The State and the Coronavirus Pandemic: Missed Opportunities for Social and Economic Progress

Abstract

The unique feature of the problem field studied is linked to the fact that during the COVID-19 pandemic representatives of almost all societies witnessed failures of the state. These failures included lockdowns and social distancing in the first stage of the pandemic as well as the fast growth of the number of infected and lethal cases in the second stage. This chapter shows that waves of the pandemic which followed each other accompanied by the inability of the countries to prevent them aggravated the problems of economic growth and social instability. The chapter proves that the coronavirus pandemic unveiled the state’s failures both in economic and social policies. The deepening societal crisis caused by citizens’ impoverishment, unemployment growth and absence of a clear perspective of when the pandemic would end and the new post-COVID reality would take shape, made theorists and practitioners return to the phenomenon of the modern state which seemed unexplored by the early 2020s. The author proposed a theoretical basis for prioritizing the functions of the state, which assumes that two of the three groups of state functions related to the distribution of resources and economic stabilization mutually determine each other, albeit with a certain amount of contradictions.

1. Introduction

The peculiarity of the issues related to the modern state is due to the fact that in the conditions of the COVID-19 pandemic, almost all representatives of national communities became aware of the “failures of the state”, which included lockdown and social distancing regimes at the first stages of the spread of coronavirus infection, and the rapid increase in the number of infected citizens and deaths at the second stage of the pandemic. Successive waves of pandemics and the inability of States to prevent them have exacerbated the problems of economic growth and social instability. The worsening societal crisis caused by the fall in the material security of citizens, rising unemployment and the lack of a clear prospect of the end of the pandemic and the forming the post-crisis reality forced theorists and practitioners to return to the phenomenon of the modern state, which turned out to be unknown by the early 2020s. The point is that the coronavirus pandemic made obvious, overnight, failures in both economic and social policies of the state. However, it also became clear that the conditions for generating economic and social crises in the countries of the world had been maturing for more than a century [1].

The rapid spread of a life-threatening coronavirus infection has served as a test case to assess the adequacy of nation-states in their function of protecting the lives and health of their citizens, testing the quality of interaction between society and the state, the individual and society, citizens and the state. The extraordinary nature of the pandemic’s ordeal on national communities was also evident in the behavior of states around the world that were not familiar with best practices for responding to circumstances of force majeure. This affected the promptness with which states introduced emergency lockdown and social distancing regimes in their countries and individual regions, the strictness of their compliance, the optimal conditions for their removal, not to mention the timing of the deployment of the necessary additional health system capacities and providing them with the necessary medical personnel and technical means of combating COVID-19 [2].

In early 2021, new circumstances emerged that tested the adequacy of states’ behavior in a pandemic. We are talking about recurring waves of coronavirus epidemics, which permanently preserved the threat to life and health and made states responsible for minimizing these risks. All these upheavals were objectively accompanied by a decline in economic activity, an increase in unemployment, a decrease in the level of citizens’ material security, and an increase in citizens’ mistrust of the actions of nation-states. The mutual intensification of economic and societal crises predetermined asocial reactions of citizens, who deliberately violated self-isolation regimes, refused to use masks in public places, and ignored calls by governments to vaccinate for the purpose of achieving collective immunity. In this context, citizens’ compliance with the norms of social behavior imposed by the state in the context of the coronavirus pandemic can be assessed as a manifestation of consensus in society in the fight against the pandemic [3]. The asocial behavior of citizens as a response to national lockdown and social distancing regimes, it exposes many social problems that divide society and destroy its integrity, making any state action ineffective under extraordinary circumstances.

The rising societal problems of national communities are forcing the ever-present questions as new pandemic waves and new strains of coronavirus reappear: “who is to blame?” and “what to do?” On the one hand, citizens direct their main grievances to the state. But, on the other hand, their main aspirations to regain their former material position, and often their social status, are also connected with the state. Boston Consulting Group (BCG) experts write the following on this subject: “Citizens want to see the way to a brighter future. Ultimately, this matters because it is a manifestation of the desire to change. Private business represented by top managers will gladly support long-term growth caused by such desire. And investors will finance it” [4]. Virtually all experts admit that the world will be different after the COVID-19 pandemic. But citizens, society, societal crises, and economic recession will remain, and they must be dealt with. In addition, an overwhelming obstacle stands in the way - the non-recognition of the phenomenon of the state, which has existed for more than 2000 years and without which all the problems exposed by the coronavirus cannot be solved.

2. COVID-19 and epinomic policy of the state

In addition to the extraordinary consequences that the COVID-19 pandemic has caused, perhaps the most important are the actions of national governments and the ability to monitor them to assess their effectiveness. It should be emphasized that virtually all national governments had to make extreme efforts to deal with the pandemic. The specifics of these actions were manifested in the fact that states acted in defiance of all their previous aspirations to ensure financial stability and economic equilibrium by all available means. Indeed, by introducing emergency regimes of lockdowns and self-isolation for citizens, the state destroys, first of all, the structural links in the economy and finance, and as a result, the stability of these systems as a whole. As for the self-isolation of citizens, under such conditions, society had the opportunity to test the strength of their families and professional communities at the level of households. All these circumstances led IMF chief economist Gita Gopinath to define the global economic crisis of 2020 as a “global lockdown,” caused by a “great self-isolation” or “great quarantine. [5]. According to the British philosopher and politician Jonathan Sachs, this situation can be associated with a self-generated (“self-inflicted”) economic catastrophe, which was caused by government policies aimed at keeping rapid expansion in check [6].

