Don’t be fooled. Government responses to the pandemic reflect economic and political priorities.
By Cyril Winstanley
This is the first of two articles looking at the state response to the coronavirus. The first part will look at the economic response and how it is ordered around the usual priorities of capitalism (Marshall Plan), and the second at new laws and policing, designed to increase the disciplinary powers of the state (Martial Law).
PART I: MARSHALL PLAN
Disciplining Disorderly Markets
On 18th March, the ECB governing council announced a 750 billion euro asset purchase programme “to counter the serious risks to the monetary policy transmission mechanism”. They issued a stern warning, saying that: “The ECB will not tolerate any risks to the smooth transmission of its monetary policy in all jurisdictions of the euro area”.
Not long after, the Bank of England set out their own asset purchase plan, pledging to prop up corporations and government by buying their debt to the tune of £645 billion, around 16% of annual British GDP. The Governor Andrew Bailey took up a similar, headmasterly tone to his continental counterparts, saying that the financial markets had been “bordering on disorderly”.
Having failed to step in to rescue people from years of austerity, wage stagnation, rapidly growing inequality and cuts in services, state institutions were quick to come to the rescue of the debt market. Even after years of persistent low economic growth, politicians, media pundits, finance and business closed ranks against Corbyn’s proposed social democracy on ideological grounds. Even the alternative prospect of a nationalism-fuelled withdrawal from the EU trading bloc was not enough to justify backing some wealth redistribution. It was reckless and irresponsible, we were repeatedly told, to be spending state money on people and public services. Never mind the fact that we were living in a wealthy country where food banks were popping up everywhere, homelessness was rife, regional disparities wider than ever and where (not insignificantly) the health system was badly underfunded, over-capacity, outsourced, bureaucratised, hierarchised and turned against its own founding principles by charging the sick if they didn’t have the right papers, and breaking its Hippocratic oath by divulging immigration status to the government. After a decade of austerity, the UK has 2.1. acute care beds per 1000 inhabitants, half the number per population of, for example, Hungary and Slovenia, much less than Germany’s 6 or Japan’s 7.8 beds per 1000. None of these huge structural problems could convince the capitalist class that the state needed to step in. In the face of a pandemic that brought business to a halt, however, the Bank of England revealed that there was a ‘magic money tree’ all along.
The Devil in the Detail: read the small print
Now a chorus of media sycophants sing the praises of Rishi Sunak for his headline decision to spend bundles of cash subsidising businesses but the small print is mainly ignored. The government promised employers that they would front 80% of the wage bill. “Historic”, “unprecedented”, “prime minister material” trumpeted the faithful journalists. Read the conditional clauses, however, and you will discover that the government will only be paying this money at some unspecified point in the future, and only if employers can ‘keep their nerve’ and not lay off their workforce in the interim. Tory-friendly consultancy company, Capital Economics, reckon there will be just 700,000 job losses. Deutsche Bank predict “millions”. The number of new claimants for Universal Credit (nearly 1 million in a fortnight) has been five times the number that were taking up Job Seekers Allowance during the peak of the 2008 financial crisis. If you happen to be a property owner, you can take some relief in the two month mortgage suspension. Hopefully you will have found work again once payments are due to restart, but certainly many will not. Businesses which can’t take the hit of reduced or no income can sign up for the Corona Business Loan scheme that is interest-free – but only for 12 months. Business VAT payments were also suspended, but, once again, only until the end of June.
Winchester college educated Sunak, and Old Etonian Boris Johnson, did not at first appear to have thought of the millions that this package didn’t help. Pushed by the clamouring voice of reality, they backtracked and came up with some more half-arsed solutions. Zero hour contract workers were to be paid according to the lottery of how many hours they worked in February. Self-employed workers (17% of the workforce in London), it was later decided, could claim based on an average of their last three years’ earnings, leaving hundreds of thousands of people who have only registered as such within that time period wondering what it meant for them, and everyone wondering what they will do until June when they can claim it. Those on Universal Credit (24% of the working age population before this crisis), more than half of whom are worse off than when they were on the old benefit system, can now claim an extra £83 a month for the next year. Many of the million plus new applicants will be hit by the notorious 5 week wait and will be forced to take an advance. Unlike for mortgage payments and interest on business loans, repayments of this advance have so far not been suspended. Those with savings will not be entitled to what turns out to be not so ‘universal’ a benefit after all. Those who have called this bailout package ‘socialist’ should take note that while all this is happening, landlords will once again be subsidised through the usual route of an increased housing benefit, helping prop up house prices and keeping renting unaffordable. More cost-efficient and humane suggestions of rent-suspension or direct payments to workers were, to use the word of the month, furloughed.
After all this is over, said Sunak, we will remember the ‘individual acts of kindness’ as NHS workers risk their lives with inadequate protection in over-capacity hospitals where management are obediently enforcing directives that unnecessarily endanger their staff. No doubt, the government will also remember the debts they are owed when they can start charging interest on them again. We are all in this together, say the Tories once again.
