The pandemic of 2020 was conjured by an especially wily virus. Thanks to easy long-distance travel, the virus’ global spread was inevitable.
The virus was helped by spectacularly inept governmental response. Belated regional quarantines became common. More than anything, these lockdowns brought economies to a screeching halt: commerce reduced to bare essentials.
Plutocratic governments – such as the United States – ladled largesse to corporations; a relative few – not the US – also looked out for workers.
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The global economy is ultimately powered by consumer spending, which directly acts as the wellspring for roughly 2/3rds of economic activity. Consumer spending is possible because consumers have money to spend – which, for the masses, means working a job. The 1930s Great Depression lasted for nearly a decade because of extensive long-term unemployment owing to lack of confidence by businessmen.
The engine of capitalism is confidence; its fuel: optimism. To restart that engine, employers must start hiring.
In the US, every downturn since the 1970s has seen fewer well-paying jobs emerge in the subsequent recovery. So it was after the 2008 recession, when less than half of the jobs that came back paid as well as they had in 2007.
This “wageless” recovery has been a continuing trend. 94% of the 10 million new jobs in the US 2005–2015 were either temporary or contract-based, not the traditional salaried positions with fatter compensation.
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After the viral outbreaks subside, the question is not so much how to get people back to work but when people will feel “normal” again so they are willing to spend. Mass psychology has to shift from loss to optimism. That transition may take years, even if jobs bounce back – which they won’t in nations which do not subsidize small businesses and provide financial relief cushions to workers.
After the pandemic, caution will be the byword. Relying upon return of the “animal spirits” which propel the market system will only prolong the economic malaise for the masses.
Interest rates have been at historic lows since the 2008 recession, thanks to subdued inflation. In the wake of covid-19, governments around the world printed money to offset the economic collapse they perpetrated with their useless lockdowns.
The bill is likely to come due for ill governance. As demand picks up, producers are likely to raise prices, both from spot shortages of raw materials and to recoup their losses from the economic shutdown. Central banks may find scant choice but to raise interest rates to subdue the beast of nascent inflation.
Higher interest rates will dampen enthusiasm for borrowing money, and so impede economic recovery. Debt burdens will force companies to cut costs somewhere else. With a sizable surfeit of labor, wages will suffer, slowing economic revival.
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Continuing with capitalism is not just an economic dead-end, it’s assured self-extinction. Extreme weather events are making stronger economic impacts every year. Such harbingers of impending doom can only grow in frequency and intensity.
What the pandemic made plain is that an economy can be planned and run cooperatively. The waste and pollution inherent in capitalism can be overcome.
Contrastingly, the American experience under Donald Trump in dealing with its epidemic showed that commitment to capitalist profiteering works against societal well-being.
Anglo French financier and tycoon James Goldsmith sagely observed that “we have forgotten that the economy is a tool to serve the needs of society and not the reverse. The ultimate purpose of the economy is to create prosperity with stability.”
The obscene level of pollution that industrialized capitalism generates can also be controlled. Einstein lamented 7 decades ago, “it has become appallingly obvious that our technology has exceeded our humanity.”
Modern capitalism is a warped, emotional economic system. The collective mood of those with financial capital promotes an inequitable distribution of wealth. Socialism is a rational economic system: the will to cooperate determines society’s well-being.
The pandemic proved how fragile the capitalist system is, and how trust is an essential ingredient for societies to function well. Capitalism is a con game that relies on overconsumption and environmental destruction for its trickle-down prosperity to work. If capitalism continues, humanity has less than a century before civilization collapses from calamities caused by overexploitation and climate change.
If instead a sensible socialism is installed, the human race may repudiate its inequitable past and position itself to survive the rape of Nature which industrialized capitalism wrought.
If humanity cannot start to make intelligent economic choices, then the self-extinction event rushing towards us is a just outcome.