Events on a world scale are moving at breakneck speed. The new coronavirus (COVID-19) has set in motion a chain reaction, which is upending any semblance of stability in one country after another. All of the contradictions of the capitalist system are coming crashing to the surface.
Thousands of people have lost their lives and hundreds of thousands have likely been infected. But there is no indication that the pandemic has peaked. The number of deceased is going up by 20-30 percent every day. There is no vaccine in sight and no one appears to have any reasonable plan to overcome the situation. Most countries acting on their own accord with little regard to advice from bodies like the WHO. Healthcare systems in the worst-affected countries are at breaking point, and health workers in other countries are dreading the coming weeks and months.
The disease has mainly been confined to China, Iran and western countries. Once it hits shantytowns, slums, and camps in Africa, the Middle East, the Indian subcontinent and Latin America, where there are little if any healthcare and sanitary facilities, we will witness new heights of devastation. The number of deaths will be counted in millions. The destruction and dislocation on a world scale will be similar to wartime conditions.
The stock markets have already reacted with steep falls. On Monday, oil prices plummeted to around 30 dollars per barrel. Stock markets around the world followed. On Wednesday, the Bank of England announced the extraordinarily lowering of interest rates by 0.5 percent. But this had no effect whatsoever, as the stock markets continued their fall on Thursday with the worst day on record since 1987. The nervousness of the markets reflects the pessimistic outlook of the ruling class. They are terrified of the prospects for the world economy, which was already set to slow down.
COVID-19 is wreaking havoc on the fragile world economy / Image: Pixabay
China, the second-largest economy on the planet, is set to have its first quarter of negative growth since Mao’s cultural revolution. The disease in China is believed to have been contained. Yet in Hubei province, the service sector remains at a complete standstill. Major industries are restarting production, but as the rest of the world enters recession, there is little demand. The vast majority of small and medium-sized companies in China, where almost 80 percent of its workers are employed, have not resumed operations yet.
There is no sign of a quick recovery. Some experts forecast that world economic growth could slow to 1 percent from 2.6 last year, which would mean a number of countries in recession. But this is wishful thinking. Industry, commerce and transport will go through cycle after cycle of disruptions. Consumption will fall. Supply lines will be disrupted again and again. The world economy will suffer a deep crisis.
Europe is being hit hard, in particular Italy, which is the third-biggest economy in the eurozone. The council of ministers of the European Union had a meeting to take united measures to tackle the crisis. But all they could muster was to set up a €25bn fund, much of which is already in the Union’s budget. The rest of their plans amounted to lifting budget restrictions on individual member states. Basically, all states are left to fend for themselves – not much of a union there. Even the usually pro-EU Italian president Mattarella had to criticise the EU response in an official note: "Italy is going through a difficult situation and its experience in fighting the spread of coronavirus will probably be useful for all the countries of the European Union,” he said. “Therefore, Italy rightly expects, at least in the common interest, initiatives of solidarity and not moves that may hinder its action." In fact, Italy is now the recipient of far more aid (medical supplies such as intensive care respirators, etc.) from China than the EU. Austria has already closed its borders with Italy. Other countries are banning flights to and from Italy. The Czech Republic has shut its borders to travellers from 15 countries. France, Germany and other countries have imposed bans on exports of certain medical products. All this will escalate in a matter of weeks if not days. The common market is effectively being gradually shut down. Just like after the 2008 world economic crash and the refugee crisis, the present shock is bringing all of the internal contradictions of the EU to the fore, putting a clear question mark over the future of the Union as a whole.
Donald Trump, who until recently was proclaiming that the virus would not affect the US, has gone on a hysterical nationalist binge calling COVID-19 a “foreign virus”. He has imposed travel restrictions on nationals from select European countries and issued renewed calls for a border wall with Mexico (despite Mexico having only 12 confirmed cases). The travel restrictions are set to have an immediate effect on the tourist and service sectors. This will most likely push the US into a recession.
Russia and Saudi Arabia are also clashing over the level of oil production, a conflict that has already set the oil prices plummeting. The result could be a Russian default. The Lebanese state has already defaulted on its debt. Other mid-tier economies, such as Turkey, Argentina, India, Indonesia and South Africa could follow in the short-to-medium term.
