Socialist Studies Socialist Studies

Pandemics, Economic crises and the Unacceptable face of Capitalism

Global Pandemics

During the recent global pandemic, the government was forced to close-down substantial areas of the economy to prevent a woefully under-resourced health service from collapsing. This action precipitated bankruptcies and high levels of unemployment. We were told that this was not an ordinary economic crisis but a crisis "exogenous" to capitalism.

Recall, though, what was happening to the economy prior to the pandemic? Capitalism was teetering on the edge of an economic crisis prior to the Covid-19 outbreak. Here is one media report at the beginning of 2019. Under the banner headline "Pessimists are predicting a global crash in 2020. You can see why", the GUARDIAN's economics editor Philip Inman wrote:

"The International Monetary Fund leads a group of gloomy forecasters that worry about the stability of the global economy amid rising debt levels and slowing GDP growth. How long, they ask, can the expansion seen since the last crash go on before another recession hits?

And if a global recession is pushed further into the future by even larger dollops of borrowed money from the financial system, will the next recession quickly become a crash of similar or even larger proportions than the one seen in 2008?
" (5 January 2019).

Of course, the GUARDIAN could explain why capitalism was on the verge of an economic crisis. They reject Marx's explanation of an economic crisis being caused by the anarchy of commodity production and exchange for profit.

Reformers believe capitalism can be changed for the better, that the problems' caused by the profit system can be resolved by economic policies. Yet, neither the Keynesianism favoured by the GUARDIAN, Monetarism policies favoured by previous Thatcher and Major governments or the laissez faire economic liberalism favoured by all governments since, have managed to prevent economic crises and trade depressions.

At the time, thousands of so-called 'zombie companies' were only being kept alive by low interest rates and cheap borrowing. These companies were no longer profitable. It would not take much to push them over the cliff. They could not sell sufficient commodities, make a profit and re-invest capital to make more profit. They could only exist because of a credit life-line to the banks through extra credit or the rescheduling of their debts.

Take, as an example, Sir Philip Green's Arcadia. The clothing retail group found that it could no longer finance the debt of the company when talks with potential lenders for a £30m loan failed.

Arcadia blamed the pandemic but the company had long been uncompetitive and unable to meet the challenge of on-line only retailers such as Asos, Boohoo and Pretty Little Thing. These companies sold more commodities at a cheaper price than Arcadia.

As Marx noted, with companies desperately in search of money:

"We see then, commodities are in love with money, but the course of true love never did run smooth"
(CAPITAL: VO. I, Ch. 3, Section 2, page 121).

The collapse of arcadia in December 2020 put 13,000 jobs at risk but no risk to Sir Philip Green's wealth held in his wife's name in the tax haven of Monaco.

' The last thing on his mind will be to sort out the pension scheme of 13,000 former employees. Labour's shadow business secretary, Ed Miliband, believes that Green owes a "moral duty" to his former workers. He went on to say: "The worker's at Arcadia should not pay the price of Philip Green's greed" When has capitalism had anything to do with morality? And under capitalism "greed is good. Capitalism is a highly competitive dog-eat-dog social system where profit is the only consideration.

According to the TIMES RICH LIST, Phillip Green has wealth of some £1.05bn. Most of his assets are owned by his wife. He can spend millions on his yacht, forget his troubles and relax with a long cool drink as he disappears, with his life-style intact, into the sunset.

Sir Phillip Green is supposed to be the 'unacceptable face of capitalism' Well, there is no acceptable face of capitalism. All capitalists exploit the working class. Workers are paid less in the value of their wages than the total amount of social wealth they create.

Under pain of competition all capitalists have to extract, what Marx called "surplus value" from the working class. All capitalists live off the unearned income of rent, interest and profit. And they can live a life of luxury because they own the means of production and distribution to the exclusion of the rest of society.

To get rid of capitalism requires the political and democratic action of the majority working class having been persuaded that socialism is the only answer to the economic and social problems they face as a class. Until then, the Philip Greens’ of the world will continue to ride roughshod over their lives.

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