The coronavirus impact on the economy is having the effect of achieving something that was only theoretical a few short weeks ago: the necessity to halt capitalism’s perpetual demand for spending, consumption and growth. The coronavirus has offered an opportunity to radically change the capitalist paradigm.
Cash is the lifeblood of an economy. But if it can’t come from free market trade, as is happening now, where will it come from? Will the economy just bleed out and die?
David McWilliams, in the Irish Times, writes that this problem is exacerbated by panic, leading to cash hoarding, much like shopping hoarding. He offers a radical solution, sourced to Milton Friedman, for such situations. “The Central Bank of Ireland should print money and deposit free cash into every citizen’s account and every business account.”
This of course would be a short-term measure, but even the concept opens everyone’s eyes to new economic possibilities, particularly in his analysis of the meaning and worth of cash in a deflating economy.
He points out that the “normal” way to inject cash into an ailing economy is to inject it into the banks, saving the banks, as in 2008, who then dispense it back out into the economy. Notice that banks get “free money” and no one flinches.
This other method, proposed by Friedman, involves cutting out the bank middle-men and putting cash straight into people’s accounts, to offset panic and a cash hoarding wave that would lead to a runaway self-perpetuating loop, bleeding out the economy.
The similarities with runaway climate change are striking.
Obstacles to Growth
What is also becoming apparent through the coronavirus crisis is that the global system of capital has two main problems, identified by Prof Pierluigi Viale, the director of infectious diseases at Sant’Orsola-Malpighi Polyclinic in Bologna, in a different context. In a warning to other countries to act immediately against the virus he identified the two main obstacles to radical action.
“The problem is politics and economy,” he says.
These are also, coincidentally, (or maybe not) the two main obstacles to action on climate change.
Professor Viale said, “It is not easy to convince a nation to sacrifice. I am sure that in a few days they too will start moving, they have no choice. Sooner is better than later”.
The exact same conundrum faces the world in terms of climate change, the only difference being that the time frame for action with climate change is longer, offering space for denial and inaction. But the core obstacles of economy and politics are precisely the same ones.
We saw it here and in Britain and the US in the early days of the virus (ten days ago?!) when the politicians were still prioritising the economy over people’s health by seeking to minimise the deadly nature of the virus.
This again is a mirror of the political classes’ reaction to climate change, putting the economy first, when it is patently clear that you can’t have an economy without a world to run one in.
In this respect, politics and economy, as they are currently shaped by neo-liberals, are actually obstacles to growth in terms of fresh thinking, the very thing required to tackle climate change.
The differences between neo-liberal core beliefs and practical common sense have been thrown into stark relief by the pandemic, with neo-liberals initially revealing their natural ideological preference for the health of the economy over the health of the public.
But this ethical miscalculation was corrected by the nature of the virus itself, which immediately began to demonstrate that public health must precede economic health. That a virus doesn’t observe borders or class preferences. That you can’t have business as usual if public health is under threat. That the economy too will eventually bleed out unless the political class act to protect public health.
The exact same rules apply to action on climate change. Public health and climate health must be prioritised over short term economic measures. We saw this anomaly here, in its micro form, when the Fine Gael government were pointing to “healthy” growth figures in the economy, yet homelessness was at crisis point and steadily rising and children in hotels were experiencing measurable stunted growth.
That stat-driven type of economic approach has now been revealed as just a clean bureaucratic way of eating your young.
Personal Financial Security
When it finally became clear, even to neo-liberals, that mass closures of businesses for a long period of time – maybe even months – would be necessary to contain the virus, the first realization was; what are people going to do for money? If capitalism can’t create cash, if only temporarily, how are people supposed to live?
The answer came hot on the heels of the question: State intervention, the very thing that neo-liberals and late stage capitalists had been opposing and rolling back and undermining for so long.
Fringe ideas, like basic income, which had gradually been becoming more mainstream with the realization of capitalism’s adverse contribution to climate change, now took centre stage as one of the more practical ideas to deal with the necessary closures to contain the coronavirus.
Long-time proponents of universal basic income such as Andrew Yang called for a change of thinking around the concept of economy; identifying, as David McWilliams has done, “personal financial security” as a key measure to deal with the crisis.
“Treating this as a pandemic is one thing,” said Yang. “Treating this as an imminent economic depression and societal catastrophe spurred by a pandemic is another. You should flood the zone with buying power and a sense of personal financial security as fast as possible.”
This concept of personal financial security for all is the exact opposite to the concept of engineered scarcity that the neo-liberal agenda promotes in order to encourage continued and unnecessary consumption and corresponding political weakening of adversaries.
Again, the virus invites, almost as an afterthought, an interrogation of neo-liberal politics that finds its basic concepts desperately wanting when it comes to considerations of the public good.
Once neo-liberalism is disarmed in this way, as it has been in recent weeks, alternative thinking leads inevitably towards solutions based on the concept of social security, which is also a necessary re-think in the inevitable winding down of capitalism to allow for climate recovery.
The coronavirus and the restrictions imposed by the pandemic, offer an opportunity for real change.
It is as if nature was offering a clue as to how climate change might be tackled by winding down capitalism’s excesses.
A New Paradigm
The virus, with its short time frame demanding immediate action, is a slap in the face to capitalist complacency, in comparison to climate change’s slow deterioration, which can be put on the long finger, seemingly indefinitely, until a restriction is imposed by the elements.
When a disease is slow moving – and late-stage capitalism’s contribution to climate change has been described as a disease by some commentators – it is more amenable to denial.
The virus doesn’t leave any space for denial. Even the drinkers and race-goers who attempted to continue as normal were quickly corrected by the speed of the viral spread.
Every measure employed to combat the virus will be needed to combat climate change, but in a less drastic form. The virus has provided a revelation really as to how capitalism might be amended and curtailed to give the climate some breathing space for recovery.
It is as if the entire global system has been plunged into a dry run rehearsal for dealing with and offsetting the worst of the climate change threat.
Old Dangerous Ways
The only problem now, as Naomi Klein has noted, is that the old right-wing orders will be tempted by the virus crisis to behave primitively, by using the opportunity to restrict democratic freedoms and consolidate their economic power.
The old strategies designed to perpetuate the late capitalist business model of endless consumption in a finite system may continue to be pursued; ignoring the valuable lessons demonstrated by the virus crisis and condemning the world to climate catastrophe.
Already in the United States the old corporate models that always result in bailouts for corporations, coupled with opportunistic attacks on social security, are underway in what Naomi Klein refers to as old ideas lying around waiting for the right social conditions to allow them to be enacted.
It could be that the coronavirus is the wake-up call that late-stage capitalism needs to radically amend global financial systems in the interests of climate repair. A last gasp opportunity to change the capitalist paradigm and to question the twin obstacles of neo-liberal politics and economic prioritising that prop up the old destructive system.
But the danger of being duped by wily neo-liberal politicians into exchanging freedoms for a sense of security will likely continue. That’s the game after all.
Naomi Klein: https://bit.ly/33qJ6Rm
Italian Doctor: https://bit.ly/390rmNO
David McWilliams: https://bit.ly/3d9mLw6
Hong Kong Cash: https://bbc.in/3a1hkxl
Andrew Yang: https://bit.ly/38XolOA