The spread of the virus has dramatically accelerated the protectionist tendencies on a world scale. Each national ruling class is rushing to defend its own position and to export the negative social outcomes. Travel barriers could easily lead onwards to trade barriers. The trade wars between the US and China, and the US and Europe, which were thought by many to have calmed down, could flare up again, in a far-more uncontrollable manner. This paves the way for a depression similar to the 1930s, lasting well beyond the immediate impacts of the virus.
The bourgeois are shifting the blame for the economic crisis onto the virus. But this was only an accident, which has brought out all of the previously accumulated contradictions in the system. This is a crisis of the capitalist system as a whole, which has been prepared for decades. The capitalist class managed to postpone it for a while, by a massive expansion of credit. That is, by racking up debt, which has now become a colossal obstacle for growth. Sooner or later, the bubble would have had to burst. We predicted this in our World Perspectives document, which was drafted last November and passed at the recent International Executive meeting of the International Marxist Tendency. The document says:
“The recovery was in any case very feeble and fragile, and any shock could push the economy over the edge. Virtually anything can provoke a panic: a rise in interest rates in the USA, Brexit, a clash with Russia, the aggravation of the trade war between the USA and China, a war in the Middle East leading to rising oil prices, and even a particularly stupid tweet from the White House (and there is no shortage of them).”
From the point of view of the economy, the virus was merely an accidental event, which is expressing a deeper, underlying necessity. But it also impacts how the process will unfold going forward. Due to the nature of the virus, the ruling class’s ability to alleviate or channel the crisis is restricted.
The virus has precipitated a ramping up of protectionist tendecies worldwide / Image: Flickr, US Department of Agriculture
The ripple effects of the pandemic will devastate an already weak world economy. One country after another is announcing economic stimulus packages to keep the economy afloat. But the effects of these measures will be limited by the impact of the pandemic, which will not go away any time soon. Large parts of the service sector, such as cinemas, cafes, restaurants, etc. will all be severely hit as people will shy away from places of public convergence. These are also sectors where casualised working conditions predominate, and it will have a devastating impact on these workers. The situation will continue at least until definite remedies for the disease have been found. Major industries will also see production regularly interrupted by new outbreaks. Despite all the attempts of governments, unemployment is bound to shoot up. In turn, consumption will go down and become a further brake on the economy.
The ruling class is terrified of the prospects of mass unemployment and intensifying class struggle, which could lie around the corner. In many countries, governments are taking special measures, such as granting special sick leave conditions for public sector workers and others. But these measures will not come close to solving the problems of the workers affected. Some banks are allowing people to postpone mortgages for a few months. Small-and-medium-sized enterprises are getting favourable loans and tax rebates. The European Parliament is discussing the suspension of the Maastricht treaty, which binds member states to a maximum of three percent budget deficits. They are massively expanding state spending in an attempt to avert a catastrophe.
But this is highly unlikely to solve anything. Keynesian measures at this stage are unlikely to jumpstart consumption, which due to the virus could be depressed for months, perhaps years. It could instead cause runaway inflation in sectors of the economy. Small-and-medium-sized companies could go bankrupt en masse. Tax cuts and cheap loans would only push the problem into a not-too-distant future. Millions of jobs would still be at risk.
In the west, vast amounts of jobs in the service, construction and transport industries have become casualised, and they would be the first to go. In Italy, a large part of the workforce, especially in the worst-hit sectors such as the tourist industry, hotels, restaurants, etc., consists of casualised labour. In poorer countries, the situation is worse. In Iran, for instance, 96 percent of the workforce is working on so-called “blank” contracts, which leave workers with no rights. In all countries, unemployment will become a source of mass radicalisation.
National unity
The ruling classes and their governments are appealing for their respective nations to come together in a time of crisis. But behind this illusion, they are unloading the main burden of the disaster on the working class. One government after another is implementing draconian measures. In Italy, Denmark and China some areas have been functioning as if under martial law.
