WTOs polycrisis: famine, war and economic contraction

A duplicitous affirmation of converging crises

In June, the WTO began marketing the concept of “polycrisis” in describing the current confluence of… Societal challenges, shall we say.

I don’t think this is a misleading notion as such. It’s just that the mainstream description, framing and explanation of the interconnected crises, not to speak of the solutions which will be marketed to us, is going to be shaped by the goals and interests of the ruling class and their legacy institutions. When the reality of the situation can no longer be denied, it will be spun and filtered through the propaganda machine.

Still, this affirmation is unique. While crises and emergencies have been the background theme of the last twenty years or so, we haven’t until now seen such an outright assertion of the sort of intersection of wicked problems (meaning practically unsolvable ones) that e.g. the peak oil crowd have been crying foul about since the early 2000s.

The official narratives’ explicit approach to Kunstler’s “long emergency” is inevitably going to be something quite revealing. Something which, if we read between the lines, will illustrate many of the important contradictions between propaganda and reality, as well as the general outlines of the mid- to long-term goals of institutional power in this situation.

Naturally, the “covid pandemic”, the Ukraine war (what about the Tigray war? Yemen? The forced starvation of Afghanistan?), the ensuing inflation and climate change are the purported pillars and catalysts of the polycrisis™. There’s nary a word about resource constraints, the structural imbalances of the capitalist economy or the erosion of political legitimacy.

Let’s look at the general claims in some detail.

Components of the polycrisis

• The “covid pandemic”.

This key theme is the mainspring of the entire concept. Inevitably so, since it’s been the alarmist focal point of the mainstream media since early 2020.

Tellingly, almost nothing is now being stated on the actual ravages of this allegedly viable challenger to the bubonic plague. The focus is entirely on “vaccine equity”, with the indisputable realities of the viral menace being taken as a given.

Let me start with the pandemic. If there is anything positive about COVID-19, it is the development of vaccines in record time. What was missing, however, was a policy framework to secure global access to vaccines once they became available. Access to vaccines has improved thanks to initiatives such as COVAX and the mRNA vaccine technology transfer hub. But in some parts of the world, vaccine inequity remains acute. While on average, 66 percent of the world’s population have received at least one dose of a COVID vaccine, among low-income countries, the rate averages only 17 per cent.

Had the world been better prepared, millions of deaths could have been avoided. We need to learn from this pandemic and get ready for the future ones (WTO Deputy Director Angela Ellard. DDG Ellard addresses the role of multilateralism in a world of polycrisis. (2022). WTO.org. https://www.wto.org/english/news_e/news22_e/ddgae_24jun22_e.htm)

Right. Like Nigeria? 3 142 “covid deaths”, and almost no vaccinations. A population of 216 million.

We can see that the very first item on the agenda is to further expand the mass vaccinations, which at this point obviously are entirely useless in relation to their proffered purpose. Only 61% of the global population are yet to be treated, according to official numbers.

Why do you think this is the case?

• The war in Ukraine.

“Hot on the heels of the pandemic came the war in Ukraine.” As an unpredictable phenomenon of nature, thrust upon us like an earthquake or a thunderstorm.

The war in Ukraine is compounding inequalities with fuel and food prices soaring to record levels. This is without counting the looming debt crisis that leaves low-income countries with little to spend on social protection to cushion these shocks (Steiner, A. Administrator, United Nations Development Programme (UNDP). How to make clean, affordable energy available to everyone. WEForum.org. (2022). https://www.weforum.org/agenda/2022/07/3-ways-to-transform-energy-systems-for-a-sustainable-and-equitable-future-for-all)

Not to mention the arbitrary sanctions on Russia and Belarus, the latter of which produces about a full fifth of the global supply of synthetic fertilizer. And we’re actually actively suppressing Belarusian exports, ostensibly to put pressure on Russia.

Just think about this for a second.

A Belarusian potash miner that accounts for a major chunk of global supply has declared force majeure, shaking up a market that’s already contending with soaring prices.