In this situation, certain summaries must be made of the actions of national governments in the extreme conditions of the coronavirus pandemic. This allowed BCG experts to structure the process of combating the pandemic coronavirus into three phases. The initial phase is characterized by government actions to flatten the exponential growth curve of the number of cases and deaths. In the second stage, states took active action to fight the COVID-19 pandemic. The last stage, as BCG experts imagined the future (future) in mid-2020, involved state action to build collective immunity. This vision of government action was based on the assumption that coronavirus infection would be ended once a vaccine or effective treatment for the coronavirus was available. However, the third and fourth waves of the spread of more aggressive strains of COVID-19 around the world make it necessary to assume that the last stage according to BCG experts is not the last one at all.

Such structuring of the process of confrontation between the state and the coronavirus allowed to unify the actions of national governments. If in the first phase of this process, states introduced emergency lockdown regimes in order to smooth out the exponential growth curve of the infected, in the second phase the main action of national governments was to choose the moment to restart the economy while keeping the infection circulation low and exposing the national economy and society to the risk of introducing new lockdowns. The future in combating the coronavirus pandemic has been linked to the development and replication of a reliable vaccine or highly effective treatments for coronavirus infection [7]. In the middle of 2021, it became evident that the confrontation with COVID-19, which was already mutating and spreading in waves through more aggressive strains, more dangerous for humans than the “ukhan” variant, was continuing.

Nevertheless, it is unlikely that the BCG experts were wrong in their conclusions that the COVID-19 pandemic reduced the main functions of states to two main ones at once: (1) stabilizing the epidemiological situation in the country and (2) resuming the functioning of the national economic system. It was the combination of these two goals in public policy that provided the basis for the introduction of the term “epinomics” [8]. It was this policy that highlighted its three main strategies in controlling coronavirus infection and rebuilding the national economy: (1) crush and contain the infection, (2) flatten the exponential growth of infected and actively fight the pandemic, and (3) sustain and support the positive results achieved in fighting the pandemic.

The material above demonstrates the way in which the non-traditional policy goals of the state, triggered by the extraordinary event of the COVID-19 pandemic, are instantly actualized. As the spread of coronavirus infection and the number of deaths accelerate, the health care system becomes the number 1 priority. However, in repeated pandemic waves of new strains of coronavirus, the importance of government action to control unemployment and economic activity increases. As a result, the longer the coronavirus pandemic continues, the more important it becomes to optimize government actions to address societal and economic crises [9].

The theory of public finance analyzed the activities of the state through the prism of optimizing the choice of priorities in the financing of budgetary expenditures. They were structured according to their assignment to one of the three main groups of state functions related to the production of public goods. The Italian economist Vito Tanzi [9] called this problem the Musgrave Triangle [10]. In this case, each corner is associated with the main functions of the state: (1) to allocate resources, (2) to redistribute income (to ensure equality in the distribution of income), and (3) to stabilize the economy (economic efficiency itself). The problem of choice or priorities in budget expenditures was related to the limitations of state revenues, which did not allow the state to finance all groups of functions equally. As a result, the objective dilemma of justifying fiscal preferences for two groups of public goods out of the three available ones arose. This choice took on the contours of the most important fiscal problem, which was objectively predetermined by the contradictory (or rather, unknowable) phenomenon of the state itself.

On the one hand, the state has no interests of its own other than serving society, i.e. to optimally dispose of society’s resources for the purpose of optimizing the satisfaction of its needs through the production of public goods. But, on the other hand, modern society does not have adequate means of assessing the effectiveness of the rapid actions of the state. And, taking into account the significant financial resources reallocated by society to the state budget for the effective production of public goods, and the representatives of the authorities who oversee them, conditions are formed for corruption schemes and a self-sustaining mechanism for their implementation. In fact, this is where the contradictory nature of the phenomenon of the state, which, in fact, acts simultaneously in the status of the subject of regulation, and the status of its object [11].

In fact, all these theoretical arguments for the inefficiency of the state have received practical confirmation in connection with the growth of already enormous expenditures of the state aimed at eliminating the consequences of its inadequate behavior in the emergency conditions of the exponential spread of the dangerous for humans’ coronavirus infection. The logic of reasoning is traditional: the state disposes of part of the national income, which is created in society and redistributed by all members of society in the form of taxes and other payments into its budget revenues. Consequently, all state actions are paid for by society, including all emergency expenses of nation-states caused by the COVID-19 pandemic. As of June 2020 alone, total spending by national governments and international organizations on actions aimed at preventing extreme human and economic losses approached $9 trillion [12]. Moreover, since the beginning of the COVID-19 pandemic, G20 countries have announced budgetary packages that exceed $10 trillion in real terms, these amounts are roughly three times the amount of fiscal support measures during the 2008 financial crisis and 30 times the amount of the Marshall Plan budget that secured Europe’s recovery after World War II.

But despite these efforts, total global GDP losses in 2020–2021 are tentatively estimated at $9 trillion, equal to the combined GDP of Japan and Germany combined. For the first time since the Great Depression, the economic downturn has affected all countries in the world: advanced economies, emerging markets, and developing economies (Figure 1).

Figure 1.

The economic recession of all countries of the world in 2020 in comparison with the global financial crisis of 2008–2009. Source: IMF. World Economic Outlook [5].