In China, workers at key steel mills were forced to stay at work for almost a month without the right to go home. In Italy, doctors and nurses are being worked until they collapse. Meanwhile, private-sector workers, particularly in industry, are asked to keep working. Many are now asking what the meaning of this is. If, from the point of view of fighting the spread of the pandemic, the advice is to stay at home, why then should workers go to work in non-essential sectors of the economy? The answer is clear: so as to maintain profits for the capitalists as far as possible. Even though their right to strike has been severely curtailed by the emergency measures, workers in Italy are taking action. There is a wave of wildcat strikes spreading through Italy, with workers coming out to protest at the lack of proper safety measures. The strikers are demanding that factories producing non-essential commodities are shut down, without loss of pay for the workers, until proper sanitary conditions are introduced. This has put enormous pressure on the trade union leaderships of the CGIL-CISL-UIL confederations, who until then were lobbying together with the industrialists of Confindustria to keep the factories open. All of this is an anticipation of future events.
The inadequate response of governments all over the world, from Italy to Iran, has exaccerbated the social impact of COVID-19 / Image: fair use
For now, restrictions in China are being eased, but they are likely to be reimposed once a new outbreak takes off. Denmark and Italy are under lockdown. Many other countries will have to do the same. The governments are trying to appear to be “doing something”. While some of the measures taken make sense from an epidemiological point of view, they are undermined by private property, the anarchy of capitalism and the existence of the nation state. Thus, we see private healthcare providers diverting coronavirus patients to the public sector. Private health insurance refusing to cover costs from coronavirus infections. There is a lack of test kits, which are produced in the private sector. People being asked to stay home, while workers are asked to continue going to work. Private companies are profiteering by increasing the price of hand sanitisers, masks and even coronavirus test kits! Finally, the fact that different governments cannot even coordinate their responses, and are taking different and often-contradictory approaches, undermines the fight to contain the pandemic.
In the US, Donald Trump denied that the disease posed any threat until 11 March. In China, the government, fearful of damaging the fragile economy, refused to act against the epidemic for weeks. Instead, researchers and whistleblowers were imprisoned and persecuted. In Iran, the regime refused even to acknowledge the existence of the disease for weeks so as to keep participation in the parliamentary elections as high as possible. To this day, the regime is covering up the severity of the illness. Officially, only a few hundred Iranians have died from the coronavirus, but unofficial reports of deaths are many times more than this. It is likely that the number of people infected is in the tens – or hundreds – of thousands already.
When Supreme Leader Khamenei was asked about what particular measures people could take against the virus, he suggested that they pray. Of course, that only counts for the poor. Rest assured, that if Khamenei himself was infected he would receive the best, scientifically-based healthcare available. It also appears that the main source of the spread of the disease in Iran has been the holy shrine of Qom, where pilgrims flock to be healed. All of this is undermining the whole basis of the theocratic regime. But refusing to accept this, the religious establishment is defying safety measures and painting the epidemic as nothing but a western conspiracy theory. All of this is preparing a furious counter-reaction by the Iranian masses, who are paying for the rottenness of the ruling class with their lives.
Meanwhile, the intervention against the disease is hampered by decades of cuts to healthcare systems. In Italy, 46,500 healthcare jobs were cut from 2009-2017. 70,000 hospital beds have been lost. Italy had 10.6 hospital beds per 1,000 people in 1975 – now it's 2.6! Britain went from 10.7 beds per 1,000 people in 1960 to 2.8 in 2013. Between 2000 and 2017, the number of available hospital beds was reduced by 30 percent in Britain! The same conditions exist throughout the western world. In Italy, health workers often have to decide who they can treat as there are only limited facilities, meaning many will die, mostly the elderly, because of the lack of resources. As the number of cases increases, the healthcare systems are coming under intense pressure. They could collapse, leaving hundreds of thousands to fend for themselves. The rich, with access to private healthcare, would be spared such barbarism. In Iran, a whole series of ministers, MPs and top officials received immediate treatment and are in recovery after being infected by the virus. Meanwhile, tens of thousands of ordinary people struggle to even get tested. In the tragic case of one nurse, her test result arrived a week after her death.
