World and British politics, Part 1 - Coronavirus, the United States and imperialist conflicts
By Simon Korner
The coronavirus has shown up capitalism’s inability to protect people, in particular the working class. There is nothing new about that, as the Marmot report (1) showed, but now it’s become increasingly visible: double the death rate from Covid-19 in deprived areas; transport, construction and health workers amongst the worst hit, that is, essential workers, or those who couldn’t work from home; 20% of children going hungry here, and in the US, resulting in huge foodbank queues.
The drive to lift the lockdown early has been a form of class war, at its most extreme consisting of armed right-wing mobs in Michigan railing against the ‘communist’ stay at home order. While in the UK the Tories’ barely concealed herd immunity strategy has shown deliberate disregard for the vulnerable.
The supposedly nimble and efficient free market couldn’t handle the catastrophe or distribute lifesaving goods because the drive for profits came before the common good. The outsourcing and hollowing out of the British state’s capacity to provide necessary services meant that, even forewarned by Exercise Cygnus (2), Britain failed dismally. As with the Grenfell disaster, arms-length management, corrupt profiteering and cover-up have proved deadly. And because our whole manufacturing base has been shrunk, we suffered a strategic failure to produce what we needed. Movianto, the American-owned company running the NHS supply of PPE, was sold in the middle of the pandemic, causing chaos. Deloitte, in charge of testing also failed dismally, as did the outsourced 111 helpline.
The more parasitic and neoliberal the capitalist state, the worse they have dealt with the epidemic: the US and UK have been the worst, along with Brazil. China was the best – able to mobilise its society, with broad popular consent. In the London Review of Books (April 16, 2020) a Chinese intellectual complained that pro-western liberals in China were finding it very hard now to argue that the US was the better society. The WHO described China’s efforts as “the most ambitious, agile, and aggressive disease containment effort in history”. Kerala and Vietnam have been other success stories. Historically, it was the young USSR, facing the Spanish Flu, that established the world’s first centralised healthcare system. Other capitalist states also handled the epidemic better: South Korea having learnt from its SARS experience, as well as Germany – with a less Thatcherised economy and society.
RULING CLASS TACTICS
How did the ruling class deal with the crisis? Initially, by hiding behind the science – as if science stood above society.
Second, by lying, and using a compliant media to amplify the lies. The BBC with its Reithian bias (remember it sided against the workers during the General Strike), and all the commercial mainstream outlets, have been openly propagandistic, their role as ideological arms of the state increasingly clear. Meanwhile, statistics have been manipulated, with the real UK death rate of 65,000 consistently undercounted and coroners ordered to exclude lack of PPE from inquests into the deaths of NHS staff.
A third tactic has been to blame China – part of a concerted international propaganda campaign to hold back China’s development. Trump said of the outbreak: "We went through the worst attack we've ever had on our country…This is worse than Pearl Harbor.” In the US election campaign, Biden is outdoing the Republicans in his sinophobia. China’s health silk road is derided as political manoeuvring. The WHO gets blamed too – and defunded by Trump for being too close to China. The public in Britain are being fed enemy images – by both Tories and Labour (led by Lisa Nandy) – and recruited for a new Cold War over Hong Kong’s security law and the Uighurs, and it’s working.
A fourth ruling class tactic has been to increase mass surveillance. The NHS now has to pass data from its IT systems to GCHQ, after the agency was granted extra powers. The unsafeguarded – now abandoned – tracing app would have collected individualised data permanently, with the US and British data-harvesting companies rubbing their hands. Despite its failure, at least £12 million has been paid out to companies including Faculty, run by Marc Warner and his data scientist brother Ben Warner, who served on the purportedly independent SAGE committee along with family friend Dominic Cummings.
We’re facing a recession worse than the great Depression, with the economy still hobbled by the 2008 crash. The IMF predicts a $9 trillion loss of GDP globally next year – bigger than the combined economies of Japan and Germany. The eurozone economy shrank by the largest amount on record this quarter. Fitch Ratings has downgraded Italy’s credit rating to just one notch above junk status.
Ownership patterns are changing as big corporations take over thousands of bankrupt companies, aided by government. In America, 40% of small businesses are set to fold over the next few months. Grace Blakeley calls this process Amazonification. In concrete terms this meant Jeff Bezos’s net worth rose by $25 billion between January and April. The normal tendency towards monopoly is accelerating. This is most pronounced with the tech companies (‘platform capitalism’) whose apps, homeworking tools and data harvesting are increasing their power massively. Google has been asked by New York governor Cuomo to take over government functions like tele-healthcare, remote learning and so on. Such increased monopolisation will in turn exacerbate tensions between nations, and eventually lead to war.
To save capitalism from itself, conventional spending constraints have been jettisoned. This sounds good to liberal ears – unprecedented bailouts of $2.2 trillion in USA and £350 billion in the UK. But the distribution pattern reveals the class lines: landlords given mortgage holidays but not made to pass them on to tenants. Banks underwritten by loan guarantees, but refusing credit to struggling businesses. Small businesses unable to access help while big business gets billions from the furlough scheme.
Still, the scale of its spending presents a real problem for capitalism: how to undo the emergency social policies and ensure the money gets repaid – to them. It’s a dangerous moment for the system, with growing public awareness of its callousness and incompetence. It’s now more obvious that it is workers who produce the wealth – and that when they stop, wealth is not produced. And, as the worst famine since World War 2 hits the Global South, with Oxfam forecasting 265 million people starving by the end of the year, it’ll be clearer than ever that immiseration is systemic.