All this has affected the jobs and livelihoods of millions of people living on the planet. As a result, the risks caused by infectious cataclysms have become associated with the Great Deceleration, with structural and societal crises. Against the background of negative GDP growth rates and increased budgetary expenditures to support households and national private businesses, the state itself has become a grandiose problem for society. On the one hand, ambitious fiscal measures aimed at empowering national health systems, recovering lost household income, and preventing large-scale bankruptcies were objectively justified. States have been forced to undertake unprecedented fiscal measures, which could exceed $11 trillion worldwide [13]. On the other hand, the sharp decline in GDP of the countries of the world generates a fall in the budget revenues of national governments. The excess of budget expenditures over revenues increases budget deficits and the size of public debts. And both present and future generations will have to respond to the enormous obligations of their governments. In June 2020 the IMF experts revised their forecasts, published in January 2020 [5]. According to these data, budget deficits in the advanced economies (AEs) increased fivefold in 2020, while in emerging market economies they doubled. This has caused an unprecedented jump in public debt in these countries - by 26% and 7% of GDP, respectively.

According to a rough estimate by G. Gopinath and W. Gaspar [10], in 2020 the public debt of the world’s countries reached its highest level ever, amounting to 101.5% of global GDP, compared with the highest figure recorded since World War II.

Under these conditions, the unresolved problems to date of national health systems in the fight against coronavirus infection, the fall of GDP, and the braking of its growth after the removal of lockdown regimes on the national borders have only deepened the societal crisis. This means that the traditional dominance of economic priorities in the policies of nation-states has largely undermined the social unity of society. It only exacerbates the problems of rebuilding national economies, which can be effectively solved only if the goals of ensuring societal integrity of society prevail [14].

In this environment, it has become clear that policies that reduce public health risks go a long way toward restoring confidence and trust in the state, thereby stimulating economic activity, increasing employment, and reducing the burden on public finances. Otherwise, as citizens grow increasingly distrustful of their governments, all of their announced pandemic control regimes will have very limited economic and financial results in the face of the cancelation of lockdown regimes. Thus the dialectical gap between state and society, fixed by economic priorities in the policies of national governments, is actually capable of putting a brake on all state actions in any sphere of their activities, significantly reducing the effectiveness of specific measures of impact.

It is no coincidence that all the events actualized by the coronavirus pandemic make the nation-state itself a huge problem for society, the complexity of which is exacerbated by the fact that, from a theoretical perspective, the state and society are always a dialectical unity. This means that both the state and society as participants in dialectical interaction exist today and will exist in the future. But in the post-covision reality, the dialectics of these relations must objectively change for the benefit of social progress with the direct participation of both society and the state.

Thus, the state in the post-covision reality will retain its essence, but the forms of its interaction with society are likely to change dramatically. First and foremost, we are talking about the replacement of economic priorities in state policy with social ones. These changes today can only be judged theoretically since in practice there is little evidence of emerging changes in the ratio of economic and social priorities in the policies of national governments.

2.1 The societal crisis of 2020–2021: the result of the dominance of economic priorities in the policies of nation-states

The societal crisis of 2020–2021 is a recent phenomenon that needs to be understood not only in relation to the state of society in the context of the coronavirus pandemic but also in relation to the policies of nation-states. The COVID-19 pandemic only pushed the societal crisis, the conditions for its maturation were formed long before the emergence of the Wuhan strain of coronavirus in December 2019. In other words, this crisis was preceded by a rather long period of functioning of modern national communities, during which the success of the state was usually evaluated by its ability to ensure the material (economically) social status of its citizens. We are talking about the level of wages, the comfort of living conditions, access to quality services of education, health care, and social system, about the technological level of life support of households as their material well-being grows. It should be especially noted that the individual values of citizens and their compliance/non-compliance with social norms, introduced by the state on behalf of society, were not discussed. According to national governments, material well-being was and still is the main measure of their performance and the main condition for ensuring societal integrity of societies. With this in mind, states have structured their economic policy priorities accordingly until the end of 2019 [15].

The COVID-19 pandemic disrupted this perception by changing the position of households on the social ladder for the objective reasons of coronavirus infection, job loss, mounting financial problems, lowered social status, poor quality health care, distant education, and a highly uncertain future. All the negative consequences of the pandemic have affected the living conditions of large segments of the population, which have linked them to the ineffectiveness of the state, which proved totally unprepared to maintain social order in the face of growing threats to the lives of citizens and the development of various complex crises.

In practice, the rapid spread of COVID-19, which is deadly to humans, served as a basis for testing the strength of the established foundations of society, as well as the quality of interaction between individuals and society, citizens and the state, and even family members among themselves. It is hard to deny the fact that the crises caused by the COVID-19 pandemic were provoked by national governments that failed to promptly identify “zero carriers of the coronavirus infection” and isolate them from society. And the imposed lockdown regimes already ex-post the COVID-19 pandemic objectively destroyed the structural integrity of the economy and societal unity of society [16].

The severity of the hardship endured by individuals, as their well-being and established ways of life were destroyed, led to a reassessment of the role of the state and the material criteria for the effectiveness of its policies. A vivid demonstration of the substitution of economic priorities for social ones as factors of citizens’ confidence in their state is the expansion of their asocial behavior due to the deliberate violation of the emergency regimes of self-isolation imposed by national governments. In this way, citizens opposed themselves to the state, implementing their demarche as a protest against the state’s devaluation of individual values and a desire to revise the priorities of the social choice (contract) that the state implements on behalf of society.

Theoretically, this conflict between state and society, state and individual means an accumulation of qualitative changes in the structure of society, which predetermines the need to replace economic priorities with social ones. Otherwise, a societal crisis can lead to the loss of the state’s most important intangible asset - the “trust” in it on the part of society and a critical mass of citizens. This, in turn, destroys societal unity of society, and no efficient economy and successful recovery of economic activity after the pandemic become simply impossible [12]. Moreover, even with an effective vaccine, successful government response to a coronavirus pandemic seems problematic, since it can be accompanied by a mass reluctance of citizens to comply with social order. This violation of the dialectic of state-society interaction condemns to “failure” any reasonable state policy measures aimed at protecting citizens from the coronavirus pandemic.

