist power, while China had already shifted toward a mixed economic model in the late 1970s.

THE NEOLIBERAL DISASTER

At the beginning of the 21st century, the socio-psychological climate shaped by neoliberal capitalism and Atlanticist democracy had created hedonistic masses that willingly plunder nature for commodities, having fallen away from fundamental humanitarian values. Neoliberalism created a society of individualists, consuming without thinking. The masses looked the other way during the bloody interventions in Afghanistan, Iraq, Libya and Syria, wars conducted either to access energy and raw material resources or to create new markets. Most did not question their governments, submitting to the artificial threat of terror. While the weak states disintegrate in political bloodbaths, the vigorous elites of financial-capital have supported the growth of a universal middle class racked with consumer debts.

At the same time, these elites are always looking to expand their markets. The growing demands of the middle class, many of whom were in poverty one generation before, are propped up by governments who are ruthless in the geopolitical and the economic struggles. The Washington consensus offered everyone the ideal of living like an American within a liberal democratic system. Accomplishing this required that these populations comply not only within the framework of consumption, but also with western values. Those who opposed these values are considered enemies and punished.

A DEPLETED WORLD

However, the American dream proved difficult to export. The Washington Consensus had actually encouraged globalization to benefit from cheap labor: in the new climate where global manufacturing integration was carried out based on mutual dependence, especially in the Asia-Pacific. The economies of China and India had grown exponentially, and the trade axis had turned to the east. It was a sign of success that over 25 years, 2.6 billion people moved into the middle class globally, but the strategy backfired. While the Asian-Pacific countries had attained production power, the American system had moved in the opposite direction, and the consumer model had grown even larger.

At this point, the destruction of the environment was inevitable as well. From carbon dioxide emissions to the balance of supply and demand of consumer goods, the global system proved far from sustainable. In 1973, goods carried by ships increased to around 3.5 billion tons… it was 12 billion tons last year. If globalization continued on like this, it would likely reach around 25 billion tons by the year 2030. The destruction of the environment went from global warming to air pollution, from the acidification of the oceans to the formation of plastic garbage islands. This approach has long been understood to be unsustainable.

WHO WILL PUT AN END TO THIS?

Someone needs to put an end to the financial-capital world, and create a new, sustainable system. Someone must halt the spread of globalization, dependency on increasing consumption and destruction of national borders. Governments need to be reorganized not only for the benefit and the wellbeing of a specific minority, but for the peace and prosperity of all its people.

THE COVID-19 WARNING

The coronavirus has been an important warning for the entire whole world. A microscopic virus has been more effective in breaking the global geopolitical fault lines and changing the geopolitical paradigm than the Peace of Westphalia, the French Revolution and the 1956 Suez Crisis. The Covid-19 crisis is not an armed conflict, yet its impact can only be compared to a World War. Taking a closer look at the consequences of the pandemic, it becomes clear how complex the issue is. According to some environmentalists, the world has finally been breathing freely since the quarantine has been imposed. For example, the air pollution in Wuhan has virtually been eliminated.

On the other hand, the neoliberal globalist system with its dependency on the US dollar, is collapsing. The situation has opened the door to retrieve real economic systems on the ruins of financial-capital. At this point, changing interest rates or releasing capital back to the market would not be enough to get empty factories to produce bread again as had been done in response to the 2008 financial crisis.

EVERY NATION IS ON THEIR OWN

The recent pandemic has shown us that all the countries are essentially alone. Even giant supranational organizations like the EU or NATO have been unable to handle the crisis. They have been totally unable to help those in need. This problem is global, but the solution is national. Covid-19 has reminded the world that the public sphere is vital in an environment where profit-oriented capitalism has pushed the population to abandon social morality. China, on the other hand, has managed to remain strong morally and economically, providing a stable model for the 21st century. As globalization shrivels, governments will continue on the path toward self-sufficiency. As economies turn domestic, regional cooperation and trade between neighbours will increase. This kind of self-sufficiency will be important, particularly when it comes to agriculture and water resources.

THE AMERICAN ERA IS COMING TO ITS END

It has become increasingly evident that the United States will no longer be able to continue its reign of dominance. The US cannot even help itself, let alone others. The US-led IMF has been rejecting Venezuela’s requests for loans during this difficult period while the US continues its sanctions against Iran, including the humanitarian supplies, in an environment where all nations should be acting solidarity– all of this has destroyed America’s global image. This situation will further exacerbate the rivalry between the US and China, the choice between which will become more and more clear for oppressed nations.

