For the last twenty years we have been talking about the disruptive nature of the internet and how it upended all normal business models. The internet was the innovation that spawned thousands of ideas which changed the way we consumed goods; the way we produced and the way we even bought them. That is when ‘disruption’ became fashionable as a concept. Anything that was deemed disruptive seemed like a good thing: a change to the status-quo; a shake-up of the normal. AirBnB disrupted the hotel industry, Uber disrupted the taxi industry, Amazon disrupted the retail industry and Netflix disrupted the film, video rental and TV industries. This was all considered necessary change even if it was damaging to the existing models. Now we face the ultimate disruption, Covid-19, and we are beginning to see how that has started to disrupt the existing status-quo, both socially and in models of economic production.
So, we all know how the last 18 months have seen global turmoil in terms of quarantines, rolling shutdowns, and falls in output and GDP (global output fell from USD 87.6 trillion to USD 84.7 trillion) and now we’re seeing supply chain disruptions which are driving up energy prices to multi-year highs and something short of an undeclared national strike in the US. Covid has struck once again and the effects these will have may be more long-lasting than the illnesses that came with the actual virus.
One of the problems that the United States is currently facing is that there are a record number of jobs available but yet unemployment is extremely sticky in coming downwards. The reasoning suggested by the right-wing is that the workers have been pampered by all these Covid-era income handouts and they need to be made to go ‘cold-turkey’ (read: cut-off from all state support) in order to get them back to work. This is the standard free-market response to the supply-demand problem. What is actually happening in many places is that there is a battle for a higher minimum wage which hasn’t risen in over a decade in most states. So, whilst productivity, CEO wages and profits have all gone up, for the working class there has been no gain. In other words, they’re getting left behind without a share of the benefits. Income inequality is increasing as costs of getting on the property ladder, getting a university education and access to medical help all rise exorbitantly but worker pay remains the same. There is a backlash against this. In some states- even where they pay above the bare $7.25 minimum wage, workers are quitting because they are being forced to work mandatory overtime hours (sometimes 16 hours a day for 3 days a week) to make up for the staff shortages and are being worked to exhaustion and are quitting.
And, more importantly, the concept of people as merely an input cost and not as citizens with aspirations participating of their own free volition in the work environment is something that has to be constantly fought against and the workers are taking up the fight in their own way- by not cooperating. Corporations tend to look at workers as expendable resources and try to get them at the lowest cost to the company as possible. And- like in warehousing and capital investments, try to do the bare minimum to get maximum output. But it looks like that way of thinking did not apply to the human element- the workers, in the United States who have other ideas. It was just assumed that they would all flock back to their old low-pay jobs and things would go back to normal. Covid-19 has disrupted that line of thinking.
In a way they’re being forced to do these mandatory hours because- apart from the companies having staff shortages the companies have been following ‘just-in-time’ inventory levels and ‘lean manufacturing’ production processes. This means that they have no slack for when there are supply chain hiccups and that they haven’t invested in spare parts for their machinery which can’t be fixed quickly because- again, supply chain hiccups. The disruptors to old school concepts of warehousing stock and stocking adequate spare parts have now themselves been disrupted. The lean manufacturing processes work well when everything works smoothly. But with container backlogs globally this is adding to the goods shortages being seen everywhere. Even at the start of the pandemic when China went into lockdown companies started re-locating their supply chains elsewhere. But this hasn’t been able to adequately account for the logistical complications of stop-start production and delivery.
Another unintended consequence of the Covid-19 disruption: at the very start of the epidemic entire work patterns changed in a flash to accommodate work-from-home models. This immediate fix is going to have long-lasting effects beyond the resumption of normal conditions. Businesses have already made the discovery that people can be more productive away from office spaces and are offering permanent flexible arrangements. This will have a longer term impact on office rental costs and the size of business districts. Many cities had been experimenting with the concept of a 15-minute city- where everything was within 15 minutes reach for a public transport commuter within larger cities- shops, places of work, medical centres, cinemas, theatres, parks etc. The pandemic is accelerating the rate of change in the way cities are designed and will function.
In short, the pandemic is set to have enormous repercussions in the way we live and engage with each other. This is turn is going to have an enormous impact in the way society produces, consumes and the politics that this throws up. The Democratic Party in the US is already proposing to lay out a far more left-wing care and infrastructure spending agenda- a radical about-face from the decades of inching towards the right. The UK is still stubbornly clinging to a Conservative Party agenda because of the disarray in the Labour Party in formulating a similar socialist agenda. That may change if conditions there worsen. And with power shortages, empty shelves this change may not be long in coming. Again, the long, clammy hand of Covid-19 is being felt long after the vaccinations have dealt with the worst of the medical tragedies.
Long after this epidemic leaves us we will still be living with the changes in production methods, reward sharing, lifestyle changes, political changes and ways of thinking that it is throwing up. People are already more climate and sustainability conscious now. In the end, the biggest societal disruptor this century hasn’t been the internet but a variation of the flu.