The Capitalism Virus — Etymology of an Epidemic

capitalism and climate change cartoon

Five months into the pandemic, it is evident that the government is in denial. The political rhetoric is harking back a failed status quoism, with grand delusions of recovery. Rather than call for a complete reset and reconfiguration of the prevailing order, the Indian government’s approach to tackling the pandemic betrays an overwhelming faith in business-as-usual. The economic fallouts of the pandemic have prompted several questions. What does the response to COVID-19 say about the state’s vision for the economy, in general? What does it reveal about the material basis of policy, and the interests that state actions invariably promote?

The steady state of crisis capitalism

“Unless the government takes proactive measures, we are falling off a cliff,” warned Jayati Ghosh, two months into the crisis, and today, it seems that the government’s actions have done everything to accelerate this fall. The pandemic, however, is merely the spark that lit the powder keg. Underlying its origins are structural causes of the capitalist neo-liberal order. In addressing COVID-19, the Government of India has acted entirely in cahoots with big capital, reposing unflinching faith in the illusory equilibrium driven ostensibly by market forces. This, even as the pandemic has revealed the deep fault-lines that go back to a broken system.

The economic crises that nation states are witnessing is a function of the pre-COVID capitalist order. The massive unemployment, disruptions in supply chains and soaring debt are not produced by the pandemic; they are directly attributable to the crisis-prone nature intrinsic to capitalism. As Harvey argues, the approach adopted by the government in addressing any crisis, dictates the nature of the next. The flexible monetary policy measures employed to rectify the 2008 financial crisis enabled the capitalist class to borrow at nearly zero percent interest rates, creating inflationary pressures in the economy. Prices in stock markets surged far above their real economic values, while simultaneously inequality burgeoned. The pandemic was the proverbial straw of an unsustainable economic order, an expression of the inherent vulnerabilities of the system.

The effect of this current crisis however, is going to be far more acute than previous recessions, given the combined collapse in supply and demand. Shortage of raw materials is likely to result in cost push inflation. Supply chains are already being disrupted by the shut down of factories and increasing unemployment. Escalating economic inequality and decreasing consumption on the other hand are adversely impacting aggregate demand. Goldman Sachs estimates that India will experience its gravest recession yet.

Coronacapitalism – mutations of the status quo

Originally, the year 2020 was projected to witness a decline in poverty, with 14 million individuals rising above the poverty line. But the pandemic has set us back ruinously; the revised figure hypothesises that a lower limit of 8.8 million additional individuals will find themselves in working poverty. With respect to India, the 6.1 % unemployment figure from 2017-18, the highest in 45 years, seems like good news in comparison to what we can now expect. By the end of April 2020, 140 million workers had lost their jobs, and 27% of the workforce had been rendered unemployed. The central government’s deliberate policy of non-intervention to support workers in the informal economy has enlarged the reserve army of labour. It has ensured that wages are depressed, and the working population, kept in check. Strengthening the interests of the bourgeoisie at the peril of the proletariat, the government’s response to the pandemic dangerously, albeit unsurprisingly, embraces yet again, the heady logic of capital.

In the initial days, when the lockdown led to a cascading impact on the economy, with real estate, aviation, tourism and micro, small and medium enterprises bearing the brunt of the recession, the Confederation of Indian Industry met with the labour minister, Santosh Gangwar, insisting that the government orders workers to resume production. They further argued that in the event that workers refuse to return to the workplace, they should be held liable under the Industrial Disputes Act. In Karnataka, after consulting the cement lobby (anxious about an imminent demand shock), Chief Minister, Yediyurappa, cancelled trains that were to transport migrants back to their villages. Evidently, when it is labour alone that adds value to the production process, capitalists in collusion with the government are eager to go to any lengths to deprive workers of the right to withdraw their labour power, even when in duress. This marks a return to corvee labour or forced labour, which characterises feudal societies. The pandemic has simply and starkly dispelled the smokescreen of capitalist ideology, underlining how rather than the inventiveness and organisational capabilities of capitalist entrepreneurs, it is labour that is required for the production of commodities and extraction of surplus.

