The coronavirus pandemic is rapidly threatening to escalate into a global crisis of epochal proportions. As the virulent disease holds the world in its grip, the disastrous handling of the outbreak in the United States and Europe also highlights a number of structural weaknesses in the political-economic configurations of the Western world. This is demonstrating in the most unambiguous terms just how ill-equipped market-oriented capitalist societies are to deal with an emergency of this scope and intensity.
There are at least three interrelated aspects to the current crisis, all of which expose fundamental flaws at the heart of the established order. The first and most important of these is, of course, the medical dimension: a public health emergency that takes the form of a relentless exponential increase in the number of detected cases, in the number of hospitalized patients, and in the number of fatalities. In the United States and many European countries, a repeat of the Italian scenario is now imminent, as the sudden influx of critically ill intensive-care patients threatens to overwhelm structurally underfunded or outright unaffordable public health care systems.
In the short term, the immediate priority of governments should therefore be to stave off the coming humanitarian catastrophe and save as many lives as possible. Yet it has rapidly become clear that bringing this raging pandemic under control will require much more than government officials “nudging” citizens toward behavioral changes. This strategy, which effectively seeks to privatize the costs of the crisis by placing the full burden of adjustment on individuals, is the ultimate market-conforming approach. As the dithering of several Western governments over the past weeks has amply demonstrated, a public campaign for handwashing, elbow-sneezing, and voluntary social distancing simply will not be enough to stem the rising rate of infections.
According to the World Health Organization, suppressing the pandemic will require radical state action, from enforced lockdowns and quarantines to far-reaching public health interventions. The latter will need to include not only a rapid upscaling of hospital capacity and a herculean effort to produce ventilators, protective gear, and other medical supplies, but also an immediate and widespread government-led rollout of testing capacity, contact tracing, and supervised isolation of those who have been infected — not to mention the fast-tracked development of an effective vaccine. Such a state-led emergency response is clearly necessary, but it will force most Western governments to go far beyond the neoliberal remit they have long since established for themselves as the guarantors of “free enterprise.”
It is also clear that some of these public health interventions will come at an immense cost. This in turn highlights the second dimension of the current crisis: the economic one. As the virus continues its rapid spread, advanced capitalist democracies suddenly find themselves in the extraordinary position of having to defy business interests and effectively shut down all nonessential workplaces to enable their working populations to stay at home. Of course, employers are actively challenging the “necessity” of such radical measures — yet public health experts are adamant that a failure to institute them would rapidly overwhelm hospital capacity.
At present, we are yet to apprehend what the consequences of such a sudden stop in productive and commercial activity will be. All we know is that the economic fallout will be immense — far worse than anything we have ever seen outside of a major war — and that it could potentially pose an existential threat to the heavily indebted world economy and the global financial system as we know it. As the billionaire hedge fund manager Bill Ackman recently put it to CNBC, “capitalism does not work in an 18-month shutdown.”
Ever keen to prop up the established order, Western governments and central banks have therefore moved aggressively to respond to this second aspect of the crisis. Even as they hesitated to safeguard the health of the general public, they moved swiftly to preserve the health of the markets. In the space of just weeks, officials have already pledged a number of record-shattering rescue packages to prevent a system-wide meltdown, including a raft of groundbreaking new monetary interventions by the Federal Reserve and the $2tn fiscal stimulus program recently passed by the Senate.
But even then, analysts agree that the world economy is still on course for a frightful contraction this year. The investment bank Goldman Sachs has estimated that the US economy could shrink by as much as 24 percent in the second quarter of 2020. Last weekend the Federal Reserve came up with the even more dramatic estimate of a 50 percent drop in economic output. A collapse on this scale has never been experienced before — not even during the Great Depression. With China, Japan, the Eurozone, and the UK all simultaneously recording their worst declines in business activity on record, the conclusion seems inescapable: the bottom is about to fall out of the capitalist world economy.
We now find ourselves in uncharted waters. In the absence of radical state action, the coming economic depression will inevitably feed into a third concurrent emergency: a social crisis of a severity unparalleled in a modern democracy during peacetime. As the world’s leading economies suddenly grind to a halt, hundreds of millions of people around the globe stand to lose their jobs and livelihoods. The Federal Reserve just warned that unemployment in the United States could surge to a record 30 percent by the second quarter of 2020. By way of comparison, during the Great Depression of the 1930s, it took four years for unemployment to reach its peak of 25 percent.
Clearly, this unprecedented situation calls for unprecedented measures. There is only one way to prevent the triple disaster of a fulminating pandemic, an imploding world economy, and a fraying social order from spiraling completely out of control. And that is for national governments around the world to band together in a coordinated effort to decisively deal with the global public health emergency, take control over strategic parts of the economy, and ensure that essential goods keep being produced according to ability and distributed on the basis of need. We cannot allow the costs of the crisis to be privatized and fall on the shoulders of those least able to carry the burden: workers, the elderly, and the poor.
All of this will require an abandonment of long-standing neoliberal principles about the sanctity of the market, and a collective effort to defend public health, economic survival, and social solidarity. It will require the effective demobilization of large parts of the workforce to prevent the further spread of the disease. There will need to be an immediate moratorium on all rent, debt, and mortgage payments to keep people in their homes for the duration of the pandemic. And where they have not done so already, governments will have to step in to underwrite all salaries and provide a guaranteed income to those who are not in regular or steady forms of employment.
These radical measures will in turn necessitate a vast increase in government spending to make up for lost income from private-sector activity. Such an ambitious fiscal expansion could be funded through a major wealth tax on the ultrarich and large-scale monetary financing of public deficits. In the Eurozone, the issuing of collective “corona bonds” — a proposal floated last week by nine Eurozone member states, but staunchly opposed by Germany and the Netherlands — would lower the borrowing costs of the most heavily affected countries, enabling them to keep the rest of the continent safe from recurring infection. Without a strong show of international solidarity in the face of this common crisis, the European project — and the internationalist ideal more generally — will be dead in the water.
It is now rapidly becoming clear that the “spontaneous order” of the market cannot save us from the medical, economic, and social emergency at hand. Whether we like it or not, large parts of the world are already moving toward a partially planned economy — or at least a much more state-guided or state-directed one — in order to deal with the extraordinary challenges of the moment. The only real question is: Will the emerging economic model take the form of a business-friendly “disaster capitalism,” geared toward preserving corporate power in a more nationalist and statist shell, or will it take the form of an internationalist “disaster socialism,” geared toward protecting workers and preserving the fabric of our democratic societies?
The battle lines are already being drawn for what is almost certain to become the greatest crisis of our times. Whatever the outcome, it will surely shape our ability to confront the even greater challenges that still lie ahead: from the climate emergency to the sixth mass extinction. This time, we’d better get it right.