In Singapore, the whole population was provided with medical and safety equipment, such as masks. And in China, a series of hospitals were built immediately to deal with the situation, and tests were carried out on tens of thousands of people, even those without symptoms. In Britain, the government does not seem to have made any attempts to prepare for the disaster that is sure to come. Testing has gone down. Even people coming home from northern Italy and who have shown symptoms of the virus have not been able to get tested. Yesterday, Johnson had to admit that 10,000 people were probably infected already in the UK. Yet he refused to shut down large events and gatherings as has been done in Italy, and even in Scotland. He coldly stated that the public should prepare to “lose loved ones before their time.” As a one New York Times article headline aptly put it: ‘U.K. Shields Its Economy From the Virus, but Not Yet Its People’.
The cynical attitude of Prime Minister Boris Johnson was exposed in a recent interview where he was asked about how the disease could be dealt with. He casually mentioned, as an alternative, that “...perhaps you could take it on the chin, take it all in one go and allow the disease, as it were, to move through the population, without taking as many draconian measures.“ In other words, perhaps we could let thousands of people die without taking any serious measures, to ensure that business runs as usual. This fatalistic approach, which is shared by other countries, such as Sweden and the US, was implicitly criticised by the WHO, which are asking its member states to continue the attempt to contain the virus.
The cynical and Malthusian attitude of Boris Johnson reflects the views of the Tory establishment / Image: Socialist Appeal
No doubt, there is an element of Malthusianism in these comments, reflecting the rotten mindset of the ruling class. That is, the idea that poverty, wars and epidemics reflect the world’s overpopulation and that they are necessary to keep the population down. Jeremy Warner, a journalist with the Telegraph, wrote: “Not to put too fine a point on it, from an entirely disinterested economic perspective, the COVID-19 might even prove mildly beneficial in the long term by disproportionately culling elderly dependents.” So the thinking of the bourgeoisie is to let the disease pass through the population, “culling” as many as it can in one go. Then, Britain could come out of the recession faster than other countries, who are implementing more delaying measures.
The US healthcare system is particularly ill-equipped for what is to come. Millions of people without healthcare insurance could face horrible conditions. It is possible that the government will temporarily insure people in this situation. But this will not solve the problem with the decrepit healthcare system, which will struggle to deal with the levels of disease that await. The US system is only geared for one thing: to channel money into the pockets of big medical and pharmaceutical companies. It is not in a state to deal with a national disaster on the levels we expect to see.
In the last few weeks, no preparation has been carried out. Hospitals have no plan, no training has been provided, and equipment is sparse. The US Centre for Disease Control also refused to use the international standard coronavirus testing kits, developed in Germany, instead opting to develop its own tests from scratch. But this has been met by many problems, which means that the tests have been very late and that there are not nearly enough to go around. Furthermore, testing facilities are few and, as a result, retrieval procedures are extremely time-consuming. Hence, on 6 March, by which time South Korea had already carried out 140,000 tests, the US had only carried out 2,000! The result is that there is no clear overview of how many people actually have the disease in the US. No serious measures are taken to protect ordinary people from the health and the economic crisis. Yet, immediately after the crisis escalated, the US Federal Reserve injected $1.5 trillion dollars into the markets to safeguard big business.
The incompetence of the whole capitalist class and its institutions is on full display. Donald Trump seems to be completely aloof from the situation and all of his actions seem to be preparing an even worse disaster. In the end, this could lead to Trump’s downfall. Meanwhile, the call for free, nationalised healthcare could find a broad echo.
At each turn, the greed and rottenness of the ruling class will be revealed more and more. This pattern will be replicated throughout the world as the disease works its way from one country to another.
The task of the Marxists will be to expose the ruling class and the sham of national unity. We must show how the interests of the parasitic ruling class are diametrically opposed to those of the rest of society:
- Everywhere, we must raise the demand for the expropriation of all privatised healthcare institutions. The whole healthcare and pharmaceutical industry must immediately be nationalised under workers’ control in order to plan immediate and effective relief for all those who need it.
- The number of beds must be dramatically increased and, if necessary, new hospitals must immediately be set up – either by requisitioning and repurposing empty buildings such as hotels and the like, or by constructing new facilities from scratch.
- Unlimited sick pay must be guaranteed for all, and the casual workforce must be formalised immediately, or be guaranteed benefits amounting to a living wage for workers who have lost their jobs. Parents and carers should be provided with paid leave to look after children and those affected by the closure of schools, nurseries and so on.
