Peer through the fog and the world after coronavirus takes on different shapes. Some of the boundaries have been drawn. The economic legacy of the pandemic will include steep falls in output, widespread business failures, higher unemployment and a pile-up of fiscal deficits. The world’s richest nations will be at once poorer and more indebted. Capitalism will get a new look.
Governments that have bailed out businesses are likely to demand a bigger say in how they run their affairs. Taxes will have to rise. Politicians will look to nurturing national champions, particularly in sectors such as pharmaceuticals. Checks at borders will become more common, and, domestically, states may hold on to the powers of surveillance they have assumed during the crisis.
Whether this adds up to a once-in-a-generation transformation, that shifts permanently the balance of power within societies and remakes relationships between states, rests on the decisions of political leaders. Populism will tug them towards flag-waving nationalism, prefacing another turn towards deglobalisation. Inertia will make the case for attempts to muddle through, with adjustments at the margins. Enlightened self-interest should frame an opportunity for liberal democracies to refurbish a threadbare social contract.