Nachricht | Inequality / Social Struggles - Analysis of Capitalism - Social Movements / Organizing - State / Democracy - Economic / Social Policy - International / Transnational - Corona Crisis MV Kapital Is Sinking

Despite COVID-19, we are not all “in the same boat”

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Tetet Lauron,

Dance instructor Morgan Jenkins makes a video in front of a mural during the global outbreak of the coronavirus disease (COVID-19), in Los Angeles, California, U.S., April 3, 2020. Mario Anzuoni/picture alliance/REUTERS

The world is currently doing everything it can to contain and find solutions to the coronavirus pandemic (COVID-19), a new strain of the coronavirus family that was first identified in January 2020. With the total number of confirmed cases exceeding 900,000 and more than 45,000 deaths in more than 200 countries as of 4 April, the situation represents a critical test not just of every country’s healthcare system, but also of standards of governance and social cohesion.

Tetet Lauron is based in the Philippines, where she works as an advisor for the Rosa-Luxemburg-Stiftung’s International Politics Unit.

World leaders have sought to rally the people behind slogans like “We’re in the same boat” and “It’s time to work together”. While laudable in their attempt at inspiring confidence, they fall desperately short, as the real and present danger posed about by the virus has revealed the inherent flaws in the way our societies are organized and reproduce themselves.

Even if an effective vaccine is developed to arrest this global health crisis soon, its disruptive impacts will be felt for a long time. It is difficult to predict the pandemic’s economic impact as events are still unfolding, with entire countries in lockdown and borders sealed. Factories and other enterprises are operating with “skeleton crews” and severe mobility restrictions to reduce how quickly the disease is spread. The collapse of financial markets and loss of jobs, personal incomes, and life savings are causing untold anguish and panic around the world. A deep global recession is imminent.

COVID-19 is most certainly a killer, but it is not an equalizer as some would have it. The virus affects everyone, but its effects on the world’s 3.8 billion poorest people—half of the global population—are worse than on the 26 richest.  The multiple vulnerabilities of poverty, homelessness, lack of social protection, exclusion, and other manifestations of inequality coupled with exposure to the virus constitute a fatal combination. As the world scrambles to find reason and hope amidst the plethora of misinformation and false pretences, it is important to take stock of the sinking ship that is MV Kapital, and how the call to “rebuild better” could serve as a catalyst for systemic changes—if done right.

Exposing the System’s Deep Fissures

Callous as it may sound, crisis is already the lived reality for most of the 1.3 billion people living in the Global South. From Africa to Asia to Latin America, the pandemic is confronting the world’s poor with a public health emergency that exacerbates the multiple crises already found across the social, economic, financial, and environmental spheres. In the Global South—where people go to bed hungry and die from so-called “diseases of poverty” like malnutrition and tuberculosis that could have been prevented with pre-existing treatments and preventative programmes—the dangers are magnified. Yet the same issues are also playing out in wealthy nations. The Global North is not immune from the pandemic ravaging its economies and citizens, with Italy and Spain the hardest hit in Europe and numbers still rising in the United States.

Without knowing when the situation will improve, people have braced themselves for the worst by stockpiling “essentials” and stripping shelves of alcohol, sanitizer, canned goods, pasta, and toilet paper, without care or concern for others—again revealing one of capitalism’s starkest dictums, namely that “only the strong survive”. Those who do not have the means to go on a “panic buying” spree can only wince and pray that the government and other support systems will provide them the means to get by.

This global crisis has made evident the inherent weaknesses in the world’s dominant social, political, and economic systems. One could even argue that capitalism is the very force that rendered societies unable to respond to the global pandemic. One needs only to look back at the lessons of recent history to come to this conclusion.

Lessons of History

The aftermath of World War II saw the US emerge as the organizer and leader of the new world order, consolidating its strength with the establishment of international agencies such as the United Nations, the International Bank for Reconstruction and Development (before it was renamed the World Bank), the International Monetary Fund, and with the implementation of the Marshall Plan (formerly known as the European Recovery Program, from which the Organization for Economic Cooperation and Development or OECD emerged) to rehabilitate the Western European economies and “create stable conditions in which democratic institutions could survive”. Post-war reconstruction and development were critical needs after the war, and through grants, loans, and investments, these institutions were able to take control of poor countries’ economic policies and programmes, and designed them to serve rich countries’ trade, investment, and geopolitical objectives. As a result, any development that manages to take place in the Global South is firmly rooted in capitalist practices.

