There has been a steady stream of commentary, and reams of critical analysis written, about the current Covid-19 pandemic and how it has adversely impacted the economy. The pandemic we are now witnessing exposes the inability of the capitalist economy – as it is currently structured – to respond decisively to this burgeoning health and social crisis. The economic breakdown we are experiencing at the moment was certainly precipitated by the pandemic – but not caused by it.
The capitalist economy was already in crisis before the outbreak of the Covid-19 pandemic. The economic crisis has certainly metastasised into an all-out health and safety issue, affecting every aspect of society. It is not only viruses that mutate. The ongoing crisis reveals that we have been slaves to an enduring myth – that the unhindered operation of the ‘free market’ leads to the best possible outcomes.
Indeed, if this pandemic is to teach us anything – and every crisis is an opportunity to learn – we must readjust our economic and social priorities, because it is those priorities that have led us into our current predicament. If our existing political and economic structures cannot respond adequately in a time of serious crisis, then why continue working with them?
As Abi Wilkinson asks in Jacobin magazine:
If foundational economic principles must be abandoned when things get tough, does capitalism really serve our needs? If rapid, radical change is possible when circumstances demand it, what excuse is there for failing to act with similar urgency to prevent cataclysmic climate change?
Let us tackle one main myth that has sustained free-market fundamentalism since the early 1990s. This is the false claim that the private sector is dynamic, innovative, and quick to adjust to new realities, as opposed to a sclerotic, inert, and unimaginative state sector. If only ‘red tape’ were to be abolished, and government bodies stepped out of the way, the private enterprise sector would rapidly implement decisive innovations and deliver optimal outcomes for the public – so we were told.
The Atlantic consensus – shaped by the Thatcher-Reagan years – was implemented by the former Eastern bloc countries from the early 1990s. The economy – and by that term was meant private enterprise – became the supreme value against which everything else was measured. Why consider the environment, koalas, trees, fresh air – part of the economy?
In Australia, we have a deeply ingrained suspicion of advice from ‘foreigners’, such as the United Nations Educational, Scientific and Cultural Organisation (Unesco). Australians are fiercely independent, so we are led to believe, and never allow ‘foreigners’ to tell us what to do. The one ‘foreign’ import that we have implemented unhesitatingly is the doctrine of neoliberalism – the free market will deliver the best outcomes.
Silicon Valley, the ultimate paragon of private enterprise ingenuity and dynamism seeded by venture capital, built itself up with IT technologies developed by government institutions. The US Department of Defence, the National Institute of Health, sectors in the Department of Energy, the National Science Foundation – began the research, development and innovation that produced the core technologies of the IT industry. The state sector provided the funding, experts and innovation that characterised the burgeoning tech giants.
The ground-breaking medical innovations that have revolutionised modern medicine were funded by the public sector. The algorithms that make the iPhone and smartphone possible today were researched and developed by state-funded institutions. The state has created and managed markets for the end-products of their research and development. Amazon, Google, Apple – today’s IT behemoths would not be in existence were it not for massive state subsidies, tax breaks and government-implemented labour laws that provide a flexible workforce.
Adam Tooze, writing in the Guardian newspaper, states that the free-market orthodoxy that has prevailed in economic circles needs to be questioned while restructuring our society after the pandemic. The 2008-09 financial breakdown is still fresh in our minds – at least it should be, when examining the way out of the current crisis. Neal Lawson elaborates that the practice of stripping away state structures, and associated legislation, has contributed to our current predicament:
The first priority of the crisis is of course public safety, especially for the groups most at risk from catching the virus. But there are public policy issues, and different futures that might arise as the crisis unfolds. Covid-19 doesn’t exist in a political vacuum.
Removing government legislation and oversight, ostensibly to allow the private sector free rein to innovate, has been the mantra of the free-market ideologues. But does that actually work? In Australia, we have just emerged from a catastrophic 2019-20 bushfire crisis. While that may seem like a purely environmental issue, there were definitive economic and political decisions that contributed to the scale and severity of the bushfire emergency – scaling back environmental protection laws.
Nick Kilvert, a fauna ecologist, wrote that throughout the 2000s, removing environmental protection legislation and enabling developers to override ecological concerns left the ecosystem vulnerable and exposed to serious impacts.
Serious losses of wildlife were occurring well before the 2019-20 bushfire season. Increased land clearing, weaker environmental safeguards, and regarding the economy as distinct from the environment, laid the necessary groundwork for the unusually severe and widespread bushfires in Australia.
It is interesting to note that for all their talk of ‘hating red tape‘, the partisans of free-market fundamentalism have been passing reams of government legislation – whether it be restricting trade unions, anti-terrorism measures, increased powers of surveillance, increased police powers, restrictions on the ability of indigenous groups to sue the government. While ‘red tape’ is presented as a powerful obstacle, it is only so when impeding the operation of big business.
Are we going to wait for the private sector to solve this problem? Should we ignore the recommendations of Unesco, because it is a ‘foreign organisation’? Or should we, as a community, recognise that the economy and the environment are inextricably linked, and refocus our priorities on putting people and community lives before corporate profits?