- Strict price controls must be imposed on all necessary goods. Expropriation of factories capable of producing scarce hygiene products and medical equipment.
- All evictions and repossessions should be blocked. Empty homes being used as vehicles for speculation by the super-rich should be brought under public control to provide accommodation for the homeless.
- All non-essential production should be paused in affected areas in order to prevent the spread of the disease, with workers guaranteed full pay as long as businesses are closed. All public sector outsourcing must be immediately ended, with services brought in-house and their workers hired by the state, to ensure that they continue to receive their wages.
- Health and safety measures should be placed in the workplace for those required to work, with the costs borne by companies. If the bosses claim that the money isn’t there, then we must demand to open up the books.
- Such steps should be discussed and decided by the workers themselves, with shop stewards and elected workplace committees overseeing their implementation. If union presence is weak or nonexistent, then this is the opportunity to begin organising and demanding trade union recognition.
- The necessary resources to fight the pandemic cannot be found by increasing the budget deficit nor the national debt, which will be paid by the workers through austerity later on. An immediate levy on big business should be introduced. We must also raise the call for the nationalisation of the banks in order to direct resources to where they are needed, providing funding to households, small businesses, and sectors affected by the shutdown.
- Industries facing bankruptcy should be nationalised and put under the control of the working class, in order to protect workers’ jobs and livelihoods. And the idle wealth of the monopolies should be expropriated in order to fund the emergency measures required.
It is the task of the Marxists to draw attention to the inability of the capitalist class to take society forward. We must patiently explain that only the working class, by taking power into its own hands, can show a way out of this impasse.
A new period
What we are witnessing is the opening of a new period in world history. A period of crisis – of wars, revolutions and counter-revolutions. Like a boulder thrown into a pool of water, the effects of this crisis will create waves that will spread to every corner of the world. This will be the biggest dislocation of society since World War Two. Every regime will be thrown into turmoil, and the social, economic, diplomatic and military equilibrium will be destroyed.
As we have explained many times before, the ruling class never solved the contradictions that lead to the 2008 world economic crisis. Instead, they merely reinflated the bubble, which is now bursting again. At the same time, the pandemic will make the initial crash very steep and maintain a depressive effect on the economy for as much as two years. But when the pandemic ends, there will be no return to “normal”. The coming decade will be far more turbulent than the last.
Most importantly for Marxists, the consciousness of the masses will go through dramatic shifts. The process will be very similar to wartime situations. Crisis and mass unemployment will be on the order of the day. Draconian measures will be imposed on the working class.
In the first stage, the ruling class will attempt to stabilise the situation by appealing to national unity. The past period has eroded the authority of the establishment and its politicians. Nevertheless, many people will accept the new conditions because they will think that they are temporary, and necessary. Many will think that the state is acting in the interest of the nation. But gradually, it will become clear who is being asked to pay and whose interests are being protected. The masses will be asked to make more and more sacrifices for the ruling class. But there is a limit. Once this is reached, the apparent docility of today will be transformed into furious anger.
The basis for the transformation of consciousness will lie in the great events of the future. Events that will shake consciousness to its core and force it to re-evaluate all that stands. Everything taken for granted by ordinary people will change – from the smallest everyday habits to national norms and traditions. This will force the masses out of their inertia and onto the stage of world politics. Meanwhile, every part of the status quo will disintegrate and the masses will stand confronted by the naked barbarism of Capitalism.
