salt in the wound

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By Juan Grigera*

Considering that neoliberalism as a dominant system of domination and accumulation is in crisis, what can be prefigured as its substitute?

“The coronavirus crisis has already proven that there really is this thing called society” sentenced Boris Johnson a few days ago, to celebrate that 20 workers in the public health system (NHS) are returning to service and that 750 volunteers were registered to collaborate during the campaign. crisis. If that is what he said, all weight rests with what was implied. Johnson referenced, in his isolation (now internment), Thatcher's masterful synthesis of neoliberal thought three decades ago: "There is no such thing as society."

The gesture of "BoJo" repeats another one from a few weeks ago when he said that unlike 2008 when they rescued the banks, "this time we are going to make sure that we take care of the people who really suffer the economic consequences". Of course, we could ignore these expressions coming from the mouth of an opportunist and unscrupulous like Johnson, architect of Brexit and prime minister of a country that is heading for a rapid decline. However, it is worth remembering that in times of crisis “only idiots tell the truth”.

The crisis provoked by the worldwide contagion of Covid-19 is a radical crisis for global neoliberalism. In a way, it prefigures the climate crisis without precedent, since in both cases both the human/nature metabolism and the use-value/exchange-value contradiction take on an unexpected role. To measure its impact, we must first put it into perspective with the responses to the 2008 crisis. Then, we will analyze it in depth, in the extent and to what extent it jeopardizes the ability of capitalism to provide the necessary use values ​​to guarantee social reproduction. And finally, we will ask ourselves: what will be the international impact of this crisis?

Spectra of 2008

While the health crisis unfolds rapidly and with no solution in sight, the economic crisis is evident given the immediate recession of almost all the world's economies, the extraordinary increase in debt, the massive growth in unemployment and the fall in company shares. Due to its characteristics and dimensions, a very detailed comparison of this crisis with previous ones would not be fertile: it is not a problem of financial origin as in 2008, nor does it have the dynamics of the Great Depression of 1929. In terms of a pandemic, the context nor is it the so-called Spanish flu of 1918. The World Wars also have some parallel in relation to indebtedness and the acceleration of some economic sectors, although the similarities end in the brutal destruction of fixed capital (and, therefore, in unique processes of reconstruction). The effort to hibernate production and circulation, while keeping a few sectors in high activity (health, connectivity and other essential services), is unique to say the least.

However, it is important not to lose sight of the specter of 2008: the political response so far has been diametrically opposed to that of then. In 2008, against many expectations, the (non) exit from the crisis took place under the maintenance of a neoliberal narrative and instruments. The huge rescues of the “essential” financial institutions (with the consequent growth of public debt) followed an international scenario dominated by new austerity plans (and restricted to the health sector, among others), stagflation and neoliberal debt management. The interpretive clash, for its part, also showed an impermeability in changing the neoliberal narrative to deal with the crisis, resulting in the “strange non-death of neoliberalism”.

A first analysis of the measures adopted in this crisis shows the contrasting difference: “social democratic” Denmark started by announcing that it would cover 75% of the wages of employees who would otherwise be made redundant. In the same week, the United Kingdom announced a similar measure: it would cover 80% of wages. Rescue packages in the OECD vary between 2 and 10% of GDP and are aimed at a very wide range of businesses, workers and consumers. In comparison, the initial bailouts of 2008 hovered between 0,7 and 5% of GDP (although they were expanded significantly). The initial package from the United States was 700 billion, the current 2 billion is three times that (and roughly 10% of GDP). Boris Johnson recently announced that income assistance will also reach self-employed workers (still in June, see below).

However, the measures go beyond the fiscal ones. No commentator was surprised when China rolled back market freedoms to force Foxconn to produce ventilators. However, recently, Spain announced that it would nationalize the health system for the duration of the crisis. In Britain, Airbus, Dyson, Ford and Rolls-Royce agreed to a quick conversion to produce 30 ventilators. Surgical masks are produced by major clothing chains: in Italy, Armani and Prada, and in Spain, Zara and Yves Saint Laurent. The Trump administration announced that it would use a wartime legislation to provide inputs and force automakers to produce respirators.

