The post-coronavirus global economy and international order (1)

Honourable Vice-Chancellor Professor Olanrewaju Fagbohun; Dean of the Faculty of Social Sciences and Deputy Vice-Chancellor Elect, Professor Elias Wahab; the Head of Department of Economics, Associate Professor Ibrahim Bakare; Distinguished Professors, Colleagues, Students and Friends.

I am highly honoured to have been invited to give this maiden lecture of the Economics Department of Lagos State University (LASU). It is gratifying to note that, over a relatively short period of its existence, LASU has registered such impressive strides and has positioned itself among the front ranks of the leading institutions of higher education in our country.

I congratulate you for this great feat and I wish you even greater accomplishments in the years ahead.

Honourable Vice-Chancellor Sir, the history of our planet has been a titanic struggle between viruses and Homo Sapiens. This has been so since the first settled civilisations appeared around Mesopotamia some 5,000 years ago. Archaeologists have found evidence of plagues that devastated entire communities in ancient times. Indeed, the American polymath Jared Diamond wrote his Pulitzer-winning book, Germs, Guns and Steel (1997) to explain how diseases, military force and technology have interacted with ecology and geopolitics to reshape the fate and destiny of nations.

Distinguished colleagues, there is enough evidence in history to show that disease and plagues do affect the trajectories of nations and civilisations. Around 430 BC, the Greek historian Thucydides recounted the story of a plague that killed more than half the population of his native Athens: “people in good health were all of a sudden attacked by violent heats in the head, and redness and inflammation in the eyes, the inward parts, such as the throat or tongue, becoming bloody and emitting an unnatural and fetid breath”.

The two leading powers among the Greek city states were Athens and Sparta. Following the Peloponnesian War as recorded so brilliantly by the historian Thucydides, the warlike state of Sparta got the upper hand. I am inclined to believe that the plagues that decimated half the population of Athens did contribute to their geopolitical decline as a city-state, paving the way to the hegemonic rise of Sparta.

The Antonine Plague that broke out in ancient Rome inflicted a death toll of 5 million between 165-180 AD. It could have been a factor in weakening the Roman Imperium and ultimately contributing to its eventual demise. The Bubonic Plague inflicted a catastrophic devastation on the Byzantine Empire during the reign of Justinian, around 527-565 AD. The “Black Death” wiped out 60 percent of the population of Europe during 1346-1353. It also freed the lower orders from a millennial serfdom, leading to the collapse of the British feudal order. These changes helped lay the groundwork for the rise of the modern capitalist economic system as we know it today.

These plagues may also have indirectly contributed to the collapse of Byzantium and to the sacking of the glorious city of Constantinople by the Ottoman Turks in 1453.

My dear students, it would interest you to know that early modern Venice was the pre-eminent commercial centre, naval power and the most dominant force in the Mediterranean in the early modern period. The Italian Plague of 1629-31 decimated Venice and brought it down from its apogee. The decline and fall of Venice paved the way for the rise of Northern European states such as England and the Dutch Republic. We have been told that the word “quarantine” derives from the Venetian dialect word for “40 days.”

During the 15th – 16th centuries, native Amerindian populations contracted strange diseases through their contacts with Europeans. The Aztec Empire was destroyed by smallpox, opening the door to European colonisation in the Americas. By contrast, many parts of West Africa were closed to European adventurers because of the mosquito and malaria.

We are still within the first quartile of the worst cases globally. More vigilance and more work is needed to stem the tide of this evil whirlwind

In the 20th century, the Spanish Flu of 1918 killed 50 million people in Europe, adding to the tens of millions who died during the First World War. These plagues contributed to the weakening of Europe and was a factor in the weakening of the European-dominated international order of that epoch. Many of our people do not know that some 100,000 Nigerians, particularly from the coastal cities of Lagos, Calabar and Port Harcourt also perished from the Spanish Flu.

My dear students, in our 21st century, there have been outbreaks of viruses such as the Asian Bird Flu, SARS, Ebola, HIV-AIDS, and the novel coronavirus, officially known as Covid-19. Thanks to advances in medicine and the biomedical life-sciences, the effects have not been as bad as they might have been centuries ago. But for poor developing countries, the tolls have been devastating, as exemplified by our recent experience with Ebola in West Africa. Apart from the human costs, fragile economies have been undermined while the reservoir of social capital that holds communities together has been destroyed.

The novel coronavirus which broke out in the Chinese provincial city of Wuhan has turned into a global pandemic of unprecedented proportions. The human toll may have been comparatively modest in numerical terms, but the material impact has been unprecedented. The impact of the generalised economic lockdown across the world, has been a phenomenon never seen in centuries. It is a Black Swan event that could not have been anticipated by the normal laws of probability. Economic historians have drawn parallels with the economic devastation of World War II.

According to the statistics, as we speak, there have been 25.2 million cases worldwide, out of which 847,241 deaths have been registered, while 17.5 million recoveries have taken place. We still have 6.8 million active cases to reckon with across the world.

In terms of country, the top 5 worst cases are: USA with 6 million cases and 183,653 deaths; followed by Brazil with 3.7 million cases and 117,756 deaths; India with 3.3 million cases and 60,629 deaths; Russia with 970,865 cases and 16,683 deaths; and South Africa with 615,701 and13,502 deaths.

Ladies and gentlemen, in terms of number of infections and deaths, Nigeria ranks 50th out of 215 countries and territories, with 53,727 cases and 1,011 deaths. This is no reason for us to beat our chest. We are still within the first quartile of the worst cases globally. More vigilance and more work is needed to stem the tide of this evil whirlwind. So far, I think the Task Force on COVID-19 has done a good job, given the constraints of resources and logistics. But we expect more action and we urge them to do even more so that our country will return to normality.

The global economic impact of the pandemic has been horrendous. The Nigerian economy has been thrown into the jaws of another recession. The collapse of oil prices has deepened the fiscal insolvency of the government. There is today a yawning gap in the budget deficit. Millions more have been thrown into destitute poverty.

The stylised facts about the global economic consequences are already familiar.

The United States, the world’s leading economy has suffered job losses of close to 47 million. Thousands of businesses have gone under. Trillions of dollars have been wiped off from the stock exchanges.

China, the engine and locomotive of the global economy has taken a big hit. The Chinese automobile industry has suffered losses exceeding 20 percent. Exports have been reduced by 17 percent. The Chinese GDP has fallen by more than 6.8 percent. Growth in 2020 is forecast to fall to 2.5 percent.

The EU GDP is forecast to contract by 7.5 percent during 2020 while the British economy I expected to shrink by 35 percent by year’s end. India has suffered a staggering 110 million job losses.

(Text of the Maiden Annual Lecture of the Department of Economics, Lagos State University, LASU, on Thursday 27 August, 2020).