A Socialist Cry for Civilisational Change: COVID-19 and the Failure of Neo-liberalism

In 2007, the Center for Disease Control (CDC) in the United States (US) published a paper with a long and ungainly title “Interim Pre-pandemic Planning Guidance: Community Strategy for Pandemic Influenza Mitigation in the United States: Early, Targeted, Layered use of Nonpharmaceutical Interventions (CDC 2007).” The paper made a simple argument: If there is an epidemic—such as influenza—healthcare systems will be quickly overrun if people are infected all at the same time and all rush for medical aid simultaneously. The report suggested that if a large proportion of the population is to be infected, it is better to stagger the need for medical care. The report used the phrase “flatten the epidemic peak” and suggested three ways to do so:

1. Delay the exponential growth incident cases in order to “buy time” for the production and distribution of a well-matched pandemic strain vaccine;
2. Decrease the epidemic peak; and
3. Reduce the total number of incident cases, thus reducing community morbidity and mortality.

These are common-sense measures. The suggestions to delay the exponential growth of a virus are now awfully familiar today: physically isolate yourself if you show the symptoms of the ailment, try not to contract the virus by regularly washing your  hands, wear a mask, and keep yourself away from anyone who is ill.

The logic of flattening the peak—or what was later explained as “flatten the curve”—would make sense in any economic and political system: If there is an epidemic or a pandemic, it is essential for members of society to be responsible and disciplined and try not to allow viruses to spread with abandon. No social system is capable of having hospital beds available for every person in that society.

However,  barring a few countries, in our particular anaemic form of social life, the state has been utterly compromised. Social life has been atomised and private capital has driven the service sector so that it is most efficient in production of profit rather than in the delivery of social services. To flatten the curve is now not merely a response to the virus but also a scream into the void about the sheer lack of preparation in most societies that have seen their public institutions and their capacity for public action collapse. “Flatten the curve” is  not merely a public health warning, it is a civilisational cry for help.

How Globalisation and Neo-liberalism Brought Us Here

Fifty years ago, a series of developments^[1] took place: computerisation allowed firms to keep accurate up-to-date inventories that could be accessed at any computer terminal, and satellite technology allowed these computers to be connected to each other across vast spaces. Container ships, trains, and trucks enabled goods to be loaded and unloaded at much faster speeds than before. The collapse of the USSR and the communist system in Eastern Europe, along with reforms in China, and the surrender of the third world project prepared hundreds of millions of workers to be exploited by global capital. Lastly,  new intellectual property rules enabled firms to outsource production without worrying about copyright infringement.

As a consequence of these five developments, large-scale factories for industrial production could now be broken up into constituent pieces (Serfati et al 2018). One factory could make the tyres for a car while another could make the chassis. These smaller factories were run by sub-contractors, who made the investment and took the risks. This “disarticulation of production” weakened the possibility of unionisation and of nationalisation; if workers tried to unionise or if countries tried to nationalise a factory, then that factory—a part of a global supply chain—would be boycotted and it would have to close down. Having taken no risk or investment, transnational firms deepened their domination over production as they had no financial stake in these constituent factories.

Transnational firms and banks in the core countries could hold onto their capital and began to accumulate vast amounts of profit from this system. This money went into the financial market, which the ruling classes made sure was properly deregulated. This deregulation of finance enabled them to withhold taxes from their states, produce exotic financial instruments through which the giant financial casino could function, and, courtesy of a vast pool of cash resources, they could inflate asset bubbles which made the system structurally turbulent (Castro 2009 and Durand 2017).

Over these past decades, the ruling class in the advanced capitalist countries have accelerated the withdrawal of its wealth from taxable pools, held them in tax havens or in exotic financial instruments, and have increasingly refused to invest it into the productive sector. From the US to India, this withdrawal—a tax strike or class struggle from above—desiccated the budgets of its governments. These countries were forced, either by balanced budgetary amendments or by pressure from the International Monetary Fund, to stop raising taxes and to cut spending (particularly on the social side). The bourgeois order, over these past few decades, developed a theory of state–society relations that we now know as neo-liberalism. This was held together by two approaches, namely austerity and privatisation.

To balance budgets and reign in national debt, governments of the bourgeois order slashed social spending, especially for the care sector (health, education, and elder care), and cut down on anything that had a reasonable chance of making society a more humane place. For a short-term infusion of cash, governments sold off precious public assets—often assets that were productive—to private capital and/or gave tenders to private companies to provide public services via large contracts, which were often awarded without bidding. Areas of social life that had been outside the profit motive—such as water delivery—were commodified.

The bourgeois order is a world of austerity cuts and disappointed dreams; a world of fantasies about advancement and a realisation that the future has been cancelled. Great dreams are sold by the factories of advertising agencies and of mass-media entertainment productions, but these dreams come accompanied by a general statement that the present is largely eternal, and that what you experience now in your class is largely what your children and grandchildren shall experience. Technology will advance and “things” will get better, but your own place in the class structure—calcified by differences of social hierarchy—will remain. Neo-liberalism, essentially, is the cannibalisation of society and of the future (Patnaik and Patnaik 2019).

