What happened, what is happening, what will happen?

All of the questions I get from people mainly involve these three unknowns. Now, allow me to share my opinions on the future of trade, social life, and state governance.

I do not expect the Trade Rules suffer drastic changes as a result of the Pandemic Crisis; however, some procedural alterations are definitely on the horizon. I sincerely hope that companies will focus on “zero-touch” production and logistics. They will try to prove to their customers that all hygiene rules are strictly followed at every step of the production and sales. Perhaps, their products won’t even be available at physical stores; instead they will be delivered to customers’ homes through e-trade. I also believe that the packaging process is bound to face many changes as well. That’s why we should expect to see a brand new era for the most creative design ideas.

Obviously, companies will need a certain amount of time to adapt to changes. Business interruption and loss of valuable human resources will lead to a new structure which will have to be considered “new normal” by everyone. In the process, I sincerely hope that companies understood the fact that many business activities can actually be carried out digitally as well, that the total number of employees doesn’t necessarily have to be so high and they should adopt a brand new approach towards cash flow, profitability and capital. Many companies should have understood by now that “employing thousands of people” is not actually something to be proud of, in fact, a company should try to increase the quality of human resources all the time and embrace digitalization in every stage of the business. I think the most painful result of facing this reality will manifest itself as a tough challenge for Turkish business people since, if I know them correctly, none of them would admit that they did something wrong.

About the markets; this recession nightmare, the main reason behind the decline in oil prices, will not go on forever. It seems likely that DOWJONES will achieve stability if the pandemic doesn’t get worse in the US. I expect monetary and capital markets to feel the aggravation or improvement before the other markets do and take measures accordingly. Therefore, sharp falls in markets are hardly anticipated unless a deadlier second wave of infection hits later in the year. But, remember, downward trend still remains unchanged.

Let’s face it: Global economy has already facing some serious issues even before the coronavirus outbreak. Trade protectionism, world’s alarming debt pile, Brexit, recession fears, regional conflicts are only a few examples. Despite all of these, we were expecting that global GDP would achieve 2.5% in 2020, at the worst. But, the coronavirus hit us all like a bomb, reminding us all of our fragilities, showing us that they are real, not delusions. So, under the circumstances, the World Economy seems likely to finish 2020 with a 1.5% contraction. In this case, the US, Euro Zone and Turkey would respectively shrink by 2.5%, 4.5% and 0.5 %. In short, 2020 will be a lost year. Up to now, I’ve told you about the “what happened” and “what is happening” parts of the story. Now it’s time to tackle “what will happen”.

“State Capitalism May Rise…”

The coronavirus pandemic will be an economic and a political milestone. We are about to enter a new era where people, countries and systems will have reconsider their relations. It has been understood that the countries will have to review their government systems, capitalism has been having difficulty solving problems, and institutions like Central Banks have been visibly losing power.

“State Capitalism” may be on the horizon. In other words, we might be entering a new era where some governments will say to their citizens, “Stop worrying about finding job. We got this. You can enjoy sports, art or culture activities in your spare time”, and make this promise come true by employing people in nationalized companies. I don’t think ordinary citizens will have an objection to these new practices in any way because it is now perfectly clear that the private sector cannot stand on its own two feet without the State.

In this new era, the State might even consult with people about legislation and execution using the Blockchain technology, parliaments might not indeed be anymore necessary. States might be governed by people casting their votes on authenticated smart devices just like in Ancient Greek city-states, when citizens used to gather together in amphitheatres to cast their votes, which means citizens can participate in democracy without electing parliamentary representatives. This, however, can lead to the tyranny of the majority.

“If administrators start making laws based on the preferences of voters, democracy might go off the rails. It is important to think globally when making laws”, said John Stuart Mill in the mid-19th Century. Given the fact that the intellectual level of parliaments is being severely criticised, direct participation of citizens in democratic decision making might become a desirable suggestion.

Some people wonder whether liberalism will collapse. Liberalism will not collapse under any circumstances because neither liberalism nor collectivism has been implemented properly to begin with. It would not be fair to call them “fallen systems” since none of them has been properly used by the State; both systems suffered great harm due to constant government interventions. Prevented by the State, liberalism was enslaved to capitalism. The original state of collectivism was damaged by the State, was turned into something entirely different, eventually becoming a victim of abuse by capitalism again. If both doctrines had been properly implemented, then we could have the liberty to say whether they worked or not.

In short, we were able neither to create a suitable environment for “laissez faire” nor create an environment where there is no social stratification. We have sacrificed both doctrines to human ambition and greed.

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