Capitalism’s response to the general economic decline in the 1970s and 1980s due to the oil shock and the exploding debt crisis in many Southern countries was the elaboration and promotion of “neoliberalism”, and with it the notion that unfettered markets would bring shared prosperity through a “trickle-down” process. Neoliberal reforms saw the aggressive promotion of free markets and free enterprise, public sector downsizing, reduced government spending on public goods and controls over the economy (including deregulation of the financial sector), private sector expansion, privatization of public goods and services, and—of course—free trade. Although coined in the 1980s by free-market economist John Williamson, it was not until the 1990s that the so-called “Washington Consensus became the global standard for “proper” economic development. The phrase became an all-encompassing term for the standard set of policies prescribed by the IMF, World Bank, and other Washington-based institutions for countries in the Global South, prescribing trade and financial liberalization, deregulation, privatization, and fiscal belt-tightening.

In wealthy countries, reforms fiscal and monetary reforms led to austerity measures and huge budget cuts in social safety nets framed by the line “there is no alternative’ (TINA)—meaning without these measures it would be impossible for the economy to recover. For poor countries, these came in the form of IMF and World Bank-prescribed “Structural Adjustment Programs” (SAPs) that revolved around massive liberalization, deregulation, and privatization of domestic economies while maintaining an export-led, foreign-funded development strategy.

Trade liberalization paved the way for the massive dumping of surplus agricultural and industrial commodities into the Global South, decimating domestic agriculture and manufacturing sectors. This destruction of the productive forces in “developing countries” had tremendous consequences including massive unemployment and poverty, particularly as the agricultural sector constituted the foundation of many economies in the Global South. SAPs also thwarted any real move towards industrialization due to the highly questionable “comparative advantage” mantra, which basically stated that countries should stick to producing products and services they were already good at—in this case, low-value-added agricultural and light manufacturing goods. SAPs also had a negative impact on the environment, as export promotion increased investments in extractive industries such as logging and mining.

Neoliberalism’s financial and investments liberalization also gave rise to more speculative financial investments in stock and agricultural commodity markets. This is one reason why food prices have remained high or volatile despite increased production or lower demand.

The financial meltdown of 2008 was a series of bursting financial bubbles, starting with the subprime debacle that led to larger collapses in real estate, credit swaps, and other speculative financial instruments, ultimately leading to the bankruptcy and closure of many giant financial institutions. Governments from most developed countries responded with bailout plans for the biggest banks and firms deemed “too big to fail”, a phrase used to describe a company so entwined with the global economy that its failure would be catastrophic. Nevertheless, the stimulus efforts were not enough to reverse the general economic slowdown. If anything, they led to an increase in global public debt.

Crisis response measures have ended, while the 40-year experiment with neoliberalism has failed and continues to fail. The promised “trickle-down” prosperity is nowhere in sight, because it is concentrated in the hands of a few corporations and the elite. What is crystal clear is that the poor, both in the Global South and North, have borne the brunt of these crises for which they are not responsible. Poverty and misery are “staples” for the poor in developing countries, but increasingly, the poor in wealthy countries are rising up against neoliberal policies. Even some IMF researchers are beginning to question whether neoliberalism has been “oversold”.

MV Kapital Meets COVID-19

Marxist geographer David Harvey posits that capitalism is the vector exacerbating the current coronavirus crisis in three ways: the transmission of the virus to humans, the subsequent infection of populations in almost every country, and the failure of governments with collapsed health services and deregulated markets to contain the spread of infections.

Contrary to the rhetoric that “we’re all in this together”, response measures aimed at mitigating the pandemic’s spread are consistent with MV Kapital’s tenet of “survival of the strongest and fittest”. Take for instance how the Global North’s response was in many ways similar to how it responded to plagues in the past: it not only rushed to close borders in a xenophobic effort to keep the disease out, but also conveniently locked out the thousands of refugees stranded along its borders. Or how US President Trump unsuccessfully attempted to offer German scientists working on a COVID-19 vaccine huge sums in exchange for exclusive access to their work. Or how Germany’s special permit to fly in Filipino nurses to assist in the country’s fight against the novel coronavirus is exploitative and racist.

But it is not just in the North, and not just in government that these decadent capitalist values can be seen. With lockdowns instituted in entire communities and cities in the Global South, the poor (the majority of whom work in the informal sector) are left at the mercy of inept government officials and the police and military who implement draconian measures to keep people indoors, without any assurance of being provided with food and other necessities. Already living in abject poverty and unable to access public services before this health crisis, millions are at high risk of infection and death.

Efforts to provide crucial leadership and marshal international solidarity include the UN issuing a global humanitarian appeal to developed countries, international financial institutions, corporations, and charities to assist the poorest and most vulnerable people and countries, as “current national responses will not address the global scale and complexity of the crisis”. It remains to be seen how much convening and convincing power the United Nations still has, as it stands on shaky ground as multilateralism’s torch-bearer, besieged by serious drawbacks due to democratic and funding deficits, corporate influence, as well as the rise of nationalist and populist political tendencies.

The coronavirus has proven, once again, that the MV Kapital is sinking and has outlived its usefulness. “Rebuilding better” will not be possible on this sinking vessel. It is time to build a new boat.