Burn the cookbook

Before our eyes we see how the neoliberal cookbook is burned. However, the question, before “why?”, is worth asking: what will happen after this exceptional situation. And here there is little margin for error: there is no “return to normality” in the immediate future and most likely there is no blind return to neoliberal normality. Regarding the first, even when a quick epidemiological solution can be envisaged (in six months?), both the dimension of the recession (what estimate declines in world GDP between 1 and 25%) and public debts speak of a crisis that will last more than one or two years. It is also worth remembering that the systemic vulnerability of the world economy was already recognized at the end of 2019: declining profitability, rising sovereign debt and signs of contraction in manufacturing production from China to Germany. What can Italy expect, for example, after the Covid-19 crisis, whose debt was already 140% of GDP in June 2019?

The almost total suspension of productive activity (essential service work and that which can be carried out online is a tiny fraction) in most of the world's main economies is no minor event. The virtual collapse of global production chains (due to the sudden suspension of demand, such as clothing, or the bottlenecks in supply due to sudden restructuring and even export restrictions on some critical products during the crisis) is expressed in brutal increases in unemployment and the critical state of international payment and credit chains.

These elements evoke the economic crisis as a legacy of the pandemic and the palliative measures adopted to hibernate production and distribution. But it is necessary to understand the crisis in yet another dimension: that of the inability to respond effectively to the health crisis as such. It's like the saying goes: the devil is not just in the error, but in the particular form in which it presents itself.

Contradiction between use value and value

What does the fact that Ferrari is producing respirators, Gucci manufacturing masks and Christian Dior manufacturing hand sanitizer tell us? Or that the economy with the highest GDP in the world not be able to provide enough $0.75 masks to your doctors? 

On the one hand, both processes speak of the geopolitical risks of the internationalization of production. In a context of crisis and in the face of an extraordinarily greater global demand, the main mask producing countries have suspended their exports (China, Taiwan, South Korea). China produces 80% of the world's masks. And if this tension between “commodity” and strategic product is not new (oil, for example, has been navigating this tension for some time), here there is no single natural resource or a particularly complex commodity at stake. But beyond that: unlike oil, there was no contingency plan here. Because nothing has stopped the stocking of masks or respirators in recent years. Not even unpredictability: to cite one example, after the SARS crisis, the United States created a commission to prepare for the next pandemic. That commission suggested accumulating 3500 million masks and 70 thousand respirators. Of the masks, only 104 million were purchased, almost all of which were used during the swine flu (H1N1) in 2009. A spending cut blocked the replacement of the minimum initial stock. The stock of respirators, in turn, followed another path to failure: a commission tendered the design of a new and cheaper model, soon awarded to Newport, a small Japanese company based in California. When producing a respirator for $3 a unit, Covidien (one of the major producers of respirators sold at $10 a unit) bought Newport and canceled the contract with the state. In July 2019, a new contract was signed with Phillips, but delivery of 10 units was only planned for mid-2020.

Looking at the infrastructure, we are faced with the same perverse image. Mike Davis reveals that the United States has 39% fewer hospital beds than in 1981: the logic of not having idle beds led to a systematic decrease in beds, under the criterion of occupying 90% of the total all the time. The analysis of number of beds per inhabitant published by WHO is revealing: South Korea has 4 times more beds per inhabitant than the United States, China and Cuba almost twice as much, and Lebanon or Albania have the same amount.

In short, the problem that manifestly presents itself during the crisis far exceeds it. What the lack of these commodities puts into crisis is a product of mercantile logic. That is, the contradiction between use value/value becomes apparent again. In other words: if the United States does not have enough respirators and masks, it is due to decades of austerity and a health system dominated by the logic of greed. The internationalization of production followed this logic and leaves (partly by luck) Asian countries in a better position in the face of this crisis.

Being an open contradiction, the answers it generates are temporary. It is unrealistic to think, for example, that the US federal government will force Ford to manufacture respirators much longer. State intervention in the direct production and distribution of use values, which almost all states resorted to in this crisis, is an obviously temporary measure. The interruption of the international commercial logic is also temporary (among many examples, the United States intercepting shipments with 3M masks destined for Germany, to Canada or Barbados, or trying to buy exclusive access to a vaccine, sustaining the blockade Cuba still in this context, but also the Türkiye blocking the exit of respirators to Spain or Germany doing the same with masks destined for Italy). But the crack that this crisis causes in the logic of accumulation (whereas, for example, cuts to the health system are strategic for its “normal” performance) goes beyond the current situation. It opens up a world of the possible in a world that was already in crisis. Adds insult to injury, or said in our language, rub salt into the wound. 

