( An essential twenty-minute read)
It all depends on how governments and society respond to coronavirus and its economic aftermath.
As we know COVID-19 is highlighting serious deficiencies in our existing system.
Hopefully, we will use this crisis to rebuild, produce something better and more humane. But we may slide into something worse.
My focuses on this post are on the fundamentals of the modern economy: global supply chains, wages, and productivity.
I argue that we will need a very different kind of economics if we are to build socially just and ecologically sound futures.
In the face of COVID-19, this has never been more obvious.
——————————————————————————————–
The COVID-19 pandemic is simply the amplification of the dynamic that drives other social and ecological crises: The prioritisation of one type of value over others.
From an economic perspective, there are four possible futures:
Descent into barbarism, robust state capitalism, radical state socialism, and a transformation into a big society built on mutual aid.
Coronavirus, like climate change, is partly a problem of our economic structure. Although both appear to be “environmental” or “natural” problems, they are socially driven.
Yes, climate change is caused by certain gases absorbing heat. But that’s a very shallow explanation. To really understand climate change, we need to understand the social reasons that keep us emitting greenhouse gases.
Likewise with COVID-19. Yes, the direct cause is the virus. But managing its effects requires us to understand human behaviour and its wider economic context.
Tackling both COVID-19 and climate change is much easier if you reduce nonessential economic activity.
The epidemiology of COVID-19 is rapidly evolving. But the core logic is similarly simple. People mix together and spread infections.
We can see from Wuhan that social distancing and lockdown measures like this are effective.
Political economy is useful in helping us understand why they weren’t introduced earlier in European countries and the US.
We are now facing a serious recession and we are living with an economic system that will threaten collapse at the next sign of pandemic.
The economics of collapse is fairly straightforward.
Businesses exist to make a profit.
If they can’t produce, they can’t sell things. This means they won’t make profits, which means they are less able to employ you.
Businesses can and do (over short time periods) hold on to workers that they don’t need immediately: They want to be able to meet demand when the economy picks back up again. But, if things start to look really bad, then they won’t. So, more people lose their jobs or fear to lose their jobs. So they buy less. And the whole cycle starts again, and we spiral into an economic depression.
In a normal crisis, the prescription for solving this is simple.
The government spends, and it spends until people start consuming and working again.
This pressure has led some world leaders to call for an easing of lockdown measures.
But normal interventions won’t work here because we don’t want the economy to recover (at least, not immediately). The whole point of the lockdown is to stop people going to work, where they spread the disease.
If we want to be more resilient to pandemics in the future (and to avoid the worst of climate change) we need a system capable of scaling back production in a way that doesn’t mean loss of livelihood.
At its core, the economy is the way we take our resources and turn them into the things we need to live.
Looked at this way, we can start to see more opportunities for living differently that allow us to produce less stuff without increasing misery.
So how do you reduce the amount of stuff you make while keeping people in work?
You have to reduce people’s dependence on a wage to be able to live.
Currently, the primary aim of the global economy is to facilitate exchanges of money. The dominant idea of the current system we live in is that exchange value is the same thing as use-value.
This is why markets are seen as the best way to run society. They allow you to adapt, and are flexible enough to match up productive capacity with use-value.
What COVID-19 is throwing into sharp relief is just how false our beliefs about markets are.
There are lots of contributing factors to this. But let’s take two.
First, it is quite hard to make money from many of the most essential societal services-key workers low-paid employee. This is in part because a major driver of profits is labour productivity growth: doing more with fewer people – automation.
Second, jobs in many critical services aren’t those that tend to be highest valued in society. Many of the best-paid jobs only exist to facilitate exchanges; to make money.
People are compelled to work pointless jobs (they serve no wider purpose to society: ie. consultants, huge advertising industry and a massive financial sector) because, in a society where exchange value is the guiding principle of the economy, the basic goods of life are mainly available through markets.
This means you have to buy them, and to buy them you need an income, which comes from a job.
Meanwhile, we have a crisis in health and social care, where people are often forced out of useful jobs they enjoy because these jobs don’t pay them enough to live.
While state-capitalist society continues to pursue exchange value as the guiding light of the economy. It also enacts a massive Keynesian stimulus by extending credit and making direct payments to businesses.
The expectation here is that this is will be for a short period.
Could this be a successful scenario?
Possibly, but only if COVID-19 proves controllable over a short period.
Limited state intervention will become increasingly hard to maintain if death tolls rise.
Increased illness and death will provoke unrest and deepen economic impacts, forcing the state to take more and more radical actions to try to maintain market functioning.
Barbarism is the future if we continue to rely on exchange value as our guiding principle and yet refuse to extend support to those who get locked out of markets by illness or unemployment. It describes a situation that we have not yet seen.
Could this happen?
The concern is that either it could happen by mistake during the pandemic, or by intention after the pandemic peaks.
Potentially just as consequential is the possibility of massive austerity after the pandemic has peaked and governments seek to return to “normal”.
This would be disastrous. The subsequent failure of the economy and society would trigger political and stable unrest, leading to a failed state and the collapse of both state and community welfare systems.
Then there is the possibility that we could see with a cultural shift that places a different kind of value at the heart of the economy.
The state steps in to protect the parts of the economy that are essential to life: so that the basic provisions of life are no longer at the whim of the market. The state nationalises hospitals and makes housing freely available. Finally, it provides all citizens with a means of accessing various goods – both basics and any consumer goods we are able to produce with a reduced workforce.
Citizens no longer rely on employers as intermediaries between them and the basic materials of life.
Payments are made to everyone directly and are not related to the exchange value they create.
Instead, payments are the same to all (on the basis that we deserve to be able to live, simply because we are alive), or they are based on the usefulness of the work.
A Basic Universal Income.
Supermarket workers, delivery drivers, warehouse stackers, nurses, teachers, and doctors are the new CEOs.
If deep recessions happen and there is a disruption in supply chains such that demand cannot be rescued by the kind of standard Keynesian policies we are seeing now (printing money, making loans easier to get and so on), the state may take overproduction.
There are risks to this approach – we must be careful to avoid authoritarianism. But done well, this may be our best hope against an extreme COVID-19 outbreak.
Mutual aid is the second future in which we adopt the protection of life as the guiding principle of our economy. But, in this scenario, the state does not take a defining role. Rather, individuals and small groups begin to organise support and care within their communities.
The most ambitious form of this future sees new democratic structures arise. Groupings of communities that are able to mobilise substantial resources with relative speed. People coming together to plan regional responses to stop disease spread and (if they have the skills) to treat patients.
This kind of scenario could emerge from any of the others.
What hopefully is clear is that all these scenarios leave some grounds for fear, but also some for hope.
The upside of this is the possibility that we build a more humane system that leaves us more resilient in the face of future pandemics and other impending crises like climate change.
A key task for us all is demanding that emerging social forms come from an ethic that values care, life, and democracy.
The central political task in this time of crisis is living and (virtually) organising around those values.
Not low-paid workers or National Minimum Wage or National Living Wage because their work is so vital.
Successive governments had failed to reduce inequality between rich and poor despite two decades of interventions.
We must now with an uncertain future focus more on the journey, rather than the ultimate destination.
But be no doubt that we are at a crossroad where the low pay culture that has trapped people in poorly jobs is coming to an end.
Capitalism Inequality can not be allowed to continue.
All human comments appreciated. All like clicks chucked in the bin.
Like this:
Like Loading...