SOCIO-ECONOMIC TSUNAMIS

Covid-19 will restore nationalism and isolationism throughout the world. Although G-7 leaders from the United States, France and Germany say that they are at war with the coronavirus, in reality their efforts have been part of preparations for a transition to a new global economic system. There is no doubt that there are great challenges ahead as the new global system is built. Although Covid-19 will eventually be eliminated, the socio-economic tsunami created by it will shock the global economic system, plunging into chaos and recession. Meanwhile, gun sales in the US have increased by 40 percent over the last three months as Trump demands war-time authorizations. An era of a socio-economic crisis is at hand, where the threat now longer comes from the outside, but from the inside, as nations struggle with unemployment and economic imbalance. Without a doubt, every country will face serious domestic problems until a new economic system is established.

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CHINA RISING

China, with its strong centralized state structure, turned out to be the state most prepared for such a catastrophic scenario. Without a doubt, this crisis will contribute greatly to China’s position as a world leader. Having achieved incredible success in a very short time using both technology and the entire capacity of the government to handle the deadly biological threat. There is no doubt that the US military strategists will analyze China’s strategy and adapt elements of it. It seems clear that the Chinese people will respond to even a nuclear attack with the same level of discipline, let alone a conventional war. China is undoubtedly increasing its investments in response mechanisms to the threat of biological weapons. Defense budgets will now be reserved for defense against pandemics and similar biological attacks as much as conventional weapons.

LESSONS FOR TURKEY

The most important lesson for our country from this process is the same one Kemalism taught us 100 years ago. Science is everything. The truth is hidden only within science. Faith can only support the truth science reveals. Covid-19 has taught us once again that science is the most concrete guide. On the other hand, this crisis has shown us that the prosperity and wellbeing of the people should come before political interests. The practice of imposing curfews in Wuhan, China with a population of 15 million people, is a great example. Turkey did not implement a curfew for a number of reasons. It was also unable to maintain the discipline and effectiveness of quarantine implementations for those who came from abroad.

This crisis has proven that the presence of the Turkish Institution of Public Healthcare (Hifzisihha) is extremely important for the government. This institution, which does not even have the status of a General Department, must be given back the capacity and power it deserves.

ECONOMIC FRAGILITY

Turkey must achieve a production based economy within the 21st century, applying a mixed economic model with statist guidance. Economies based on the consumption and the service sector have proven to be very fragile. Unfortunately, Turkey fell for this trap after the 1980 coup d’état. While I write these words, some of the social problems such as the heavy burden brought on our economy by the coronavirus have begun to be discussed. We need to overcome these problems with national mobilization. Unrealistic projects such as the Istanbul Canal, which will not provide any revenue to our society and economy, should be abandoned. The spirit of the Izmir Economic Congress must be restored. Atlanticist ornamentation and obligations, particularly in regard to the European Union Customs Union, should be revised.

IMPERIALISM WILL RESIST

The Washington Consensus is taking its last breaths as a result of the pandemic crisis. As a result, we should expect that imperialism will do everything in its power to survive, just like Covid-19. Therefore, Turkey needs to return to its founding values, namely the Kemalist state model, and strengthen its cooperation with Asia, especially Russia and China, taking lessons from the failure of humanitarian values and crisis management in the EU and the United States, places which Turkey has too long considered the geopolitical holy grail.

 
Cem Gürdeniz
Admiral Cem Gürdeniz graduated from Turkish Naval Academy in 1979. As a deck officer, he served in different in destroyers and frigates. He assumed the Command of guided missile frigate TCG Gaziantep and the Third Destroyer Division. He completed his education in Turkish Naval War College and Armed Forces College. He holds two masters degrees from US Naval Postgraduate School and Université Libre Brussels (ULB) in personnel management and international politics respectively. He was promoted to the rank of Rear Admiral (lower half) in 2004 and upper half in 2008. He served as the Chief, Strategy and Agreements Department and then the Head of Plans and Policy Division in Turkish Naval Forces Headquarters. As his combat duties, he has served as the commander of Amphibious Ships Group and Mine Fleet. He retired in 2012 as a result of the Sledgehammer Bogus Case. He is the founder and Director of the Istanbul Koc University Maritime Forum. In addition to his native Turkish, he is fluent in English and French. Admiral GUrdeniz is the writer of numerous publications in multiple languages languages including ‘Bluehomeland Writings.’ He is a columnist at Aydınlık Daily and Yacht Magazine.

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