Coronavirus: the Straw that Broke the (Capitalist) Camel’s Back?
Global industrial capitalism was put to the ultimate test, and it failed admirably.
“When we try to pick out anything by itself, we find it hitched to everything else in the universe.” -John Muir
I. Interdependence and the Global Industrial Capitalist World-System
The largest living organism on Earth is a colony of Aspen trees in central Utah — a grove of 47,000 genetically identical trunks originating from a single male parent. Connected underground through their root structures, the trees are deeply interdependent — nourishing one another through shared water and nutrients. A threat to one tree produces a ripple effect for neighbors in the stand. Blanketing 106 acres of forest, the slender white plants are symbiotically interwoven to form one harmonious, thriving organism.
As the world has witnessed in the past 2 weeks, our built environment shares a similar level of interconnectedness. Our globalized industrial capitalist world-system is a fragile web that relies upon a delicate balance of optimal conditions, which can change rapidly.
Upending this web affects all those reliant upon it. As participants of the web, we don’t have a right to the status quo, but we assume that its systems are accountable to us. Systems are built for shocks — a system’s value is determined not by its functionality during business as usual, but by how it handles challenges. (This is not a radical idea — it is the principle of “resilience” — a key tenet of systems thinking.)
The U.S. global industrial capitalist system — the fabric that underpins every institution in our society, in all sorts of insidious ways — is ill-equipped to handle the most important systemic shock of the decade.
Covid-19 marks the largest public health crisis in the era of globalization and the Internet. In an era when world leaders are more connected than ever before, with an inexhaustible trove of reliable information from public health experts at their fingertips, it would seem as if a crisis of this scale could be easily subverted. At the very least, world leaders could be expected to heed guidance from their disease-ridden peers, or learn from similar outbreaks in the past. Instead, our inextricably globalized reality makes itself felt in the rapid, exponential spread of the disease to every corner of the globe.
As the virus spreads, so too do concerns that our socioeconomic system was not designed to handle suffering on such a large scale.
Suddenly, the fundamental ideology underlying our world-system is called into question. Suddenly, a privatized multi-payer healthcare system in which the right to live hinges on wealth seems cruel and insensible. When millions are forcibly deprived of work, universal paid sick leave doesn’t seem so radical after all.
How do profit-driven utility companies and internet providers react to times of crisis? Suddenly, arbitrary price spikes, throttled internet, and interruptions to clean water and electricity services in low-income areas are declared unjust. Suddenly, it would be inhumane for police to help landlords evict tenants in times of economic distress; for people to be incarcerated for petty drug crimes; for the poor and mentally ill to roam the disease-ridden streets without a place to call home. Suddenly, onerous federal loan payments (on expenditures like college) aren’t as pressing.
To be clear, I am — above all— awed and uplifted by the adjustments authorities have made to lighten this pandemic’s toll on Americans. But I’m also interested in the reality these changes bring to light: that global industrial capitalism is ill-prepared to sustain dignified human lives in the face of adversity.
This crisis lays bare the broken foundations upon which our collective well-being is predicated. Even in the pre-coronavirus reality, one could — randomly and abruptly — find oneself in dire financial, medical, or mental straits at any given time. A sudden lay-off, debilitating injury, the death of a loved one, or any number of circumstances can put an individual in a position that all but necessitates basic, guaranteed, government-provided services.
Tragedy is not novel to the novel Coronavirus.
American’s poor has endured economic or medical hardships such as these for centuries. Economic safety nets should be the status quo, not exceptions made for extenuating circumstances.
Vulnerability reproduces itself, inexorably. This is especially true in a system that deems monetary wealth the basis for good health, clean water, education, reliable electricity, a decent home, and freedom from incarceration.
The current sociopolitical moment is but a mere glimpse into the tragedies that have befallen lower-middle class America since the Industrial Revolution, forgotten casualties in a system that disproportionately threatens the already vulnerable. Today’s tragedies are a symptom — not a bug — of a system designed to prioritize profit over human lives.
II. Does late global industrial capitalism work in times of crisis?
If global capitalism were a robust, resilient system, it would be capable of rebounding from financial hiccups. One of the benefits of globalization-era capitalism, as we understand it, is the myriad of production options it boasts. If one country can no longer produce something at its normal rate, we have a plethora of competitive alternatives — right?
Before Covid-19’s explosion in the U.S., alarms sounded over what was ostensibly the worst case scenario: the onset of a financial recession.
As it turns out, outsourcing cheap labor to developing countries to build our consumer goods is convenient — until it isn’t. The first economic disruption arose from a weakened global supply chain, with the destabilizing of China — the source of roughly one third of the world’s economic growth. (So too was Italy’s most affected region its industrial heartland — responsible for nearly half of the country’s economy.)