A Return from ‘Coronashock’

The bourgeois world order has crumbled under “coronashock.” The stock markets—the MRI of the investor class—have rapidly spiralled downwards as faith in the future collapsed. Central banks and governments have hastily opened the spigots for “helicopter money” to descend into the coffers of the private sector (Menassé and Carolino 2020). This crisis has shaken the pieties of neo-liberalism, with the Financial Times (2020) coming out with a call to return to dirigisme:

Radical reforms—reversing the prevailing policy direction of the last four decades—will need to be put on the table. Governments will have to accept a more active role in the economy. They must see public services as investments rather than liabilities, and look for ways to make labour markets less insecure. Redistribution will again be on the agenda; the privileges of the elderly and wealthy in question. Policies until recently considered eccentric, such as basic income and wealth taxes, will have to be in the mix.

The bourgeois order, which will not surrender easily, is already reshaping itself around the platform economy, by deepening its exploitation of labour through the use of the digital sector, and by increased financialisation. We are being led into what the former Bolivian Vice President Álvaro García Linera called a “zombie neoliberalism.”^[2]

Neo-liberalism of the earlier period offered hope—however illusionary—through ideas such as entrepreneurism and aspiration for upward mobility, as well as through the construction of desire for commodities which could enhance one's personal standing in the world. These hopes, however, are now crushed.  They have been ground underfoot by financial and employment crises. In their place we have  a zombie-like situation: The death of the ideal hope on the one hand and at the same time the existence of  a callous hope that is crafted around hatred; a toxic hatred drawn from the old lineages of conservatism and tradition and which sharpens its toxicity against women, foreigners, minorities, and against anyone seen as the undeserving outsider (Prashad 2018). 

A Validation of the Socialist Cause 

[The] Virus is a product of nature; the crisis is a product of neoliberalism (Salas and Silverman 2020).

The virus has not destroyed society. Rather, a destroyed society has been confronted by a cruel virus. Governments in the bourgeois order remained confused even as evidence mounted on the need for preparations. The Chinese CDC informed the US CDC about the virus and its virulence on 31 December 2019. A few days later, George Gao, head of the China CDC, called his American counterpart, Robert Redfield, who  “burst into tears^[3]” on hearing about the potential impact. But, the US, like other states of the bourgeois order, simply did not act. They believed that the virus would not impact them. They did nothing.

The parts of the world with a socialist orientation—such as China, Cuba, Venezuela, and Kerala—moved in a different direction. The state governments mobilised as many resources as possible towards monitoring the virus, beginning with testing and then contact tracing. Then they moved to ensure the production of materials needed by health professionals (including masks and other protective equipment). Finally, they ensured that supply systems were in place in case large parts of the region had to be quarantined. 

The fight against COVID-19 is not over. Vigilance is necessary. Vaccines need to be tested and authorised; better cures, including those used effectively by Cuban doctors in China, need to be studied and shared. But even as one is vigilant, the lessons from places like Kerala should be absorbed.^[4]

One of the great victories of neo-liberalism has been to portray a weak state and a government only interested in war and money as democracy, and to portray a state with robust institutions that consider the betterment of the people as authoritarianism. This is why there is a failure of imagination to see how China (on a much larger scale) or Kerala  have been able to fight the virus outbreak. In both, the institutions of society have remained relatively intact. Moreover, the political will in these parts of the world with active socialist parties have been able to summon the spirit of volunteerism amongst party members and members of mass organisations to give their time and energy in the fight against the virus.

A Manifesto for the ‘New’ Normal

It is impossible to fully imagine the world after the Coronashock. According to the International Labour Organization, 1.25 billion people are out of work. More damning, however, is that 2.7 billion people, or 81% of the global workforce have been affected by “full or partial workplace closures” (ILO 2020). Capitalist firms are already contemplating using this crisis to reshape how goods are produced, transported, and sold. Platform capitalism—retail through the web—has expanded during this crisis and will be the basis for the further centralisation of commerce and of capital accumulation. Companies such as Amazon will wipe out smaller businesses as more and more economic activity comes under the grip of the large corporation. This is when the “normal” of the past tries to be the “normal” of the future. Whether people’s movements will be able to make the case that we reject a return to normal, because normal was the problem, remains to be seen. At the very least, these few points should frame a new way of understanding the social order:

Capital controls: No advancement in policy can take place unless governments have the power to tether capital—to prevent hot money and helicopter money from subduing society to the immense authority of finance capital.

Wealth taxes: The ruling elites have been on strike. They have been undertaking a form of class struggle from above. By withdrawing their money from the social system, they have boycotted humanity. What the world needs is taxation, not philanthropy. If somebody donates money to a hospital, you’re expected to pray to them, you have to name the hospital after them. Philanthropy is not democratic; it is monarchical. Taxation is democratic.

Spending on health and education: The new money entering the state coffers must be utilised to robustly finance the sectors of health and education. Public health workers need to be paid well, they need proper equipment, and they must be allowed to form unions. The same goes for teachers. A society that does not fund its education and health sector while it funds its military is a society that has lost its moral compass. A social order should be judged not only by its constitution, but also by its annual budget. There is no logic in having high-minded values if these are not enacted every single year in the disbursements from the tax base.

Spending on life: There is a permanent section of the population that suffers from hunger and acute deprivation (in India, hundreds of millions of people do not know when their next meal is coming from; for them, this crisis is permanent). It should be the priority of any government to end hunger and to eradicate all forms of deprivation. Experiments need to be conducted in food delivery and in the encouragement of cooperatives for the local production of goods and services. Relief need not come with a small supplement of cash; it can come with the production of high-quality social wages (public services of all kinds, including pension schemes).

In a pandemic, a rational person would much rather live in a society governed by the norms of socialism than of capitalism—a society where people rally together to overcome a virus.  A society where fear pervades and where stigmatisation becomes the antidote to collective action cannot be the norm.