A Marshall Plan for Conglomerates
All this is to say that although the Tories have shown a willingness to use state spending to mitigate some of the economic disaster, we should be cautious about celebrating it as a left-wing, humane U-turn. Effectively, we have seen a Marshall Plan for the business sector. After World War II, Europe was economically devastated. The USA stepped in, needing Western Europe’s cooperation to assert and retain its political, economic and military pre-eminence in world affairs, especially in its growing rivalry with the USSR. Over the four years of the Marshall Plan, the USA poured $13 billion (equivalent to $140 billion in today’s money) into Europe to help state rebuild physically and economically. Thus, having helped finance Western European nation-state recovery, the USA were able, as Eric Hobsbawm describes it, to “dominate their international behaviour” (Age of Extremes: The Short Twentieth Century, 1914 – 1991, Eric Hobsbawm, Abacus Books, 1994; p241).
Are the economic effects of Corona Virus going to be so severe? The OECD admit that “we don’t know how long it’s going to take to fix unemployment and the closures of millions of small businesses: but it’s wishful thinking to talk about a quick recovery.” As in 2008 (with e.g. Northern Rock, the profitable parts of which eventually were sold to Virgin and the rest to the aptly named Cerberus Capital Management), the government will end up owning chunks of bankrupt businesses which will either go to conglomerates, hedge funds or asset strippers. This helps capital’s trend towards monopolies or oligopolies. How will, for example, pubs survive this shutdown? Will it just be Wetherspoons after all this is over? As with the original Marshall Plan, he who pays the piper calls the tune.
There Is An Alternative: Our Power in this Crisis
We must remember, however, that the concessions we have been granted in this short period have come from our pushback. Desperate to maintain some semblance of recognisable order, the government have been forced to think the unthinkable. The mirage of capitalist realism (There Is No Alternative) disappears in time of crisis and a whole load of other alternatives force their way into view. Before this crisis, calls for e.g. universal basic income, rent waivers, ending evictions, housing the homeless, pay rises for nurses and carers, releasing prisoners and immigration detainees, ending the exam system and compulsory schooling, were all considered outside the box of possible options. Now, some of these have been implemented in one form or another. All are being discussed in mainstream circles.
It was in the interests of capital that the UK government first chose ‘herd immunity’ as the best available model for dealing with a pandemic. This callous, ‘let die’ policy was meant to allow business to keep going. Once this was abandoned, the turnaround was blamed on us – the irresponsible children who just wouldn’t say “no” to the temptation of leaving the house. However, despite the ‘reality management’ of speech writers and propagandist media outlets, a lot of us will remember that it wasn’t us claiming that we should keep calm, shake hands with corona patients and carry on. The government’s “huge and unprecedented programme of support” started with the debt market, finance and business, and was only later extended (in its qualified way) to workers. Tory MPs clapped for the NHS but have still not given them adequate testing. Experience teaches us that the state will not benevolently grant more than is necessary to keep us from rioting. Prisoners trapped in places where they cannot be safe from the disease have already taken that approach.
We need to keep up the pressure and not be pacified into a Netflix fug, nor have our anger directed at our fellow citizen whose trips to the supermarket or jogs round the park are not the cause of the NHS crisis. Demands are gathering for a rent strike in challenge to the notion that the parasitic occupation of landlordism is somehow a sacrosanct social function. Before this year, ‘Mutual Aid’ was anarchist jargon, now anarchists are being interviewed on daytime TV shows and asked how did they ever come up with the idea of neighbours organising to help each other. Currently, despite the impossibility of air travel, the Home Office remains “committed to removing foreign national offenders or those who violate our immigration rules,” yet the barbarity of indefinite immigration detention is being challenged. Within a week of making that statement, 350 people were released from these “Immigration Removal Centres”, concessions were granted in terms of hygiene and there was a reduction in any new detentions.
For everyone, the pandemic is a chance to remake society in their image. We must not step back from our demands in favour of life and humanity and against death and inhumanity. It is no time to be complacent. As Naomi Klein made clear, the capitalist class is never shy of making use of a crisis. They will all too eagerly heed calls to cut aviation tax to help airlines (and help further pollute the planet) just as they have relaxed employment laws and competition so that supermarkets can work their drivers on longer shifts and club together to fix prices. The Trump administration has protected polluters by suspending the enforcement of environmental legislation. Certain corporations, such as Amazon, are turning record profits. Those that survive, indebted, will, as Critisticuffs points out, “have to produce economic successes to justify and pay off their new debt burden.” And this means “pressing more performance out of their employees at reduced costs, i.e. wages, to maximise profits.” The unemployed may find that the current so-called “generous” benefit system does not remain that way for long. Not only must we make demands, we must build our own support systems, our own relations and our own models of production and supply, based on what we need as humans not what capital needs to make profit.
But Marshall Plans are not the only way that state power is increased. There is also, of course, Martial Law.