The coronavirus has revealed the main “spring” of today’s societal crisis, which has not allowed to dampen the consequences of an unexpected infection dangerous to human life and has worsened the structural disunity of national societies. In this regard, one cannot but agree with the BCG experts, who have begun to link the effects of COVID-19, first and foremost and to a greater extent, with the societal crisis [17]. The objectivity of this assessment is quite understandable. Experts’ calculations have shown that social isolation and economic lockdown aimed at stopping the exponential spread of coronavirus infection in countries around the world have caused unprecedented losses in both human lives and national well-being. At the same time COVID-19 proved the priority of social problems, which, moreover, were worsened by the colossal drop in the volume of material production in the world, determining the co-subordination of state functions: first to stabilize the epidemiological situation in the country, and only then not to lose time and timely restart the economic activity after the lifting of the lockdown [8]. Epinomic policy emphasizes the paramount importance of ensuring the health and life of citizens, the achievement of which is an indisputable factor in the ability to successfully revive the economy. And the specificity of the first problem is related to the fact that along with the physical health of citizens in the context of equalizing the epidemiological situation in the country, perhaps, the most important for the states is the elimination of the negative consequences of societal crisis.

Thus, the reduction of the uncertainty of the post-COVID future is largely related to the development of a more inclusive social environment, which is predetermined by the change in the functions of the state in the socio-economic system. Moreover, this issue has both theoretical implications and many applied problems since there are no “best practices” of state behavior in similar situations to COVID-19 in the past. And in terms of strategic goals for the progress of social communities in the post-coronavirus future, the most important thing has become the reconstruction of their societal integrity as an objective condition for rapid economic recovery after the lockdown and the guarantee of an adequate choice of an acceptable scenario in case of subsequent waves of the coronavirus pandemic. In essence, it is about expanding the intersection between the individual values of citizens integrated into society and the value conceptions of norms of behavior institutionalized by the state on behalf of society.

2.2 The interpretation of the policy of economic priorities of the state

The main failure of the state in the fight against the pandemic coronavirus is the dominant policy of economic priorities until 2019, which replaced social justice measures due to a lack of budgetary resources. It is to this period that quite a wide discussion of the “triangle dilemma” paradox, which was posed by the American economist Arthur Okun [18], meaningfully revealed by his colleague Richard Musgrave and highlighted as a paradox by W. Tanzi. It is essentially a generalization of all state functions into three main groups: (A) allocative efficiency in resource allocation, (B) social justice in income redistribution in society, and (C) macroeconomic stability (to achieve economic efficiency). This triad does not specifically include state functions of economic development and economic growth, although many modern governments increasingly declare them on their list of policy goals. Considering all of the above, the author proposes an interpretation of the priority of state functions, using the “triangle dilemma” proposed by R. Musgrave. For these purposes, a certain constant was introduced by analogy with Planck’s constant in physics to estimate Werner Heisenberg’s uncertainty, which resolves the dialectical contradiction of the wave-particle duality in physics.

The assumptions are based on the fact that among the three groups of state functions, the two related to resource allocation and economic stabilization mutually imply each other, although with a certain degree of inconsistency. In other words, they can be performed by the state more or less effectively at the same time at any stage of economic dynamics. Consequently, Musgrave’s uncertainty can be minimized with respect to them. But the third group of functions related to the development of human capital, which are associated with social expenditures in the state budget, cannot be performed simultaneously with the two above-mentioned functions. In this case, Musgrave’s uncertainty tends toward infinity. If the development of human capital is associated with the implementation by the state of the principle of fair income distribution in society, and this, in turn, implies the need to increase budget expenditures on the social needs of society, then their underfunding (inhibition) may allow the potential for economic growth to be quantified through the human capital development factor [10].

Musgrave’s uncertainty is manifested in a variety of ways. First, social expenditures in the official interpretation are always paramount, but social expenditures act as balancing items, i.e., those that can be frozen or even reduced if the risks of economic dynamics slowdown increase. Secondly, the specific nature of the budgeting process is such that, as a rule, the planned and executed parameters of the state budget expenditures do not coincide. All this is the result of the contradictory nature of the state itself, the contradictory nature of its functions contained in the magic triangle, and the state finances themselves.

In this context, up until the coronavirus pandemic, there were discussions about the role of the state and increasing the effectiveness of its economic policy. In particular, the vectors of changes in the income elasticity of GDP and expenditures were compared for the purpose of identifying those specific areas of budget expenditures that produce a real macroeconomic effect. In this case, the fiscal multiplier should demonstrate a value greater than zero. If the budget expenditure item is estimated by the fiscal multiplier much higher than zero, then this direction of budget expenditures was assessed as effective and recommended to increase. This growth was to be carried out at the expense of the reduction of inefficient, in terms of macroeconomic returns, budget expenditures. Based on the assessment of fiscal multipliers and the selection of factors determining them, such approaches make it possible to adequately assess the degree of efficiency of the state in terms of the main groups of its functions, which makes it possible to ensure the stability of public finances, as well as the growth of the national economy. In this context, the solution of R. Musgrave’s “triangle dilemma” allows us to approach the development of the optimal economic policy of the state.

In general, the overall effect of fiscal policy of the states of the world can provide up to 0.81% of the growth of the world economy, providing different contributions to it by tax and expenditure instruments. Thus, the fiscal multipliers used by the IMF for this assessment were 0.30 for government income, 0.51 for government investment, and 0.31 for another government spending [19].