When the U.S.’ three major stock indices plummeted beneath 2008 recession levels last week, financial collapse loomed. But, surely, there is no such thing as a problem that the capitalist economic toolbox cannot fix. On March 18, the Federal Reserve Bank practiced a time-tested strategy to stimulate economic activity: cutting interest rates to nearly zero. Historically, slashing interest rates has amplified demand — spurring consumers to spend more, borrow more, or invest.
But, as NYT Economics correspondent Peter Goodman noted, in this case, that won’t work — this recession is categorically different. While we traditionally know how to heighten demand, the capitalist playbook lacks a mechanism to deal with a supply shock. When factories shut down, borders tighten, and leisure business are deemed “inessential,” supply dwindles— rendering changes to demand inconsequential.
Contemporary capitalism has its roots in the Ford assembly lines of the late Industrial Revolution. Predicated on economies of scale, it relies on the idea that high demand can be met with large-scale production at low costs, with the best producer reigning supreme. By that logic, one would think that one problem capitalism would be able to address is high demand for products in times of need — for instance, Clorox wipes and hand sanitizer. Purell, the premier hand sanitizer brand, is primarily manufactured in the U.S. — the business was virtually undisturbed by disruptions to China’s supply chain. However, as Corona fears escalated, the U.S. faced an abrupt, widespread hand sanitizer shortage. While Purell and competitors have immensely ramped up production, it still falls short of global demand. Worse yet, the crisis brought out capitalism’s worst: doomsday hoarding, sanitizer stockpiling, and third party Amazon sellers offering the product at exorbitant costs. Earlier this week, the price of a 12 ounch Purell bottle averaged $150 on eBay. When demand outpaces supply, and our systems (i.e. multinational online shopping companies, owned by billionaires) aren’t designed to prevent profiteering before the fact, the difference can be life or death.
III. What does Coronavirus teach us about late industrial capitalism’s shortcomings?
The Covid-19 crisis offers important lessons on how our economic system has shifted — from Adam Smith’s classical supply/demand capitalism to the late capitalism of the twentieth century, which thrives off of 1) incessant need-creation and 2) corporate money recirculation.
Issues with the need-creation economy
By “need-creation,” I refer to the basis for economic growth under our current system: manufacturing coupled with advertising to convince consumers to desire an endless stream of goods. Late capitalism’s business model is as follows: make consumers feel inadequate in some way, and offer them products (that they “didn’t know they needed”) to fill that void. This creates a self-perpetuating cycle, as consumers are convinced they need more, better, newer, brandname goods to feel confident and whole. This manifests itself in every industry, stretches to every corner of the globe, and is amplified by the internet. In the past decade, we’ve even seen need-creation seep into the medical and pharmaceutical industries, creating the largest human-made epidemic in history. As multi-million dollar pharmaceutical companies churned out prescription opioids at staggering rates, they were able to pay off doctors to convince them they “needed” to prescribe them to patients. (This was, of course, done before testing had evaluated their addictiveness — which would cost 400,000 Americans their lives.)
A need-creation economy in the midst of this pandemic raises ethical queries. Corporations act in self-interest to maximize profit — which explains why we can mass-produce AirPods, Apple Watches, Special K cereal, or Oxycontin during business as usual, but mass-producing medical and sanitary supplies amid dire straits proves more difficult.
Money recirculation and new white collar jobs
By “corporate money recirculation,” I refer to the fact that much of today’s economy is not rooted in economies of scale, supply/demand curves, or the creation of any value whatsoever— but, rather, in the recirculation of money. The premier example of this is the U.S. stock market. To win at the stock market game, one bets money on the success of a company, earning money if it prospers. The investor hasn’t created any value; rather, money has been recirculated. A large segment of our economy hinges on this very principle, which can lead to unethical decisions. Look no further than the U.S. Senators who sold millions in stock — before investing in teleworking companies — after being privately briefed on the threat posed by Coronavirus, while simultaneously assuring their constituents that the epidemic wasn’t a serious concern.
As anthropologist David Graeber famously wrote, in the twentieth century, we saw the mass automation of — and reduction in — blue collar “productive” jobs: jobs that involve “actually making, moving, fixing and maintaining things.” Simultaneously, we saw a surge in new, white collar jobs, in fields like portfolio management, hedge fund consulting, financial services, corporate law, trading, banking, and the like. These jobs are mostly concerned with the recirculation of money, rather than creating value (i.e. producing a good or service that — in some way — helps people). Their obscenely high salaries illuminate the importance our society places on bolstering the economy, rather than securing the capacity of everyday Americans to survive and flourish.
