COVID-19: A pandemic unlikely to be affordable
Woven throughout the address of Boris and his chancellors in recent press conferences was language advocating to put the United Kingdom on a wartime footing to combat COVID-19. Then, on 23rd March, Boris Johnson strictly ordered UK residents to stay at home, save lives and tackle “the biggest threat this country has faced for decades”. Police and local authorities are unprecedentedly expanding their clout to disperse gatherings, including through fines.
Guided by a false perception that underestimated the severity of COVID-19, it seemed a matter of just washing our hands and singing “Happy Birthday” twice and was easy to maintain consensus. However, cracks are showing now as it escalated to a pandemic. Even those supporters of the conservative party are holding the it accountable for routine tests, protective equipment in NHS and most importantly, measures to guarantee people’s livelihoods if asked to stay at home. The strict bans sharpens the societal divide as it inevitably leads to the question of “who can work at home and who cannot”, more precisely, “who can afford to isolate or quarantine themselves (with or without pay) in the event of contact or infection”.
Politicians are throwing open the fiscal spigots to support the economy. Sunak sought to address the urgent questions surrounding livelihood with his extraordinary announcement, which torn up 40 years of small-state, free market doctrine, first promising to spend a staggering £330 billion, and then evening committing to pay 80% of the wages of furloughed workers in private sectors, which can even hardly be implemented by "hardcore" socialism.
However, whether this is still utterly inadequate, considering the uncertainty of how long the pandemic might last, remains depressingly unknown. The government has been in a trapped situation, while forced to react to all of its people’s demands. Local governments and regional or state authorities, which invariably form the front line of defence in public health and safety emergencies of this kind, had been starved of funding thanks to a policy of austerity designed to fund tax cuts and subsidies to the corporations. ‘Capital Economics’ have predicted that the UK economy could shrink by around 15% in the next three months. During World War Two the UK underwent a budget deficit of 20% of national income for five consecutive years, which should have reminded Johnson of how serious it is to follow his advocates in “leading a wartime government".
Bailout for the economy: There are no free-marketeers in a pandemic/”wartime”
The free market consensus has undergone public skepticism during the global financial crisis of 2007–08, even from some economic rightists. Contemporary capitalist economies are 70 or even 80 percent driven by consumerism. Over the past forty years, capital has become increasingly driven by demands and needs mobilised by consumer confidence or sentiments. This neoliberal model is increasingly resting on fictitious capital and a vast expansion in the money supply and debt creation. It is already facing the problem of insufficient effective demand to realise the values that capital is capable of producing.
Therefore an urgent question follows: how might such a dominant economic model survive the inevitable impacts of COVID-19 pandemic? Repercussions for the global dynamics of capital accumulation have already shown a dangerous sign, if paying attention to the drastic fall in Dow Johns Index and desperate cuts on interest rates worldwide. The hits upon China’s economy are also bound to cause serious consequences for a global economy in a parlous condition. Still, while the spread of COVID-19 appears to slow with China’s shockingly aggressive measures to harshly conduct invasive and authoritarian personal surveillance, the impact on China’s production and economy alert other countries, including UK, to prepare for the lasting shrinking economy. Preliminary data on the effect of the COVID-19 disease on the Chinese economy shows substantial dips in areas of retail sales and industrial production. For example, The National Bureau of Statistics of China released a report showing a 13.5 percent decline in industrial output over the first two months of the year due to mass quarantines and social distancing measures taken to prevent the coronavirus spread. As the biggest trading nation and export supplier in the world, such sharp declines in China’s industrial output is certainly not a positive sign; at least, the acute shortage in medical supply worldwide has demonstrated this.
To sum up, the role of government is both to get the best out of people by making room for their strength and compensating for their weaknesses. There used to be debates whether to compensate a small guy who needs a hand, but now, the table has turned that we are all vulnerable to a tiny, microscopic virus; that even the mighty civilisation we have built might hang by a thread, as the 40-year neoliberalism in economy exposed the capitalist world ill prepared for such a pandemic. Nominally, the drastic economic measures are temporary, designed to hold the economy in a coma until the pandemic passes. However, the capitalist world might hardly revert to the status quo ante after the pandemic. The likely economic effects of the pandemic reach far beyond the role of the state, to a rollback of globalisation in terms of demands for self-sufficient domestic production and even xenophobia sentiments. Probably, more strident turns are looming.
image: Flickr