A new world order?

What then is the deep crisis that Covid exacerbates? For it is worth risking the analysis of two possibly linked dimensions: on the one hand, the crisis of neoliberalism as an articulated response to domination and capital accumulation, and on the other, the dominant place of the United States in the international system.

Let's start with the world order: the crisis highlights the lack of international coordination for the epidemiological response – even more so due to its nature. It also reveals the clear impotence of the United States to effectively respond to the crisis at home. That is, it demonstrates how the inability to provide goods in the quantity and nature needed is a result of the limits of its recent development. On the one hand, the commercial logic mentioned above, and on the other, the internationalization of production thanks to which a good part of the use values ​​needed in this crisis are produced in China. So New York illustrates this crisis with stories of overcrowded hospitals, nurses making protective suits from garbage bags or masks from old clothes, and how the state government competes with others for the purchase of ventilators.

For its part, China (beyond the controversy over the statistics of its response to Covid-19) used its position to offer itself as that international guarantee: it offered respirators, tests and masks to Italy, Iran and most of the Africa and Latin America.

Those who drew attention to the profound inequalities with which the crisis will be processed, signaling, for example, the even greater deprivation of health systems in Latin America (Ecuador, for example), Africa or the Middle East, or cases like the Gaza Strip, are right to point out the existence of a “Third World” in this crisis. It is important not to fall into the Western arrogance of believing that the “First World” will be confirmed as the OECD countries, because, perhaps with the exception of Germany, the scenario places them below the answers given by China, Taiwan, Singapore or South Korea.

The situation highlights a process already underway: the loss of US competitiveness vis-à-vis China and Southeast Asia. And to prove this is not to enter theoretical territory of realism (who still expects a change in hegemony because he does not see Chinese military power surpassing that of the United States). If Covid-19 is the North American “Suez Canal moment”, it is as a conjuncture that proves the structural problems of competitiveness that have been going on for a long time. The dynamics of accumulation will surely prevail over other elements – it would be expected that at some point the US dollar ceases to operate solidly as international money. In short, it is to be hoped that the North American decline will not be delayed any longer.

Now, returning to the first part of this hypothesis: considering that neoliberalism as a dominant system of domination and accumulation is in crisis, what can be prefigured as its substitute? If we only look at the element of competitiveness, we could be on the verge of a capitalist restructuring by the “Asian” model (which some orientalist analysts call “authoritarian”, as if the West needed a guide to be so). But here it is convenient not to confuse international hegemony with accumulation, nor the latter with domination. The exercise is much more than trying to read in the current situation the elements that will be most relevant to overdetermine a new equilibrium.

Digital Control

Navigating through this exercise, which is as risky as it is necessary, let's start by analyzing the speed with which digital control has expanded, to then assess the new resistances that are foreshadowing.

The pandemic crisis legitimized the use of control and surveillance technologies at a unique speed. A few weeks ago, many of these technologies were used only in the “fight against terrorism”, that is, they were directed at specific groups (political or racial groups) and not against all citizens, quickly sweeping away the always weak legal barriers that protect privacy. in moscow, for example, compliance with the quarantine will be verified using facial recognition on the cameras, but also with a mobile app that will record movements and a QR code that will have to be presented to the police to circulate. Those who don't have a cell phone will be borrowed one. Israel will use cell phone location data to track Coronavirus cases and notify anyone who has been in contact with the infected person (sending a text message telling them to self-isolate by a particular date). This system uses data that the intelligence agency Shin Bet already owned and created technology to fight terrorism. Italy uses drones equipped with heat sensors to measure the temperature of passers-by and is capable of announcing instructions such as “You are in a prohibited area. Leave immediately.” And it can use facial recognition to later impose administrative and criminal sanctions. Local police have been given new powers that allow them to take people's temperatures without their knowledge or consent.

