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The Covid-19 pandemic – an ideological game changer?

The Covid-19 pandemic – an ideological game changer?

As an international commercial law firm, our daily business lies in providing our clients with the best possible support in overcoming the crisis. But we also need to pause for a moment and reflect on how the current crisis is changing our political, social and economic system and what effects we can expect in the near and distant future. An essay by Gabriel Lansky.

We are already in a position to reach a preliminary conclusion, in both a positive and negative respect. For example, the numerous restrictions placed on citizens’ basic rights and freedoms that find themselves in tension with the measures to contain the pandemic (more on this in the interview with LGP Of Counsels Heinz Mayer and Manfred Matzka and the law firm’s founder Gabriel Lansky from page 6 of this issue onwards) are necessary, but should be viewed critically nevertheless. At present, those in power everywhere, including here, are being strengthened: the crisis is not the hour where the opposition comes into play. Instead, power is shifting from parliaments to the executive branch. Under the guise of alleged necessity, totalitarian tendencies are also gaining ground in some states, with such people taking advantage of the sad situation for their own agendas – think of Hungary, for example. On a positive note, social partnership is experiencing a clear renaissance in Austria. We also saw an impressive demonstration of the importance held by an independent and publicly financed state broadcaster that provides the population with objective and neutral information during a crisis. The EU is also trying (albeit rather late in the day) to determine new areas of focus: the recently adopted aid package worth 540 billion euros is an important sign of life for the European Union, which has not had an easy time of it recently due to a lack of competence in terms of health policy and legislation on crisis management.

But what are the broader ideological consequences of the crisis for global politics and Austrian politics alike? Starting with the obvious point: the basic assumptions of neo-liberal policies have clearly been contradicted by the facts as a result of their impact on our health systems. Only dyed-in-the-wool ideologues still take the view that a sole focus on private-sector efficiency (profit maximisation), and the reduction of state services in favour of private providers that goes hand-in-hand with this, is a good idea. The Court of Auditors also states that its earlier recommendations such as the reduction in intensive care beds and the extensive privatisation of healthcare are no longer of relevance. A powerful brake has been applied to the neo-liberal maxim of pushing back state influence on the economy. Public statements, even by conservative politicians, remind us of the time of Kreisky: people who considered zero deficit and saving to be their top priority, until recently, are now declaring without reservations that they prefer debt to unemployment. 

The fundamental importance of multilateralism, which has already been declared dead by some, is once again becoming abundantly clear in view of the global coronavirus crisis. The virus knows no borders and its spread cannot be stopped by states going it alone. Contrary to the claims of Donald Trump, it is not the WHO that is responsible for the pandemic. In fact, it is individual nation states, including the USA, which have failed to implement the WHO’s recommendations that this body formulated as far back as the end of January. Instead of cutting funding to intergovernmental organisations, it is now the time to strengthen them. This applies not least to the EU, where the principle of subsidiarity (which states that the EU should only intervene where individual states are not in a position to handle a particular task on their own) takes on a new guise when faced with coronavirus. The EU runs the risk of losing its identity through the crisis measures taken by the member states: its key promises, namely the four fundamental freedoms of services, capital, persons and goods, have been abrogated to varying degrees. As a result, and given the scale of the coronavirus crisis, it lacks the competence and the means to fulfil its raison d’être: providing security and prosperity for all EU citizens. 

The European Union cannot continue to exist as an economic power alone. It is only conceivable as a political power, which also needs corresponding skills in health policy, among other areas, as a result. It must also be empowered to balance out the north and the south, or those states particularly affected by the pandemic and those that have got off lightly, by offering appropriate funding (whether through Eurobonds or an enhanced ESM). The Stability and Growth Pact is virtually dead. Increasing the EU’s budget beyond 1.13% of the economic output of its member states is the order of the day. After all, this is the only way to pursue proactive financial and economic policies, and the only way for Brussels to provide concrete support at the relevant level.

We must be asking who should, and must, pay the bill for the billions that have to be raised now. How does our society of prosperity, not to say abundance, deal with the fact that there are more and more people faced with unemployment and poverty, even homeless people, whose few remaining opportunities have been snatched away from them by the crisis? Should the middle class of employees and the newly self-employed foot the bill once again or will those who have assets of their own also take on their share of the funding required during this crisis? How will our society distribute the burden of the higher taxes that will undoubtedly follow? Will the labour factor continue to bear the brunt of it or will it now be time for long-discussed projects such as financial transaction, property and inheritance taxes?

Nor should the question of the great future plans, which have apparently been wiped off the agenda by the pandemic, be neglected: what is now to happen to European climate and environmental policy, to ambitious campaigns for infrastructure and digitisation or to the overdue reforms of the European Union? And last but not least, can this pandemic give rise to a new solidarity? Unlike past moments of misery, will this crisis really lead to a turning-away from the neoliberal economic model, whose inadequacies have once again been clearly demonstrated to us? These are all highly topical issues that require answers sooner rather than later, with participation from the whole of society.

In turn, what does this mean for an international commercial law firm like LGP? We are part of this world (not just in terms of providing legal advice) and want to play an active role in shaping the future. Of course, we also want to run our business, but first and foremost, we want to fulfil our responsibility as citizens and stakeholders living and thinking within the political sphere. As a result, we want to participate in the politico-economic discourse by making our knowledge available to those who have to make important decisions, both now and in the future. 

Our team currently has its hands full working through the new legal framework and dealing with our clients’ problems resulting from it. We receive a good deal of support from our Senior Expert Council in this regard, which helps us ensure we are encompassing the entire social context rather than simply narrowing our perspective to focus on the legal issues alone. 


Dr. Gabriel Lansky, Managing Partner at LANSKY, GANZGER + partner

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