All of the above proves the fact that until the end of 2019 (the time when the Wuhan strain of the coronavirus appeared), economic goals remained primary in government activities, and social justice measures played a subordinate role. COVID-19, in the extreme conditions of a deadly coronavirus pandemic, changed priorities, making spending on public health the primary goal of government economic policy and the priority of fiscal spending. Moreover, the growing number of coronavirus cases and deaths, the economic lockdown, social distancing, and the transition to remote work predetermined complete uncertainty about the future welfare of citizens, drastically changed the habitual way of households, and exacerbated the factors of societal crisis development. According to OECD experts, most governments were not prepared for such a scale of crisis and had to restructure their economic policies “on the march” [20].

As a result, not all government economic policies were adequately prepared and equally effective, and this became evident to all citizens. In this context, the phenomenon of loss of trust in the state by citizens, exacerbated by irritation over ineffective government responses to the pandemic, began to emerge in national communities. Citizens began to deliberately oppose the pandemic emergency regimes imposed by national governments. In this way, social opposition between citizens and the state began to mature, which is undoubtedly becoming a major obstacle to the state’s implementation of an effective strategy for resuming economic activity after the lockdowns.

The above makes it clear that fiscal support measures for growing employment and subsidies for private business in an economic lockdown are costing the nation-states exceptionally high costs of multiple crises accelerated by the coronavirus pandemic and the growing deficit in national budgets during the period of coronavirus infection is clearly a loss to society, in particular, because governments have failed to establish national health systems capable of functioning in anticipation of the enormous human and economic losses that COVID-19 has caused [21]. On the surface of the phenomena, global fiscal deficits and huge public debt can be interpreted as the price of inadequate policies of national governments before the pandemic with their priorities of ensuring high GDP growth rates at the expense of ignoring the social preferences of citizens that ensure societal cohesion and prevent the societal crisis. And the poor quality of health care has become evident to all citizens in the context of an exponential increase in the number of people infected with coronavirus and fatal outcomes. Thus, according to the World Health Organization (WHO) on July 14, 2021, the total number of people infected with coronavirus on the planet reached 188.3 million, with an estimated 4.06 million deaths. On June 17, 2021, alone, there were 599,949 more people sick and 8727 more deaths.

If we compare the implementation of the social functions of the state at least in the context of ensuring the health and material well-being of citizens and the measures of governments to accelerate economic growth at all costs, the inefficiency of the modern state in the face of the COVID-19 pandemic becomes evident. However, the essential reason for the rapid deepening of the societal crisis in 2020–2021 is the divergence of citizens’ value perceptions and the social order implemented by states, which predetermined the gradual slowdown of the global economy in the early 21st century and its catastrophic collapse in 2020 [22].

In particular, three areas of state-society interaction are crucial for increasing citizen trust, transparency, and combating the societal crisis. First, it is very important to eliminate misinformation about the current situation of the coronavirus pandemic, even when citizens have a high degree of trust in government. In 2020, for example, only 51% of people in OECD countries trusted their governments. At the same time, the social strata of the population that refused to participate in traditional democratic processes were increasing, which only worsened the societal crisis.

Second, it is essential to strengthening the consolidation of society around the state, which should be facilitated by the adoption of economic policies in a fair and transparent manner. For this purpose, governments must strive to promote the inclusion of all citizens in actions related to the fight against the COVID-19 pandemic. Most important in this regard is to consolidate the efforts of public servants and proactive citizens, to involve young people in this process, activate social ties, and to broaden the circle of participants in political consultations. Governments should increase the involvement of members of society in the political decision-making process, which would have a positive effect on leveling the playing field in lobbying. The latter is a serious problem for almost all countries of the world since most actors more or less regularly engage in lobbying [8]. The state’s lack of foresight and long-term forecasting capacity is also a significant problem, which is becoming increasingly important in the context of the growing likelihood of man-made disasters.

All of the above proves the presence of cardinal changes in the interaction of the state with economic and social systems, which are manifested in the fact that the factor of individual values and their coincidence/non-coincidence with the social norms institutionalized by the state become key in the resolution of societal and economic crises. Societal integrity of society becomes the foundation of its stability because it is conditioned by the dominance of socially significant norms of behavior in comparison with individual values, as well as loyalty (trust) of citizens to the state and its actions, especially in such extreme situations as COVID-19. If the integrity of society is destroyed, the state is forced to use formal institutions to cope with the societal crisis as a mechanism of punishment for the opportunism of citizens who do not agree with the government’s actions aimed at combating the COVID-19 pandemic. As a result, trust between citizens, society, and the state, acting on its behalf, is further eroded, which negatively affects the effectiveness of state actions.

2.3 State policy and missed opportunities for socio-economic progress

The emergencies caused by the coronavirus pandemic in 2020 made nation-states the last resort to bear all the financial costs associated with isolation in the national economy, social support for the population, fiscal and financial support for private firms, and diverse forms of business whose activities were effectively blocked. As a result, the budgetary expenditures of national governments have reached a ceiling, and budget revenues have fallen to a minimum. As for the entrepreneurs whose businesses declined or closed completely, they lost revenues and profits, the ability to pay salaries to employees, repay loans and pay taxes, and build strategic prospects for long-term development.

Leaving aside the fiscal aspect of providing states with high-quality public health systems, it is useful to assess their status on the eve of the COVID-19 pandemic. At the very end of October 2019, experts from the British think tank Economist Intelligence Unit and the Center for Health Security at Johns Hopkins University (USA) released a seminal paper titled “Global Health Security Index [23] Building Collective Action and Accountability”. This was actually a month before the first cases of coronavirus infection appeared in China’s Hubei Province. They assessed national health systems in 195 countries and created Global Health Security Index. The results were very negative. The experts described the situation in national health systems as follows: “National health security is fundamentally weak worldwide. No country is fully prepared for epidemics or pandemics, and every country has important gaps that need to be filled. Altogether, international preparedness for infectious pandemics is weak. Many countries lack evidence of the health security capacities and capabilities needed to prevent, detect, and respond to serious infectious disease outbreaks” [23].