Belaruskali said around Feb. 16 that it won’t be able to meet its contracts, according to a letter from an exporter addressed to clients seen by Bloomberg. Shipments have been halted as a result of U.S. and European sanctions.

The absence of Belarusian supplies will have big consequences. Potash is a key nutrient for major commodity crops like corn and soybeans, as well as produce. Fertilizer prices have already skyrocketed as soaring natural gas costs forced some European plants to halt or curtail production, and U.S. spot prices for potash in the Corn Belt have nearly doubled in the last year (Bloomberg.com. (2022). https://www.bloomberg.com/news/articles/2022-02-17/belarus-potash-maker-roils-fertilizer-markets-with-force-majeure).

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The EU has banned all imports from Belarus of potash, an important fertiliser that is largely deficient in Europe, in a move that puts further pressure on the agriculture sector already struggling with an input price hike.

On Wednesday (2 March), the EU ambassadors approved a new package of sanctions targeting Belarus for supporting Russia in its military attack against Ukraine (Euractiv.com. (2022). https://www.euractiv.com/section/agriculture-food/news/eu-sanctions-on-belarus-target-key-fertiliser-amid-rising-input-prices/).

Why would you do something like this in the context of a global hunger crisis? You’re not going to put meaningful pressure on Russia by specifically cutting EU imports of synthetic fertilizer. You’re going to achieve a lot of other things, however. None of them very palatable.

• Runaway inflation and the debt crisis

There is increasing focus on inflation, the debt crisis, and the risk of a stagflationary recession, which is also connected to the polycrisis concept, albeit rather vaguely and tersely. Of course, inflation is Russia’s fault, as well as an inevitable and natural consequence of the “covid pandemic” rather than due to any policy decisions, structural issues, or actual resource scarcities.

A recent and quite comprehensive article by Roubini coming out as a doomer in The Guardian spells out the mediatic framing of the current economic turbulence in excellent detail, and is ominously close to the truth:

The global financial and economic outlook for the year ahead has soured rapidly in recent months, with policymakers, investors and households now asking how much they should revise their expectations, and for how long. That depends on the answers to six questions.

First, will the rise in inflation in most advanced economies be temporary or more persistent? This debate has raged for the past year but now it is largely settled: “Team Persistent” won, and “Team Transitory” – which previously included most central banks and fiscal authorities – must admit to having been mistaken.

The second question is whether the increase in inflation was driven more by excessive aggregate demand (loose monetary, credit, and fiscal policies) or by stagflationary negative aggregate supply shocks (including the initial Covid-19 lockdowns, supply-chain bottlenecks, a reduced US labour supply, the impact of Russia’s war in Ukraine on commodity prices, and China’s “zero-Covid” policy). While demand and supply factors were in the mix, it is now widely recognised that supply factors have played an increasingly decisive role. This matters because supply-driven inflation is stagflationary and thus raises the risk of a hard landing (increased unemployment and potentially a recession) when monetary policy is tightened. …

This affirmation is significant. I would argue that what we’re seeing in terms of economics is at heart the clash between an industrial growth economy and actual scarcities. The mainstream narrative will naturally frame the supply issues as transitory, however, while we know there are plenty of decisive arguments for them being permanent, especially in terms of energy resources.

That leads directly to the third question: will monetary-policy tightening by the US Federal Reserve and other major central banks bring a hard or soft landing? Until recently, most central banks and most of Wall Street occupied “Team Soft Landing”. But the consensus has rapidly shifted, with even the Fed Chair, Jerome Powell, recognising that a recession is possible, and that a soft landing will be “very challenging”. …

This is a complex discussion, but since the economy ultimately reduces to actual resources and energy, no money-printing thaumaturgy is going to make much of a difference in a situation of hard shortages. As money is nothing more than a socially affirmed claim on necessities, financial trickery such as quantitative easing in a context of neo-colonial dominance will absolutely support the flow of goods and resources to the empire’s heart for a while, but when we’re up against hard resource limits, this entire endeavour very quickly collapses.

