Covid and the End of Neo-Liberalism
What are the lessons of the COVID-19 pandemic for the political and economic order of our society?
The first lesson, surely is the utter failure of global neo-liberal capitalism. Tried out in Pinochet’s Chile, in the 1970s, brought to full bloom by Margaret Thatcher and Ronald Reagan in the 1980s, the system has staggered from break-down to break-down — the mortgage crisis, the financial crisis of 2008, and now the Covid crisis. It has never been able to provide stability or justice for the majority of citizens.
One may ask, how is it responsible for Covid? It did not, of course create the virus, but the basic principles of neo-liberalism show that it could never face it effectively. Neo-liberalism means the limiting of the state as much as possible to monetary policy and the maintaining of order. Taxes are cut and state services reduced to the minimum and this is made possible by the “globalization” and free trade which enable companies simply to move out of recalcitrant countries and find more compliant ones for their investments.
If the system has not yet succeeded in destroying all universal social programmes, it pared them down by cutting staff, equipment and supplies. That explains the state of retirement homes across the west, which have proved so vulnerable to Covid. It also explains the long waiting time for medical help, the inaccessibility of justice for most citizens, the disappearance or decline of many major cultural institutions and the failure of the west to take adequate measures to protect the environment. Most likely, if the crisis had not occurred over Covid, an environmental disaster would have started it within a very few years.
The system provided and promoted multi-national corporations and speculators — those who buy and sell securities several times a day in different time zones, who spend non-existent funds, who evade all taxation through the clever use of shelters and tax havens. Its numerous and ardent defenders blame a few dishonest businessmen for the financial collapse of 2008 and an act of God for Covid. That is patently false.
The essence of speculative capitalism is to use other peoples’ money and non-existent money to extract more and more profits from the economy. Sooner or later, confidence falters or a misfortune or crisis occurs. When this happens, public institutions, which should have been fortified against such events, are weak and not adequate for the need.
In recent weeks the majority of western countries have simply underwritten wages, rents and essential services. In short, the economy has been nationalized, as it was to a considerable extend by President Obama in 2009. We can be certain that as soon as the crisis recedes, the champions of neo-liberalism will again come to the forefront calling for more of the same — untrammelled competition, a weak state, global free trade. This, they argue, produces the steady growth which makes everyone better off.
It would be a terrible error to listen to the sirens of neo-liberalism yet another time. None of the supposed gains from this system have been realized and much that was valuable has been lost.
The increase in inequality which always accompanies uncontrolled capitalism has made large sectors of society worse off than before. This is clear despite numerous attempts to mask this result by computing inequality and poverty differently. Moreover, relative poverty is in many ways as pernicious as absolute poverty and inequality by definition creates relative poverty.
The natural effect of the system is to reduce the share of the pie of those who hold fixed-income jobs, however important, such as nurses and teachers, in favour of speculators who add no value to the economy and of businessmen who vote themselves totally disproportionate salaries and bonuses.
In order to defend its members’ claim to a larger piece of the pie, various groups — ethnic, gender, language — founded lobbies to promote their interest. Universal solidarity and social justice have paid the price of this fragmentation. We have wasted time on such unfruitful concepts as quotas, cultural appropriation, and political correctness instead of concentrating on the one really important question of a decent life for all.
Because the disadvantaged groups in society became poorer, force was needed to ensure discipline. The United States and other countries, to a lesser extent, became carceral states with a criminal law that functions as one of the principal tools of social repression and with a large percentage of citizens in prison. Only the increases in the cost of prisons have recently led some to question their value. In fact, if public institutions generally are in economic difficulty, it is ridiculous to waste funds on prisons which, in any case, are of dubious efficiency in combatting crime.
The untrammelled and disturbing growth as an ideal brought us to the brink of an environmental catastrophe. Melting ice-caps, rising oceans, fires in Australia, declining quality of air have made it evident that nothing short of a massive state intervention will be able to stave off the resulting decline in the quality of our lives. Yet many neo-liberals continue to express scepticism about climate change and are unmoved by the looming disaster.
The Covid crisis should lead to the rehabilitation of state action to enhance both the economy and the quality of life. If we are to have first-rate medical service, good education, admirable cultural institutions and a healthy environment we cannot confide these matters to private interest. Let us hope that Covid is the last nail in the coffin of neo-liberalism.