Trotsky, writing about Britain in 1924, explained this process as it took place in World War One:
“It must not be forgotten that human consciousness, taken on the scale of society, is fearfully conservative and slow-moving. Only idealists imagine that the world is moved forward through the free initiative of human thought. In actual fact the thought of society or of a class does not take a single step forward except when there is extreme need to do so. Where it is at all possible, old familiar ideas are adapted to new facts. We speak frankly if we say that classes and peoples have hitherto not shown decisive initiative except when history has thrashed them with its heavy crop. Had things been different, would people have allowed the imperialist war to happen? After all, the war drew nearer under the eyes of everyone, like two trains hurtling towards each other along a single track. But the peoples remained silent, watched, waited and went on living their familiar, everyday, conservative lives. The fearful upheavals of the imperialist war were needed for certain changes to be introduced into consciousness and into social life. The working people of Russia overthrew Romanov, drove out the bourgeoisie and took power. In Germany they got rid of Hohenzollern but stopped half-way. The war was needed for these changes to take place, the war with its tens of millions of dead, wounded and maimed. What a clear proof this is of how conservative and slow to move is human thought, how stubbornly it clings to the past, to everything that is known, familiar, ancestral – until the next blow of the scourge.“
Already now, we see the first stages of this process. In Iran, revolutionary anger is everywhere. One tweet explaining the desperation of the people read: “My great uncle died two days ago due to the coronavirus. From the age of seven, with the death of his father, and until the age of 77, he was a worker. In the crisis that spread throughout Qom, he couldn’t stay at home, because he had to choose between bread and his life. This is the bitterest thought in my mind."
Yes, that is a very bitter thought, similar to thoughts going through the minds of millions of others. Thousands of people are dying for nothing but the greed and incompetence of the ruling class. The threat of the virus is the only thing holding the movement back. But that is only a delaying factor. Once the dust settles, the masses will start to move again.
This crisis is an accident, which has exposed the weaknesses of every capitalist regime on the planet. Further turmoil is on the horizon / Image: Pixinio
In Ecuador, Lenin Moreno has introduced an austerity package to deal with the effects of the crisis. This will almost certainly lead to new uprisings only months after the government was almost overthrown by a mass movement. Throughout the Arab Peninsula, the Arab Revolution was only halted by increasing welfare spending. But with the decline in oil prices that is not viable, austerity will be on the order of the day. In China, experts have said for years that a six percent GDP growth was necessary to prevent social unrest. Well, those figures are a thing of the past.
In Italy, a similar mood is developing. In particular, amongst those on the frontlines – doctors, nurses and other healthcare workers who are overburdened and who have to make up for the lack of resources given to them by the authorities. They cannot move at the moment due to the heavy burden on their shoulders. But they will not forget what they see either. When they get a chance to breathe, these layers will begin to move onto the offensive.
The advanced capitalist countries will not be spared. Here, the masses are entering the crisis, not after a period of growth and prosperity, but after more than 10 years of austerity and attacks following the 2008 crisis. Trust in the authorities and the establishment is already at an all-time low. The hoarding and lack of attention to safety directives in some areas are signs of this. And on top of this, instead of going back to pre-2008 levels of living standards, they will be served with mass unemployment and poverty unseen in the post-war period. This will force them onto the path of struggle.
In the course of the struggle, the working class will be transformed and with it, its leadership and organisations. In this process, many opportunities will open up for Marxists to gain an audience for our ideas – at first amongst the advanced layers, and later on amongst the mass of the working class. Our ideas are the only ones that can explain the events taking place today.
At every level, the disaster we are facing is a product of the capitalist system. From the destruction of the environment leading to an increase in epidemics; to the corroded pharmaceutical industry, which is only interested in investing in developing new drugs if these are potentially profitable; and to healthcare systems that have been subject to years of cuts, privatised and outsourced to the stage that they are unable to deal with any sudden changes. Furthermore, the ruling class and their lackeys in governments around the world have proven thoroughly incompetent to shore up defences against the disease. At each turn, their hesitancy to sacrifice any of their profits has allowed the epidemic to spread further. Under the guise of responding to the pandemic, they will attempt to lay the cost of the pandemic and the economic crisis on the shoulders of the working class.
The environment is in a parlous state, unprecedented numbers of floods and droughts are hitting various areas of the globe, and swarms of locusts are threatening the livelihood of tens of millions of people. Wars and civil wars are raging in Africa and the Middle East. One catastrophe after another is hitting our planet. But, this is not a second coming, as some might suspect. It is the death pangs of a system that has become a fetter on human society. The choice between socialism and barbarism could not be clearer. Capitalism is horror without end. But amidst its horror, it is forging its own gravedigger: the working class, which is leading behind it the poor and oppressed. Once the workers begin to move, no force on the planet will be able to stop them.