Global Governance Centre
01 October 2020

Capitalism, COVID-19… and then?

Is the COVID-19 crisis the end of free market capitalism? To answer this question, we don’t necessarily have to look to the future. On the contrary, we could explore the history of the free market ideas.

This article is part of the series Governance, in crisis.


By Pablo Martín Méndez
CONICET Researcher
Professor, Ethics and Political Science, Universidad Nacional de Lanús, Argentina


When we think about contemporary capitalism, we cannot help remembering Francis Fukuyama’s 1992 book The End of History and the Last Man. After the fall of the Berlin Wall, did history end? Obviously, it didn’t. History has continued. This was demonstrated by the September 11 attacks, the global financial crisis of 2008, and now, the COVID-19 pandemic.

Some analysts believe that coronavirus is, in fact, the end of free market capitalism. They argue that the fight against the pandemic demands more active states and less open markets. Maybe! However, free market ideas could survive beyond capitalism. To think about this matter, we don’t necessarily have to look to the future. On the contrary, we could explore the past of market ideas.

The crisis caused by COVID-19 has been compared with the Great Depression of the 1930s. As we know, the Great Depression was countered with different economic and political proposals. One of them was the welfarism promoted by the New Deal in the USA and Western Europe. The other proposal was developed by the Mont Pèlerin Society in 1947, led by Ludwig Mises and Friedrich Hayek. This proposal has been linked with economic liberalism and free market capitalism. However, there were other free market ideas that were manifested during the Great Depression.             

During 1930-1940, there were several “Schools”, groups of scholars who tried to find an answer to The Great Depression and its effects. Here not only came into play Mises, Hayek and other economists of the Austrian School, but also a group of German liberals, namely the Freiburg School, Ordoliberalism and the Social Market Economy. Most of the members of this group believed that the Great Depression was not only an economic crisis, but also a crisis of liberalism itself. According to them, liberalism had turned out to be dogmatic, rationalist, and sociologically blind. This may have been the main cause of the crisis of free market capitalism.

Therefore, some German liberals proposed a “third way” between old liberalism and socialism. This third way has been called “sociological liberalism” by contemporary scholars such as Christian Laval, Pierre Dardot and Serge Audier, among others. Maybe we could rediscover this sociological liberalism in some trends that originated in, or were exacerbated by, the COVID-19 crisis. 

First, German liberalism is very critical of mass societies. Some scholars such as Alexander Rüstow or Wilhelm Röpke saw the big crowds of people, life in urban centres and industrial work habits as a “pathology” of modern capitalism. In opposition to this pathology, they advocated life in small communities of peasants and artisans. Wilhelm Röpke – who was an influential economist during the reconstruction of Germany after World War II and Professor of International Relations at the Graduate Institute, Geneva between 1937-1966 – said that “the peasant world together with other small sectors of society, represents today a last great island that has not yet been reached by the flood of collectivization, the last great sphere of human life and work which possesses inner stability and value in a vital sense.”


Photo by Hello I’m Nik on Unsplash


This is an excerpt. To read the full article, visit The Global.
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