Six categories of indicators were included in the GIPH Index: (1) Prevention of the emergence or release of pathogens; (2) Early detection and notification of epidemics of potential international concern; (3) Rapid response to and mitigation of the epidemic; (4) A strong health system to treat patients and protect health workers; (5) Meeting national capacity building requirements, funding plans to close gaps and meeting obligations in accordance with international standards; (6) The overall risk and vulnerabilities of the country to biological threats. The average overall GIBS score for all 195 countries was 40.2 out of a possible 100 points. Among the 60 high-income countries, the average GIIBH score was 51.9. Meanwhile, 116 high- and middle-income countries did not score higher than 50 out of a possible 100. In total, the GHSI score revealed serious shortcomings in the world’s ability to prevent, detect, and respond to health emergencies:

1. In terms of the ability to prevent the emergence or release of pathogens, less than 7% of countries had the highest level of ability to prevent the emergence or release of pathogens.

2. Regarding the ability of countries to instantly detect and notify epidemics, only 19% of all countries examined had this capability.

3. In terms of responsiveness to the epidemic, less than 15% of countries were in the leading group for responsiveness and prevention of the spread of the epidemic.

4. On the indicator of the reliability of national health systems, the average score for all countries was 26.4 out of a possible 100. It was the lowest among all groups of indicators.

Judging by these data, no state was prepared to promptly prevent the exponential increase in the incidence of coronavirus infection both within the country and between countries. At the same time, the imbalance of socio-economic systems exacerbated the inadequate state of national health systems. This, incidentally, explains the paradox that the top-ranked countries in the 2019 GIBOH Index were the most vulnerable to a coronavirus pandemic. In any case, the COVID-19 pandemic proved the experts’ conclusions right, demonstrating in a living demonstration that biological threats occurring in nature, accidental or deliberate, can kill millions of people, cause economic losses estimated in billions of dollars, and create political and economic chaos and instability on the planet. Despite significant progress in health care in the twentieth century, the year 2020 has proven that humanity is still far from a quality health protection system on a global scale [24].

In 2019, public sector spending in OECD member countries averaged 40.8% of GDP. In 2020, budget spending in all 26 OECD countries rose as a share of GDP due to additional spending due to COVID-19 and falling GDP. Thus, about 16.4% of GDP was spent additionally to support households and companies in OECD countries and to compensate for their lost revenues. And at the expense of fiscal support to the private business through financial injections, loan coverage, acquisition of assets, or delays in the payment or cancelation of debts, contingent liabilities of the public administration sector amounted to another 10.5% of GDP.

At the same time, government sector revenues in OECD countries averaged 37.7% of GDP in 2019. In 2020, real per capita income in 24 out of 26 OECD countries decreased due to a decline in economic activity. And in 13 countries, per capita income declined by more than 5% [25].

To increase social and economic resilience during the recovery and adaptation phases of COVID-19 shocks, national governments must demonstrate their ability to act quickly and extensively to protect citizens and thereby build confidence in the effectiveness of fiscal protection measures. Only by restoring public confidence in its actions, the government will create a kind of buffer that allows it to successfully withstand likely shocks in the future. There are two critical components of the success of government action that have been demonstrated in the fight against the pandemic coronavirus. The first is the ability of national governments to withstand shocks by taking immediate, large-scale actions aimed at minimizing negative consequences (Figure 2). The second essential condition is related to strengthening the trust of citizens and increasing transparency in the actions of governments. It is essentially a revision of state behavior, focusing on strengthening the interaction between government and society as a whole, as this is the only way to strengthen the integrity of society.

Figure 2.

The two main components of a program to build the resilience of national governments in the extreme conditions of a crisis like the COVID-19 pandemic. Source: OECD [20].

Recently, there has been a growing consensus among theorists and practitioners that a lack of trust in government undermines the legitimacy of state institutions, contributes to political polarization, and favors populist movements. Public trust in government has suffered significant damage since the global financial crisis of 2008–2009, and only in some countries has it recovered to pre-crisis levels [26]. In other words, the COVID-19 crisis was preceded by an accumulation of citizen discontent with growing social inequality and injustice, both economically and socially, as well as politically and representationally.

Year 2020 created even more problems for public trust in the actions of governments, as well as for civil liberties and democratic systems in general. After an initial “rally-around-the-state” effect in the early stages of the fight against COVID-19, by the end of 2020 distrust in government and public institutions was deepening in most OECD countries [27]. Corruption and fraud scandals have overshadowed the response of governments in many countries. Some experts have suggested that the unprecedented restrictions on civil liberties in 2020 (curfews, travel restrictions, restrictions, or bans on meetings) have gone beyond what international law allows for limiting rights during public health emergencies [28].

Thus, society is in great need of a profound socio-economic restructuring based on clearly expressed individual values. The social and economic crisis of COVID-19 brings destruction, but it also provides an opportunity to reassess what kind of society should be created for future generations. We are talking about a human-centered system and a state with health priorities over economic benefits. With the COVID-19 pandemic not yet over, it is up to the state to evaluate its actions in connection with the stabilization of the epidemiological situation in the country as a serious step toward its rehabilitation in the eyes of society and the return of public confidence. The positive consequences of the successful epidemic policy of states in the categories of missed benefits can be assessed using the results obtained by the experts of the McKinsey Global Institute [16].