Objectively, there are many factors in favour of an upsurge in class struggle. Hence the Financial Times advocacy of more social democracy and Boris Johnson’s ‘promise’ of no more austerity. On the other hand, subjectively, there has been muted public resistance.
The global crisis has hit the oil price badly. US fracking had already flooded the world markets, pushing energy prices downwards. But with Covid-19, demand for oil virtually stopped, affecting US oil regions badly, plus the Gulf, Angola, Iraq and Iran. The glut meant storage prices soared. Exxon made a loss in the first quarter of this year. Shell has cut dividends by 65%. What Trump once called “energy dominance” came to look like weakness – he had to bail out the oil companies by buying oil for the US strategic reserve. So much for small government. The climate change-denying oil companies began calling for oil to be kept in the ground. But when Trump threatened Iran in the Straits of Hormuz in April, the oil price rose 21%. A war shutting the Straits would solve the oil price problem at a stroke. And redirect public anger. But it would also endanger the Gulf monarchies – which are struggling with the loss of their oil revenue, and which would become an Iranian target in a war.
The global recession will increase the dollar’s dominance. The Fed, the US central bank, has been allowed to issue unlimited money, which means it can dictate which US companies survive and which do not, and do that internationally too. With the dollar as the currency for over 80% of international trade, the US can seriously damage its imperialist rivals, and come out of the global depression ahead. Beyond the West, with over 90 countries needing bailouts from the IMF, and 60 seeking World Bank programmes, and with the US controlling the purse-strings, America will emerge even more dominant.
Even if all the IMF and World Bank resources were used to ease the global crisis, their combined $1.2 trillion isn’t enough. There’s $11.9 trillion of US denominated debt globally – apart from debt in the form of Eurodollars. Trump will therefore use the dollar as a weapon to intensify trade wars against China and Russia. China will resist, and attract new allies into its orbit, but is not yet wealthy enough to act as world banker – its GDP was $14 trillion last year, whereas the US’s GDP was $21 trillion – and China’s GDP per capita is four times lower. So while the US is withdrawing from many world institutions and treaties – a dangerous move for world stability and peace – China is not ready to take over. In other words, we’re not yet in a truly multipolar world. Meanwhile, Russia will try and expand its East Asian Economic Union and seek to attract failing Euro economies.
Overall, the world financial system could start to fragment – with the US gaining greater power, but over a hugely diminished global economy, and with China well-placed to move ahead. China’s aim is to turn the accelerating US trade war into US self-isolation. Costas Lapavitsas points out that China’s response to Covid was public investment in state industry whereas the US and EU issued cheap loans and wage support, short term fixes that are basically useless because “businesses hoard liquidity”.
Globalisation could partially go into reverse – we may see a return of industry to domestic markets, and some of the complex just-in-time supply chains broken. Nationalism is rising as individual countries defend their own capitalist classes. We saw how quickly a beggar-thy-neighbour attitude arose when early in the crisis the US pirated ventilators meant for Germany and, more recently, when it monopolised supplies of the life-saving drug Remdesivir – pointing to the larger underlying inter-imperialist tensions: over the US imposing its Iran sanctions on Europe; over Germany buying Russian energy via the Nord Stream pipeline; and over Germany’s close ties with China. Former German Chancellor Schröder condemned proposed US sanctions against Nord Stream as the “deliberate termination of the transatlantic partnership.” Foreign Affairs, the American establishment mouthpiece, says all the signs “herald the emergence of a less cooperative and more fragile international system”.
Not just US-European rivalry, but rivalries within the EU have intensified. Italy, the third biggest eurozone economy, represents a major problem for the EU. Germany and the Netherlands have stuck to their hard-line anti-fiscal union policy, with Germany leaning on the European Central Bank not to bail out Italy and Spain with Eurobonds. While Germany’s wealth and health system are built on cheap European labour, its capitalist class is extremely reluctant to make sacrifices to help southern Europe, even while its industry has taken half the total EU state aid since restrictions on it were lifted in March. It’s unsurprising that euroscepticism has been rising in Italy. The EU eventually did give emergency aid to Italy and Spain of £500 billion, and Germany reluctantly agreed a further one-off £500 billion, driven by French pressure, the fear of Italy and other periphery countries defaulting, and the threat of the US cashing in on a resulting eurozone crash. But none of this aid transfers debt from individual countries to the EU, the way a Eurobond would do, so it won’t soften austerity.
Cracks are also deepening within NATO. One example is the war in Libya, where the former colonial masters Italy and Turkey are on one side, facing France and Greece on the other. The dispute extends to who gets to exploit the eastern Mediterranean energy fields, drawing in Israel and Egypt.
Tensions have increased within countries too. In the US early on in the crisis, the White House redirected PPE supplies destined for individual states to private companies for sale, forcing states to bid against each other. Here, England pushed for an early opening up of the lockdown, while other nations delayed. Wales refused Covid bailouts for companies based in tax havens. Support for Scottish independence has risen. Are constitutional settlements coming under strain?
The second part of this article looks at the UK and its future, as well as the class struggle within the country.
(1) The epidemic of poverty – killing before coronavirus, Korner, S. The Socialist Correspondent, Issue 37 Summer 2020
(2) Exercise Cygnus was a 2016 pandemic simulation exercise carried out by NHS England.
The more parasitic and neoliberal the capitalist state, the worse they have dealt with the epidemic: the US and UK have been the worst, along with Brazil.