Organisations supporting climate action and the environment are furious! They have been pressing governments for years to release funding for the climate emergency. Now, with COVID-19, governments are throwing together some of the largest economic stimulus packages in history. Trillions are suddenly available to slow down the spread of the pandemic and to support the suffocated economy. How is this possible?!

This article focuses on economic approaches to the crisis and handling the psychological challenges it brings. The previous article was dedicated to community-led emergency reaction and food distribution. The third will cover the significance of digital tools and self-care.

Many people are wondering how drastic must the climate crisis become for authorities to take it as seriously as they are taking the pandemic. What would it take to transform the fundamentals of the economy? The dogma of limitless economic growth seems to be hitting its limits, as economists recognise that global GDP, as this article puts it, “was so big and bloated, it was causing more harm than good. It had grown into bad-deal territory.”

“The task today is not to fight the virus in order to return to business as usual because business as usual was already a disaster,” writes Peter C. Baker in The Guardian. “The goal, instead, is to fight the virus — and in doing so transform business as usual into something more humane and secure.”

As Naomi Klein said in a recent online teach-in: “Normal is deadly. We don’t need to stimulate the economy. We need to build an economy that is based on protecting life.” In the same teach-in Astra Taylor added: “The real pandemic here is capitalism.”

Community-scale economy

Some writers warn about the crisis strengthening totalitarian forces, while others praise the emergence of community-sourced solutions. In both cases a robust local economy is essential and how it plays out depends on who holds the control, autocrats or communities.

Here is a little personal vignette of human ingenuity within a depressive economy.

In the 1990s, I, the author of this article, visited my family in Serbia during the UN embargo. My sister would go to a local shop, acquire the groceries and the shopkeeper would write the amount in a foreign currency under her name in a notebook. On the salary day, my sister would go pay for her entire month’s purchases. That’s how her family survived during the hyperinflation (in 1993, the dinar recorded a monthly inflation rate of 313 million percent).

There are similar stories in all crisis regions. The exchange is based on personal trust and informal ad hoc currencies, coupons, debt accounting etc., valid only in local transactions. COVID-19 hasn’t pushed economies into chaos yet, but if it does, most local economies are not prepared to withstand it and may be left to improvise. What about communities that have considered economic alternatives proactively?

One of the pillars of Transition Network’s work is strengthening the local economy before crisis strikes, using support platforms such as the REconomy project. It offers solutions such as community banking, complementary currency, influencing local procurement policies, enterprise incubation, and strengthening local supply chains. Many Transition initiatives are also rooted in the informal “economy” of solidarity and mutual care.

Strong local economies build networks of trust and loyalty, which — combined with smart incentives, distribution schemes and banking approaches — form a true circular economy. Every resource is well managed and as much waste as possible is retrieved and reused. The economy, when you strip it down to bare essentials, is prudent management of a home. As is often the case, people take their home and their economy for granted until a disaster strikes.

Let’s go circular and glocal!

I won’t repeat what other authors have been highlighting about COVID-19 and the economy: millions of unemployed, vulnerable populations being most affected, the deepening gap between rich and poor etc. Instead I point out the critical importance of the circular economy, which links the end and the beginning of material flows.

On 11 March 2020, the EU adopted a new Circular Economy Action Plan, acknowledging that the European economy is 88% linear. And even that figure is probably inaccurate since “waste-to-energy recycling” practices, burning 80 million tons of waste a year, are often (inappropriately) accounted for as a circular economy. Indeed, according to the Circularity Gap Report, global resource circularity is only 8.6%.

Zero Waste municipalities are stepping up with holistic approaches to this problem. The Zero Waste reverse pyramid presents a hierarchy with refusing what we don’t need and fundamentally redesigning our business models at the top, and unsound wasteful practices like incineration and illegal dumping at the bottom. Zero Waste best cases tell amazing stories of local innovation in both resource management and social cohesion.

Some progressive sustainable communities stretch the limits, proving that a high quality of life can go hand in hand with the low-impact economy. Sieben Linden ecovillage in Germany is a frontrunner in smart resource management: local eco-construction, organic farming, and even composting their fecal matter. Their carbon footprint is a third of the German average, and many of their pioneering practices are being upscaled to the wider surrounding society.

A circular economy can only work if it’s grounded in small local circles of local production and consumption, local energy, local services and high self-sufficiency while nurturing global connections, a phenomenon popularly known as glocalisation.

Lockdown depression

Only in the aftermath will we know the total toll of drastic measures related to the COVID-19 crisis. The economic cost can have a quantitative evaluation, but not the psychological devastation affecting the already underprivileged. The WHO has expressed concerns about the impacts of COVID-19 on mental health, due to fear, anxiety, loneliness, violence, even panic. Specialised websites offer psychological tools and resources to help troubled families and individuals of all ages.

As this article in Aljazeera states: “After years of unrestrained neoliberalism, in the face of this pandemic, we realised that our security, wellbeing and prosperity depends more on strong and well-funded public services than multinational cooperations.”

The so-called self-regulating forces of the global market don’t seem to work in a crisis; they’re accustomed to having a government intervention to rely on. It’s like children holding their permissive parents in a grip: children can play all they want, but when something breaks the parents are expected to fix it.

In the meantime millions of voiceless people will suffer in poverty, hunger, fear, violence with severe consequences on their mental state, while further risking their health and their life in order to keep society running. For these people taking a few weeks off is a luxury they cannot afford, just as they cannot afford, or have the means, to follow safety prescriptions.

Like the ecological crisis, this pandemic exposes how unjust and unsustainable our global system is, while also highlighting our collective strengths and resilience. The fundamentals of the economy are not far removed from the fundamentals of social and mental health. Communities with local economic infrastructure in place can buffer the effects of a global economic crisis, not leaving people to their own ingenuity (or the lack of it), and even more importantly they nurture solidarity and psychological support.

VoxEU portal of the Centre for Economic Policy Research states here that “The world economy cannot survive the current social distancing for more than a few weeks.” They’re looking at the ‘health’ of the seven biggest economies in the world, the US, China, Japan, Germany, Britain, France and Italy, saying ‘when these economies sneeze, the rest of the world will catch a cold.’

“On the dark side, it could become an economic crisis of global dimensions and a long-lasting reversal of globalisation. On the bright side, it could be the moment when policymakers manage a common crisis response. They might even manage to rebuild some trust and create a cooperative spirit that helps humanity tackle other common threats like climate change.”

Billions of euros of support, unleashed by governments, will be just a patch on the wound. Real social healing depends on the vitality of each community. Whether you look at Transition Towns and ecovillages or at strong, well-connected traditional communities you’ll see people taking care of each other. Security, wellbeing and prosperity depend on the strength of community. With COVID-19, we can see that more than ever.

The coronavirus crisis gives communities time to put such considerations into perspective. And when governments say that our lives will be back to the old “normal” soon, communities can put their heads together and ask the question: “What is the new normal that we want and how are we going to establish it?”

Text by Nara Petrovic, Author of Human: Instructions for Use, advocate of luxurious simplicity and fecologist; www.narapetrovic.com.