Better health contributes to economic growth by increasing the labor force and productivity, as well as by providing significant social benefits as a basis for addressing the negative effects of the societal crisis and restoring the integrity of society. And in recent years, the emphasis on rising health care costs, especially in advanced economies, has dominated political discourse. But the understanding of health as an investment in the development of society has been largely ignored.

The COVID-19 pandemic, which caused the societal crisis, put the health system in the context of its priority for people, society, and economy, as well as for global socio-economic progress. This approach makes it possible to assess the lost benefits to individuals, societies, and economies, with adequate state behavior that could have avoided serious human and economic losses, as occurred in the coronavirus pandemic. According to preliminary estimates by experts of the McKinsey Global Institute, the pandemic and its consequences could cause global GDP to fall by 3–8% in 2020. And each year, poor public health reduces global GDP by 15%. A well-functioning public health system means that more than 70% of economic gains can be achieved through prevention by creating a cleaner and safer environment, encouraging healthier lifestyles and addressing underlying social factors, and increasing access to vaccines and preventive medicine. As a result, an additional 230 million people could be alive in the world by 2040, and the welfare benefits of good health could then reach $100 trillion. In sum, this is a rough estimate of the failures of a state that has failed to develop a highly effective national health system capable of preventing severe pandemic conditions and consequences, as well as a societal crisis as a manifestation of citizens’ distrust of the state [29].

Improvements in all of the categories that define the Global Health Security Index could result in impressive results. For example, by 2040, 245 million more people could be added to the world’s labor force just by improving health outcomes. About 60 million of them would be due to reductions in early mortality through successful treatment of heart disease, various forms of cancer, malaria, and other common diseases. This alone could increase global GDP by $1.4 trillion by 2040. It could add $1.4 trillion to global GDP by 2040. Successful treatments for mental disorders and diabetes would increase the workforce by 120 million full-time workers. This could increase global GDP by another $4.2 trillion by 2040. An additional $4.1 billion could come from increased labor force participation by three groups of workers: people of retirement age who because of good health can continue to work, informal caregivers who no longer need to take care of loved ones, and people with disabilities who can go to work because jobs are adapted to their abilities [30].

The McKinsey Global Institute estimates that better health could add $12 trillion to global GDP by 2040, or an increase of 0.4% in annual growth, 8% more than currently projected. About half of that annual economic output would come from an expanding and healthier workforce. The remainder will come from expanding opportunities for seniors, people with disabilities, and those who have transitioned from informal to formal employment, as well as from productivity gains from reducing the negative impact of chronic disease (Figure 3).

Figure 3.

Nearly $12 trillion global GDP growth in 2040, representing an 8% increase mainly due to better health and more healthy workers. Source: McKinsey Global Institute [16].

So, the economic effect could be between $2 and $4 for every dollar invested in health improvement. In higher-income countries, the costs of implementation can be more than compensated by increases in health productivity (Figure 4). This does not mean that obtaining health and economic benefits will be easy. It requires reorienting thinking and investing in citizens’ health and health care delivery, and promoting healthier living conditions and behavioral change for both individuals and the state. It also requires changes in the workplace and economic policies to, among other things, ensures greater participation of older people in the workforce.

Figure 4.

For every $1 invested in improving the health of citizens, there can be an economic return of $2 to $4. Source: McKinsey Global Institute [16].

As tragic and devastating as coronavirus has been, it has also given society a unique opportunity to think about making health a priority. Figure 4 presents a scenario of economic growth due to improved public health in 2040. Incremental health spending, impact on GDP, and wealth growth are only directly related to health gains (excluding increased participation). Realizing the opportunity for healthy growth will require a turn toward prevention both inside and outside the health care system [31]. This will not be easy and will require all stakeholders to work together on four imperatives: make health a social and economic priority, keep health on everyone’s agenda; transform health systems, and double the amount of innovation in therapy and beyond.

Thus, as countries emerge from the crisis caused by the pandemic, they have a unique opportunity to rethink the role of human health in a future post-consumer reality, as well as the quality of governance that would fulfill this historic mission. Making health care a priority and shifting the focus to areas of greatest return can increase sustainability, reduce health and health disparities, and promote individual, social, and economic well-being. Preventing disease usually costs less than treating it and reduces the need for costly treatments later on, which contributes to high economic returns (Figure 5). Obtaining these benefits will require dramatic changes beyond what the state normally considers health care. It means major changes in where and how health care is delivered, as well as in the communities that will help people develop, work and grow old while staying healthy. It means big changes in the policies of governments and regional governments. As for companies, innovators, and communities, they must understand the need to shape the environment and society in ways that promote healthy lifestyles and reap societal and economic benefits. Could there be a better time to invest in global health in order to promote well-being and prosperity in a post-consensus reality? In this context, restoring and maintaining citizen trust is a priority for national governments, and to do so, they must understand its main determinants and act on them [32].

Figure 5.

Comparative analysis of investment in health and the resulting economic return (every US dollar invested in health improvement/economic return in US dollars) in different groups of countries in 2040. Source: McKinsey Global Institute [16].

The OECD identifies five main factors that can increase trust in government: 1) responsiveness in providing public services; 2) reliability in anticipating new needs and protecting people; 3) honesty; 4) openness; and 5) fairness [33]. Across countries and across a variety of government functions, major differences in these drivers were found. For example, before the pandemic, only 23% of Italians were confident that their government would be reliable in dealing with shocks such as natural disasters or the spread of contagious diseases, while in Finland the figure was 54% in 2020 (Figure 6). Improved responsiveness and reliability will help countries achieve sustainable economic recovery and build people’s trust. According to the OECD, it is the responsiveness and reliability of governments in South Korea and Finland that are the main factors of trust [34].

