Economics Essay: Capitalism, COVID-19, and the Future of the Economy

This economics essay explores the profound impact of the COVID-19 pandemic on global capitalism. It examines the disruption of supply chains, the shift towards localized production, and the potential for long-term economic and social changes. The essay discusses the immediate consequences of the pandemic, including market losses, business impacts, and rising unemployment. It highlights the vulnerability of the contemporary capitalist model and analyzes the roles of government intervention and stakeholder capitalism. The essay concludes by considering the potential for a prolonged economic downturn and the need for adjustments in consumer behavior and business investment. It references several key studies and expert opinions to support its arguments, providing a comprehensive overview of the crisis and its implications for the future of the global economy.

Running head: ECONOMICS
Capitalism in Covid-19
Name of the Student
Name of the University
Authors Note
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Table of Contents
Introduction:...............................................................................................................................2
Discussion:.................................................................................................................................2
Conclusion:................................................................................................................................4
References:.................................................................................................................................5

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Introduction:
The coronavirus pandemic has not only claimed several lives but is a new economic
headache which will have a severe outcome when the situation is bought under control. Just
like the fall of Berlin Wall or the collapse of Lehman Brothers, the coronavirus pandemic is
regarded as world-shattering event whose wide reaching magnitudes can only commence to
image today.
Discussion:
The outbreak of “Covid-19” has created a dramatic new stage in the “global
capitalism”. The major shockwave to the world’s financial and economic system involves the
identification which the global supply chains and networks of distribution are intensely
exposed to interruption (Jones 2020). The “Covid-19” pandemic would not only create a
long-lasting economic impact but would also result in a significant fundamental change. As
evident from the scale of financial market losses the world has experienced since February,
companies are very likely to come-out from this pandemic decidedly gun-shy regarding the
just-in-time model and regarding globally dispersed production (Baldwin and Tomiura 2020).
The outcome can be very dramatic in global stage where supply chains are brought close to
home and filled with redundancies in order to protect against the future disruption. This may
impact the profits of the company but would render the overall system more resilient.
Considering the dynamics of capitalism majority of the cutting-edge model of
contemporary capitalist consumerism is not possible to operate within the present condition.
Workforce in major parts of the world are socialized to behave as a neoliberal subjects
(Ramelli and Wagner 2020). It can be greater than a year and the longer it may take, the more
will be the deflation, together with the labour force. The level of unemployment would surely

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rise to levels that will be comparable to 1930s in the non-existence of state intervention. The
instant consequence for the economy along with the social daily life is multiple.
With the increase in the “Covid-19” health emergency, the economic decline is rising
as well. The pandemic teaches that the global level economy growth has went reverse,
business have begun abandoning the service to consumers and millions of workforce are
unemployed technically (Gates 2020). A short-term economic crisis such as Covid-19
outbreak reveals that companies truly personified the stakeholder model and only paid lip
service, whereas basically maintained a short-term orientation in profit. The “Covid-19”
crisis should be viewed as litmus test which shows that who has been “swimming naked”
whereas endorsing stakeholder capitalism.
Words such as recession, credit crisis and depression are presently on the lips of
forecasters. The virus has simply caught the government off-guard. As per the economist the
Covid-19 outbreak and the sudden stop in the consumer expenditure will certainly strike a
bitter blow to the economy at global level than the recently concluded global recession
(McKibbin and Fernando 2020). The social distancing is also an economic distancing. To
slow down the pandemic, government are forcing a recession or perhaps a depression. The
Covid-19 outbreak can produce a difference what the economy can produce or what it was
producing.
The approaching surfs of economic agony can certainly witness a decline in economic
activity. The economic pain from the outbreak of “Covid-19” could witness an unanticipated
cessation in the economic crisis across the world as vast number of country is sheltering in
place and majority of the economy has simply stopped. According to Albulescu (2020) gross
domestic product could witness a massive decline of 24% in the second quarter of the year. A
fall of GDP at this magnitude would nearly be around two-and-a-half times in size of the

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biggest quarterly decline in the history of modern GDP. When the economy would come to
halt and the GDP plummets workers would lose their jobs.
Another notable economic effect that will be seen is wiping out of nest egg. As
majority of the stock market have shattered it would turn into disaster for those that are
nearing retirement. The reticence of consumer spending would simply slow down the
economic growth long following the direct crisis comes to an end. The economy could also
witness a cut in investment by businesses. Corporations that were looking forward to open a
new factory will not open, media organizations that were looking forward to launch a new
publications will witness a hold back which is yet another engine of economic decline.
Conclusion:
Conclusively, the virus is not yet under control by the summer which could be seen as
a nightmare scenario and an extreme social distancing measures will be required all through
the year which majority of the health experts considers the likely situation. The ground can
breakdown under the economy.

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References:
Albulescu, C., 2020. Coronavirus and financial volatility: 40 days of fasting and fear. arXiv
preprint arXiv:2003.04005.
Baldwin, R. and Tomiura, E., 2020. 5 Thinking ahead about the trade impact of COVID-
19. Economics in the Time of COVID-19, p.59.
Gates, B., 2020. Responding to Covid-19—A Once-in-a-Century Pandemic?. New England
Journal of Medicine.
Jones, D.S., 2020. History in a Crisis—Lessons for Covid-19. New England Journal of
Medicine.
McKibbin, W.J. and Fernando, R., 2020. The global macroeconomic impacts of COVID-19:
Seven scenarios.
Ramelli, S. and Wagner, A.F., 2020. Feverish Stock Price Reactions to COVID-19. Swiss
Finance Institute Research Paper, (20-12).