The COVID-19 pandemic aggravates the capitalist crisis
Julio C. Gambina[1]
The coronavirus and its impacts, as well as the policies to confront it, highlighted the long-standing economic problems of the global economy.
One sign was the 1999 collapse of the dot-com “new economy” and the Battle of Seattle, a process that unfolded until 2001. It was then, with the attack on the Twin Towers, that a state response was unleashed, fueled by increased credit and military spending. The capitalist state itself, the disseminator of neoliberal policies, turned to the state to uphold the logic of capital. These were economic and political mechanisms adopted to overcome the decline in economic activity and renew the forms of global domination.
The breaking point emerged in 2007 as the mortgage crisis, exacerbated in 2008 by the collapse of Lehman Brothers and the global recession of 2009. The response involved massive state intervention with billions of dollars in bond issuances in developed countries to ensure the system's viability. Alongside this issuance came extensive banking deregulation, leading to the emergence of today's investment funds, the "shadow banking" sector, which manage fixed and financial assets of transnational capital in amounts exceeding the GDPs of the world's leading nation-states.
The global crisis of 2007-09 marked the beginning of the end for the liberalizing policies implemented in the aftermath of the 60s and 70s, policies that had begun as a trial run in the Southern Cone of South America under genocidal dictatorships sustained by state terrorism. The solution to that crisis was what became known as "neoliberalism," the dominant economic policy in the global system. Simultaneously with this neoliberal emergence, China became strongly integrated into the global system following its modernization process beginning in 1978. We are now in the midst of a global crisis of neoliberalism, with the novel element of the debate over who will dominate the new world order. This explains the trade war between the US and China, as well as the nationalist and protectionist responses of Trump, Brexit, Bolsonaro, and various right-wing regimes.
Therefore, beyond any analysis, the “protectionist rhetoric” in times of economic transnationalization responds to the critique of globalization built over more than four decades since the South American experiment with state terrorism. Both the US and the UK, among many others, intend to start afresh, but because others are acting, especially China and its alliances, it becomes a multi-pronged struggle. Of course, those who envision a return to Keynesian policies, hegemonic between 1930 and the establishment of the logic dominated by neoliberalism, also participate in the debate. Bernie Sanders' Democratic campaign in the US, the rhetoric of Labour's James Corbyn in England, and the pronouncements emanating from the Vatican, such as the dialogues between Pope Francis and 2001 Nobel laureate Joseph Stiglitz, fall within this context. The recently formed Puebla Group, which is rooted in the new dynamics of political processes in Mexico and Argentina, draws on this intellectual and political framework. Less visible is the alternative, anti-capitalist will, which faces significant limitations in establishing a global common sense favorable to the expectation of systemic transition through social transformation.
Order dispute
There is not only a political dimension to this hegemonic disputeRather, it unfolds against a backdrop of technological innovation and the evolving forms of social relations of production, particularly between capital and labor, and especially the role or function assumed by the State, not only in each country but also in the articulation of a global capacity for subordination and domestication through the globally constructed institutional framework of international organizations, the United Nations and its agencies, the G20, and others. The ongoing recession stimulates and accelerates dominant aspirations to reverse social rights and induce new forms of managing and exploiting the workforce, such as "teleworking" or the expansion of platform economies, the accelerated adoption of artificial intelligence, and other forms of the so-called knowledge economy.
The pandemic triggered, at varying paces, passive policies—in the style of the US, Great Britain, and Brazil, among others—which, as the situation worsened, were modified and progressed toward policies of social isolation and reduced economic activity. These measures, affecting more than half the world's population, impacted production, foreshadowing a recession. The head of the IMF stated: “Global growth in 2020 will fall below last year's level.” She went on to say that “the number one priority in terms of fiscal response is to ensure frontline health-related spending to protect people's well-being, care for the sick, and curb the spread of the virus” (Kristalina Georgieva, IMF Blog, March 4, 2020).
Let's not be mistaken. The IMF has not turned towards Keynesianism; rather, as on previous occasions, the dominant sectors are turning to the State to solve the problems of capitalism. In any case, the underlying fear is the escalation of conflict in the face of job losses, declining incomes, impoverishment, and so on. These are opinions expressed by the IMF in response to the need to increase healthcare spending, which has been reduced by the privatization policies promoted by neoliberalism. The lack of beds, ventilators, hospital infrastructure, and insufficient personal protective equipment for healthcare workers, now evident with COVID-19, reflects the result of a market-oriented approach and public spending that prioritizes militarization.
This is why the right to health policy promoted in Cuba since the beginning of the revolution in 1959 stands out in the current situation, as does China's capacity to confront the coronavirus through state planning. The meaning of state action, and in whose particular interests it serves, is once again under debate. Since the crisis of the 1930s, the capitalist state has intervened to sustain the capitalist order, as evidenced by the massive bailout programs currently underway in the US, Europe, and Japan. This also allows us to consider the role of a state in transition, following the path of the Cuban experience and, perhaps with some nuances, the situation in China. This is a topic ripe for discussion in the current context and with a view to the future as we emerge from the pandemic.
Just as the State is discussed, the debate on the impact of the production model on Nature is enabled. When global production stopped in several territories, as a result of the "isolation" or quarantines of the population to avoid contagion, there was a decrease in the generation of polluting gases, although this does not eliminate the toxic concentration in the environment.
The reduced pollution resulting from partial or total shutdowns of domestic production leads us to believe in the potential to lessen the impact of the ecological crisis. Of course, we shouldn't be fooled by the prospect of "clear skies" due to production halts, as this is only a temporary phenomenon and could worsen if everything returns to "normal" after quarantines or isolation. The environmental threat is the production model based on non-renewable energy and driven by profit and accumulation, a model brought to light by the coronavirus pandemic. It's good to think that the environment improves if it isn't affected by production methods that damage nature and, consequently, our lives.
[1] Argentina, Working Group on Crisis and the World Economy, President of SEPLA and of the Foundation for Social and Political Research, Argentina.
Article published in No. 42 of the Bulletin «Our America XXI – Challenges and alternatives», an initiative of the CLACSO Working Group on Crisis and the world economy.
[+] Thinking about the pandemic
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