Figure 6.

Government confidence factors, according to recent OECD surveys. (Percentage of people who answer yes, by dimension and country). Source: OECD [20].

The reliability of public services is also linked to the actual or perceived long-term sustainability of policies, which, in turn, increases people’s trust and support for the changes underway. For example, recent data from South Korea, Spain, and Sweden show that most people believe that climate change mitigation will make people’s lives better in the future, and public debt can be increased for this purpose. At the same time, they are unwilling to support future-oriented policies because they have little faith that governments will actually follow such climate policies [34, 35].

Country experiences during the COVID-19 crisis demonstrate the adequacy of the OECD’s Trust Policy Framework in identifying specific measures to maintain trust during a pandemic, as well as areas that governments should address to make systems more resilient. Governments need to restructure their activities with a focus on restoring citizen confidence by informing and engaging the public and by anticipating and discussing fiscal measures and the structure of GDP redistribution, taking into account the effects on different groups of people. In particular, as the economy recovers and adapts to the pandemic, governments should build resilience by socially adapting their practices in three key areas: 1) ensuring openness and responsiveness in how interests are represented and integrated into public policy; 2) ensuring that all stakeholders are integrated into the social justice sphere when designing policies, and 3) confronting distortions and inaccurate information.

3. Conclusions

The pandemic has revealed the virtual inability of the vast majority of the world’s nations to effectively confront emergencies that threaten the lives of millions of citizens. By imposing regimes of social and economic isolation in the combat against the coronavirus, the state was faced with a societal crisis. Its consequences are hard to overestimate, especially as the economy recovers. Experts’ assessments have shown that social and economic restrictions aimed at stopping the exponential growth of coronavirus cases in countries around the world have resulted in unprecedented losses to both human lives and national well-being. At the same time, COVID-19 proved the priority of social problems, which in addition were worsened by the absolute decline of material production in the world. The pandemic has dictated an absolute subordination of government functions: first to stabilize the epidemiological situation in the country and then to “restart” the economy in time. BCG experts called this latest dualism in government actions “epinomics”. Epinomic policy emphasizes the primary importance of ensuring the health and lives of citizens, which is an obvious factor in the ability to successfully restart the economy. Moreover, the specificity of the first problem is related to the fact that along with the physical health of citizens in the context of leveling the epidemiological situation in the country, perhaps the most important thing for the state becomes the elimination of the consequences of the social crisis.

However, the growing distrust of households toward the state, caused by the disruption of their habitual way of life, rising unemployment, and worsening prosperity, became a serious obstacle along the way. Thus, people began to perceive significant differences between their individual values and the social norms institutionalized by the state. Consequently, the priority for the state should be to restore citizens’ trust by creating a more inclusive social environment that minimizes the negative effects of the societal crisis. Nearly all experts recognize that the world will be a different place after the pandemic, but it will retain both citizens and society and crisis, which the state must address as a necessary condition for further socio-economic progress.

The urgent need to create a more inclusive social environment, necessary for restoring the social integrity of society and accelerating economic progress, predetermines the growing demand for a theoretical justification of the new functions of the state, and factors for increasing the effectiveness of formal institutions in its hands. In fact, the coronavirus pandemic has revealed the fundamental problem of modern socio-economic systems, which is the state’s neglect of the need to ensure the dialectic of interaction between society and the economy. For this purpose, the author proposed to use the model of R. Musgrave’s triangle dilemma, which allows the state to solve the priority problems of societal crisis and ensure universal prosperity in the post-coronavirus future.

The rapid spread of the deadly COVID-19 has served to test the stability of existing social foundations, as well as the depth of mutual trust between people and society, citizens, and the state. The test that fell on people’s shoulders and destroyed their well-being and established way of life turned into a reevaluation of the role of the state and society in ensuring the stability of households. The most striking demonstration of these individual reevaluations was the observance or non-observance of self-isolation regimes by citizens, as they became a function of their degree of trust in the actions of their state and their individual desire to follow the extraordinary norms of self-isolation imposed on society by the state in connection with the pandemic. Thus, the coronavirus exposed the main “spring” of modern societies, which failed to mitigate the consequences of the unexpected emergence and spread of an infection dangerous to human life and contributed to the development of a social crisis as a demonstration of the structural fragmentation of national communities. It is in this context that the BSG experts regarded the COVID-19 outbreak as primarily a societal crisis. Experts’ assessments showed that the social and economic isolation aimed at stopping the exponential growth of coronavirus cases in countries around the world resulted in unprecedented losses to both human lives and national well-being.

For reducing the scale of uncertainty in the post-coronavirus reality, it is largely related to the creation of a more inclusive social environment, which is predetermined by the change in the functions of the state in the socio-economic system. Moreover, this issue has both a theoretical basis and many applied problems, since in the past there were no “best practices” of state behavior in situations similar to the COVID-19 pandemic. In terms of strategic goals for the progress of social communities in the post-coronavirus future, the most important thing is to restore their social integrity as an objective condition for a quick economic launch after the forced downtime and an adequate acceptable scenario in case of repeated pandemic waves and emergence of new strains of coronavirus. In fact, this is evidenced by the following conclusion of the World Health Organization’s April 14, 2020 updated strategy: “Governments must reposition and harness the full available potential of the state, public, and private sectors to rapidly expand the public health system. It is about restoring the intersection of societal values as the integrity of citizens and public choice, aggregated by the state in the social norms of citizens’ behavior in society.