The fourth question is whether a hard landing would weaken central banks’ hawkish resolve on inflation. If they stop their policy-tightening once a hard landing becomes likely, we can expect a persistent rise in inflation and either economic overheating (above-target inflation and above potential growth) or stagflation (above-target inflation and a recession), depending on whether demand shocks or supply shocks are dominant.

Most market analysts seem to think that central banks will remain hawkish but I am not so sure. I have argued that they will eventually wimp out and accept higher inflation – followed by stagflation – once a hard landing becomes imminent because they will be worried about the damage of a recession and a debt trap, owing to an excessive buildup of private and public liabilities after years of low interest rates.

Now that a hard landing is becoming a baseline for more analysts, a new (fifth) question is emerging: Will the coming recession be mild and short-lived, or will it be more severe and characterised by deep financial distress (Nouriel Roubini. (2022). Stagflationary global debt crisis looms – and things will get much worse. The Guardian. https://www.theguardian.com/business/2022/jun/30/stagflationary-debt-crisis-us-recession)?

Yeah. I think “permanent crisis” correlates pretty well with deep financial distress.

There will be rationing, and there will be blood.

• Climate change.

The final aspect of the polycrisis construct is climate change. There’s quite little to say about this item on the list, it’s basically just padding in these texts, dutifully referred to as a matter of course. Even in the article on sustainable energy quoted above. Same points about IPCC warnings before key targets are unattainable, “we have to act now, et.c.”

So. There’s a narrative taking form around the “polycrisis”, which basically affirms the notion of converging wicked structural societal problems that’s been supported by alternative economists and the peak oil sphere for decades now. The only issue is that the polycrisis is going to be framed to support the preservation of the dominant power structure, class privileges, and the hegemony of the “global north”, which will be immediately reflected in the solutions sold to us.

Predictably, The WTO, the WEF, and similar transnational institutions of authority, want to address this set of issues with “more globalization”, with the erosion of national sovereignty and the entrenchment of supranational governance. And with further mass vaccinations:

In many ways, not enough globalization — or multilateralism — has resulted in the world’s uneven, fragmented response to the pandemic, worsening its effects. And vaccine protectionism has led to inadequate attempts to vaccinate people in developing countries, risking the emergence of new, vaccine-resistant variants threatening the world. In short, the pandemic has shown that when a global threat is mismatched with a deglobalized response, a crisis is likely.

In a similar vein, the climate crisis cannot be addressed by states setting their own independent goals without reference to others’ actions. And it would be suboptimal at best to address the issue of overfishing on a bilateral or plurilateral basis, simply because nations are unlikely to curb their subsidies unless they know that other nations will do the same.

The WTO's multilateral approach has a tremendous role to play in solving all of these problems, to harness the best parts of globalization. It brings all 164 Members to the table and gives each of them a voice. Consensus is very difficult to achieve and negotiating international agreements is the long game. But once consensus, is achieved, it means that there is buy-in from all WTO Members, that they “own” the Agreement, and will be likely to respect it.  It's not a “majority rules” outcome (Ellard 2022).

The actual solutions are of course at the diametrically opposite end. We need to re-localize production. We need local and regional self-sufficiency in terms of producing food and essentials. We need de-globalization and de-growth, and it’s way too late in the game for all of this taking place in anything akin to an orderly fashion.

So get to know your neighbours. Take up gardening. Raise chickens. Build local low-tech communication networks. Learn a trade or a set of skills that would have been useful back in 1920. Or 1820. Read books. Take it slow, and learn how to think again.

If a government is unobtrusive,
the people become whole.
If a government is repressive,
the people become treacherous.

Good fortune has its roots in disaster,
and disaster lurks with good fortune.
Who knows why these things happen,
or when this cycle will end?

Good things seem to change into bad,
and bad things often turn out for good.
These things have always been hard to comprehend.
Thus the Master makes things change without interfering.

She is probing yet causes no harm.
Straightforward, yet does not impose her will.
Radiant, and easy on the eye.

(Tao Te Ching, ca 400 BC.)