Iran tried a more obvious method, asking users to install an app that promised to help diagnose coronavirus symptoms. It secretly filtered the user's personal data in real time. South Korea has also implemented a must-use app for infected people. In China, at some points, a QR code checks your risk of infection and allows you to access certain buildings or not. Google has made public its mobility reports that show not only the granularity of the data they have but also their ability to analyze it: the reports show the decline in the use of parks, transport, workplaces based on the geolocation of Android phones. Examples of location apps abound: Taiwan, Singapore, South Korea. Germany and the United Kingdom explore the idea of ​​an “immunization passport”, which, in addition to its effectiveness, would open up horrific distinctions between the ability to circulate between different citizens.

Added to this repertoire is the intensification of classic repressive measures. Peru has exempted security forces on their patrols for the Covid emergency from criminal responsibility, Kenya has authorized shooting at those who break quarantine, and police have killed a 13-year-old boy. Police brutalities in Ecuador, Paraguay, Chile or Argentina in this context are also the norm. London Police (Met) announced the purchase of war vehicles.

If these behaviors appear to be temporary, their legacies are not. First, by demonstrating the strength of (some!) States and companies in showing that these technologies not only potentially exist but are capable (in every sense) of being used in certain contexts. Second, because these massive experiments will in turn be a learning path to improve them. These are legacies that don't go unnoticed. Freedom of movement will be restored as soon as possible and it is not at risk, despite the liberal laments of Giorgio Agamben or Paul Preciado.

Electrical

As much as the crisis serves to reveal the control and surveillance power of the States, it also highlights the structural power of some sectors. In the list of exceptions for “indispensable” sectors there is an unexpected calculation that production depends on sectors in which one day of strike cannot be tolerated. Like a kind of Ridley Plan, these balance sheets show unexpected patterns: the vulnerability of value chains due to their extreme reliance on production Just in Time (responsible for the great toilet paper crisis, among other phenomena), and the incredible precariousness of the jobs on which these essential services are based. It can be seen, for example, that in the United Kingdom the decision to pay the minimum income to self-employed workers only from June and not right now takes into account the need for them to continue working: xs distributors, delivery service, Uber, etc.

And while the same ones who, until yesterday, shamelessly cut health budgets, today call for weekly applause to the same doctors and nurses (while not providing the essential materials for their safe work, personal protective equipment or PPE), even they know that health systems will have another position in future negotiations. Or xs Amazon workers elevated to “new Red Cross” who have carried out strikes in the United States, France and Italy.

If the structural position of production has suddenly become exposed to everyone's eyes, it is also necessary to weigh the enormous weakness that power in the labor market will mean for these struggles. Unemployment figures above 15% are particularly alarming, and will be a very important pressure, especially in these less qualified sectors.

Conclusions

Seeking to blame capitalism for the origin of the virus, emphasizing the risky “governance” of the environment and the dangers that both the food industry and agriculture under the command of greed bring us, is a noble but unnecessary exercise. To respond to the racism blamed on China for its cultural practices, it is enough to name it as such. As Gerard Roche said:

“(…) when images of eating bats circulated on the net, they evoked pre-existing representations of Chinese and Asians in general. This allowed commentators to feel secure in claiming that they understood the etiology of the virus. (...) How can so many people unable to find Wuhan on a map and completely unqualified to make any claims about the origin of the spread of a virus feel so safe to make such judgments?

The real focal point is to highlight the way in which Covid-19 is articulated in a social structure: its brutal, structural, social and economic inequality, its insensitive indifference and suffering.

Major crises and pandemics always put the existing world in crisis. They entail enormous human losses and force us to rescue some lessons amidst the shipwreck. I propose three: to remain alert in the face of a crisis that can articulate an authoritarian exit, the growth of xenophobia and racism that feeds false exits and finally the x-ray of the vulnerable points of capital – until yesterday not so visible. And holding on to the latter can help us fight to activate, as Benjamin said, “the emergency brake of humanity”.

*Juan Grigera is professor of political economy at King's College London.

Translation: Giulia Falcone

Published in Intersecciones Magazine: Theory and Social Criticism, on April 13, 2020.

 

 

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