Three interrelated shocks have impacted the uneven recovery of the world economy from the “Great Recession” that began in 2007. These are the ongoing efforts of the United States to try and retain its hegemonic status, the Covid-19 pandemic, and the conflict in Ukraine. All three have implications for international political economy.
Covid-19 was clinically detected in January 2020, but most developed countries disregarded lessons from China’s public health practices to deal with the pandemic. As a result, they suffered avoidable economic and public health ruin. They did not utilise their relatively high per capita incomes and public health infrastructure, which could have minimised this ruin, since it was incompatible with the hegemony of the neo-liberal project in them. Instead, their elites scapegoated China and misattributed the failures of neo-liberal policy to tackle the pandemic to the “idiosyncrasy” of some leaders, such as Donald Trump.
Most developing countries entangled in the neo-liberal project could not afford to deal with Covid-19 effectively. The absence of capital controls meant that their governments could not expand their fiscal deficits as per the public health requirements and the needs of workers, peasants and small firms. Instead, their fiscal deficits had to be maintained at (lower) levels that international finance found “acceptable”.
In many developing countries, such as India, it is arguable that even the limited “fiscal…