The humanitarian crisis wrought by the pandemic has been exacerbated by the government’s callous economic decisions. Research conducted by SWAN in April 2020 indicated that 92% of migrant labourers had not received rations from the government. India is slated to join some of the world’s poorest countries adding to the projected numbers of hunger deaths owing to the pandemic. The government is yet to universalise the public distribution system, though the Food Corporation of India’s godowns hold 98 million tonnes of wheat and rice. Instead, it has sought to covert the surplus grain to ethanol, in order to blend it with petrol. A central question of economics is regarding the distribution of scarce resources. Given this, the government’s policy measures have resulted in allocative inefficiency, with the interests of the working population being summarily dismissed. As, Sanjeev Sharma, a taxi driver, said in the early days of the virus, “Some people will die of the virus. The rest of us will die of hunger”.

Nivedita Menon has coined the term ‘Coronacapitalism’ to refer to how in the course of the pandemic, the state has entirely been subordinated to the interests of the bourgeoisie. The economic package announced by the Modi government attests to this, with deregulation and pro-free market reforms being implemented in all sectors of the economy. Agricultural markets have been opened up, with the removal of laws governing the prices and stocks of produce. This will lead to greater centralisation of capital, with powerful traders establishing monopolies and foreign companies crushing local farmers. Additionally, Madhya Pradesh, Assam and Gujarat have amended labour laws, eroding the paltry protection workers possessed. These labour reforms deny workers the right to toilet breaks, ventilation, protective equipment, weekly holidays and disallow the formation of trade unions. The bourgeoisie, it seems, has waged a class war against the proletariat, denying them of their basic entitlements in order to increase the rate of accumulation.

The government’s assumption that capital will flock to India due to its weak labour laws is empirically flawed. Foreign investment exiting China has largely flown into Vietnam and Thailand; countries which have more robust labour laws. As economists critical of the neo-liberal paradigm argue, the Indian government should have adopted a Keynesian model and implemented expansionary fiscal policies. Rather than adopting a policy of decisive intervention, the government’s response to the crisis has been dictated by the whims of capital.

How inequalities have shaped the cartography of COVID

In a society that is deeply stratified, the adverse socio-economic outcomes of the pandemic are bound to disproportionately affect marginalised social groups. Women workers are more likely to be dismissed and to suffer pay cuts. Women constitute the reserve army, forced out of labour markets during periods of economic slowdown. Like gender, caste too is relevant in tracing the contours of the crisis. The leisure industry was instrumental in pumping demand into the economy post the 2008 financial crisis, thereby salvaging capitalism. However, today, the norm of social distancing is leading to ‘COVID Brahminism’, institutionalising caste hierarchies and legitimising practices of untouchability through registers of hygiene. Restaurant businesses – desperate as they are – want to win back consumers through bio-surveillance of delivery boys and kitchen staff. Your home-delivered pizza bill now has details of body temperatures of workers, a perverse state of transparency that applies to those condemned to everyday struggle by our class-caste structures.

The development divides of the world mean that some countries are going to be affected by the pandemic far more severely than others. The United States can restore its own economy, as the sole holder of the world’s reserve currency. Developed nations are also able to adopt sizeable fiscal packages, with Japan spending 20% of its GDP in addressing the crisis. On the other hand, developing nations are confronted by depreciation, capital flight and falling remittances. Significantly, their ability to adopt expansionary measures is circumscribed due to their fear of exclusion from the international market. Thus, contrary to assumptions that the virus doesn’t discriminate, the economic fallout of the pandemic manifests in a profoundly unequal manner.

The COVID crisis has lifted the curtains, revealing the exploitative underpinnings of the current socio-economic order. It is a wake up call for an alternate economic system that is equitable and caters to the interests of the working class rather than to the minuscule section that owns the means of production. Unprecedented times call for unprecedented measures, and capital’s impulse to colonise must be reined in boldly and unequivocally. A blatantly class collaborationist line of government policy is bound to push the dispossessed majority off the cliff, with the capitalist class rejoicing in the bountiful panorama of renewed accumulation.

Amulya Anita Gurumurthy is a student of law



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