Today, we notice that Graeber’s “productive” blue collar jobs map directly on to those deemed “key workers” in the Covid-19 crisis. We realize the importance of our custodians, cashiers, shelf-stackers, healthcare workers, delivery drivers, farmers, garbage collectors, and bus drivers, while all sorts of white collar employees can work from home.
IV. What can the U.S.’ brand of industrial capitalism do?
To be sure, I am pleasantly surprised by some of the shockingly progressive fiscal response measures the federal government has taken. However, I maintain that the disaster relief toolbox under our current economic system is inadequate at best and fatal at worst.
Take, for instance, one of the most promising components of Trump’s trillion dollar stimulus package: $1,000 checks for every American adult (excluding the country’s wealthiest). This short-term remedy illuminates the inherent limitations of money alone in shoring up human rights. $1,000 payments would be an ineffectual, convoluted means to a simple end. It is too little for those who need it, unnecessary for those who don’t, unspecific to a point of fault, and doesn’t address the systems that put the vulnerable at risk.
For those without healthcare, newly unemployed, or overburdened with loans and debt payments (i.e. those who need it) $1,000 is not nearly enough to alleviate the hardships Covid-19 has generated. It is far too little for adequate medical treatment, or to secure the capacity for the socially vulnerable to make ends meet. On the other hand, for some (i.e. those in higher income brackets, whose jobs will continue virtually, at the same salary), the $1,000 seems unnecessary. Furthermore, without a designation for a specific purpose, recipients of the $1,000 may spend it in whatever way they choose. This raises an obvious question: if the goal is to keep everyday citizens afloat, wouldn’t universal paid sick leave, free healthcare, and/or a universal basic income be more direct and effective means to achieve that?
In the face of disruptions to every system upon which our livelihoods depend, basic government-provided services would make more sense than mere payouts. At a time when Covid-19 cases in the U.S. have outstripped the number of ventilators and hospital beds — leaving no space for other health emergencies — a robust Medicare for All system would prove much more useful than a thick pocketbook (to shell out on egregious hospital bills, prescription drugs, and co-pays). Temporary monetary bandaids will not remedy a fundamentally unjust, broken healthcare system.
The trillion dollar stimulus package also includes billions of dollars to bail out the hardest-hit industries, like the airline, cruise and hotel sectors. One could hope that this money would trickle down to the industry’s employees, but the bill doesn’t include any such stipulation. Besides, a plethora of other industries are affected — which makes a Universal Basic Income sound a lot more logical than an industry bailout.
The package came after the Federal Reserve gave a staggering $1.5 trillion in loans to bail out Wall Street banks from a floundering stock market. In a tumultuous time, it seems evident that there exists a glaring discrepancy between spending and need. The question arises: if these vast swaths of emergency money exist — to bail out the banks and bolster the economy — why aren’t current federal investments in healthcare infrastructure and social services being made at comparable rates? Shouldn’t a federal government be more accountable to its constituents — in times of dire crisis — than its stock market?
To be sure, the U.S. has the largest GDP of any country on the planet — but it also has the highest college tuition, largest rate of income inequality, highest incarceration rate, and highest cost of healthcare per capita of the developed world. On the other hand, the world’s five most egalitarian countries — the Nordic countries — have universal, free government-provided services (like healthcare and college education). While none of them are economic superpowers, they consistently rank lowest in income inequality and highest on the Global Peace Index and World Happiness Report. Whether a more egalitarian system would be feasible in the U.S. is a question as old as capitalism itself, and beyond the scope of this essay. In writing this, I wish not to radicalize you. Rather, I wish to suggest to you something reasonable, a logical conclusion that flows from everything aforementioned: our economy could slightly contract (after it stabilizes). Our government could reallocate funds to provide services that would enable more Americans to lead healthy, dignified lives, in times of crisis and in times of health.
V. A Final Word
The tragedy of today is unique in its capacity to transcend political, national, racial, gender, and class boundaries: to unite the human race in solidarity and in suffering against a common enemy. For the first time in centuries, we march together under a shared banner: team human. Crises like these can generate unbelievable amounts of selflessness, generosity, and compassion. Tragedy tends to breed empathy — after having suffered, it proves more difficult to ignore the suffering of others.
So, as we go about our grieving and mourning, I want to imbue you with a sense of hope: for collective suffering to sow the seeds for collective healing. Times such as these — not unlike near-death experiences — put everything into perspective. They engender value shifts. We have good reason to see this moment as an opportunity for reawakening: a catalyst for enlightened awareness, an impetus to rewrite our narratives of progress to value human lives over unfettered economic growth.