In matter of just a few weeks the novel coronavirus pandemic has demonstrated the argument for strong government intervention in economics to maintain society, as well as for nation states to cooperate in a spirit of solidarity and internationalism.
Over recent decades it has become fashionable among Western ideologues to dismiss the role of government as a “socialist” appendage impeding the efficiency of private capital and supposed free markets.
But with economies and businesses in turmoil over the global spread of Covid-19, what we are seeing with spectacular clarity is the essential role of governments and state intervention for maintaining stability and sustaining social order.
In the United States this week, the Congress signed off on a $2.2 trillion rescue plan for its economy and purportedly social welfare. The financial mobilization is reckoned to be the largest-ever in the history of the U.S. There are well-founded concerns that the rescue plan may boil down to another corporate bailout, while ordinary citizens and their needs are left largely neglected. The Trump administration is allocating $500 billion for propping up corporations. Some $50bn is earmarked for Boeing alone. President Trump brags (unrealistically) about the U.S. soon being “open for business”. If the U.S. gets back to business, it will have been because of the public treasury bailing out private capital. And therefore why shouldn’t public ownership of banks and corporations thereby prevail going forward?
The main point is, however, that the U.S., which claims to be a capitalist state par excellence, is providing a consummate lesson of how private capital would not survive without the full-blown intervention of the state and public finances. The coronavirus crisis is proving that principle yet again, as in many other past crises, such as the Great Depression of the 1930s and the aftermath of World War Two.
The impact of the disease is also demonstrating how states which have failed to properly fund public services, in particular health services, are vulnerable to worst effects. Arguably, the outbreak of this new coronavirus could have been far more adequately contained on a global scale if states had robust and publicly operated healthcare systems.
In Italy and Spain where public services have been decimated by years of economic austerity dictated by Neo-liberal capitalism, the spread of Covid-19 has been devastating. The lack of equipped hospitals and medical staff from years of chronic underfunding has exacerbated the impact of the disease, making Europe the epicenter of the pandemic. China and Russia have responded commendably to provide Italy and other European states with medical aid, thus demonstrating the vital importance of internationalist solidarity in times of crisis.
The U.S. is bracing for an explosion in infections and fatalities, where healthcare systems are even more fragile than in Europe due to capitalist economics.
China, where Covid-19 erupted in December but which has apparently been brought under control, has illustrated the efficiency and effectiveness of strong state intervention. The mobilization of the state was initially pooh-poohed by some Western liberals as Chinese communist “authoritarianism”. But who can object to the way President Xi and his government have efficiently dealt with the epidemic?
Western governments are now following suite with similar draconian policies of lockdown and public financing. Overnight, it seems, Western so-called capitalist states are taking on socialist measures in order to survive.
Nevertheless, the story of Covid-19 and its global consequences is still unfolding. There are dangers of states using the crisis as a cover for instrumenting malicious state controls over populations. A timely commentary this week by Cynthia Chung on this site warns of a creeping fascism under the guise of addressing a public health emergency.
Still, a much more positive outcome to the present challenge could be an opportunity for advancing democracy on a global scale, as argued by another of our writers this week, Matthew Ehret.
Ehret writes: “In the Chinese language, ‘crisis’ and ‘opportunity’ are expressed by the same word and this ironical dual meaning applies as much to today’s global crisis as anything else. The reason is that a race is being waged between those forces representing legitimate nation states of the world in defense of the people vs. those Malthusian technocrats who are committed to managing this crisis in defense of themselves.”
No doubt a crisis can proceed in several ways. In our present context, private capital and its state functionaries may exploit the situation to concentrate power over public and democratic needs. That outcome speaks of fascist dictatorship. One may be apprehensive of this outcome for states which have shown a systematic subservience to private capital, as has been the case in many Western nations. On the other hand, the moral of benign state intervention and a proper spirit of internationalist solidarity may win the day.
The vision of strong states acting in the service of greater public good and working in cooperation with other states on a mutual basis has been the hallmark of the multipolar worldview expressed by China, Russia and others. The Western view of “small government”, the imperative of private capital and unipolarism has been typical of the U.S. and its trans-Atlantic European partners. We may now see which model prevails.
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