Coronavirus will not destroy neoliberalism – Only we can do that

By Lisbeth Latham

June 11, 2020 — Links International Journal of Socialist Renewal reposted from Irish Broad Left — Triumphalist comments about the end of capitalism or neoliberalism abounded in the aftermath of the global financial crisis in 2008, just as there are many people today who believe that the current crisis is the end of neoliberalism or capitalism.

Unfortunately, neoliberalism and – more importantly – the capitalist system will not just end of their own accord. Both, while prone to crisis, are extremely resilient, and are adept at turning their own crises into a rationale for deepening rather than reversing their dynamic.

It is not inevitable that the current crisis will see a strengthening of capitalism and its dominant ideological frame – they can both be defeated, but their defeat will not just happen. It will be the result of conscious resistance, not happenstance or luck.

Capitalism is prone to crisis. This tendency towards crisis, particularly in its late monopoly stage, is due to the ripening of a number of contradictions inherent to capitalism. However, capitalism is resilient as a system, and has demonstrated over more than a century that there is no crisis it can’t overcome if the working class is prepared (i.e, can be made) to pay the price.

Importantly, crises – particularly destructive crises – help to renew capitalism, sweeping away uncompetitive capital, and creating the space for a renewal of capital accumulation, however briefly. Destructive crises also enable a renewed assault on the rights of working people and on social spending that working people have won in previous struggles.

This is a central feature of the neoliberal offensive over the past five decades of its history: to seize every crisis, impose its own doctrine, smash working conditions, privatise the economy, and dismantle the welfare state, shifting government spending to prop up profits rather than support working communities.

Neoliberalism constitutes a political project aimed at weakening the political power of the working class, asserting the political power of the capitalist class and seeking to establish profitable avenues for capital investment¹.

Key features of neoliberal projects include:

• Facilitating the free movement of capital by removing barriers to capital investment and shattering trade barriers; 

• Increasing barriers to the movement of workers, which results in increasingly constrained rights and marginalisation for migrant workers (this includes open calls to movement being linked to migrants’ wealth);

• Prying open more aspects of social life for capital investment – privatisation and ownership of water, for example, exemplified by the 1999-2000 water wars in Cochabamba, Bolivia, between the community and the the Nestlé corporation;

• Opening government services to capitalist competition, whether through direct privatisation; corporatisation; ‘public-private partnerships’; access by government agencies or the introduction of ‘voucher systems’ to enable government subsidisation of the entry of private capital into the provision of social services; and at the same time, deregulating the cost of these services. This is often articulated in terms of enhancing consumer ‘choice’;

• Reduction in government social spending, primarily premised on the justification of the need to rein in deficits, although this has rarely been achieved. Throughout the neoliberal decades the US’s budget had regularly been in deficit. Instead spending reductions occur primarily as a consequence of declines in government income via the narrowing of the tax base to be more heavily reliant on working people, and a redirection of government spending away from social spending on the working class and the promotion of worker-funded retirement funds.

COVID response as a deepening of neoliberalism

As with the global financial crisis, the Covid-19 pandemic and its associated crisis has been described as the death knell of neoliberalism, if not capitalism. In particular, the massive government stimulus packages that have been enacted in many countries to prop up economies have been seen as a decisive shift in the outlook of these governments.

However, government spending is not necessarily in contradiction with neoliberalism. Moreover, as both Philip Mirowski and Naomi Klein have pointed out, neoliberals are adept at turning economic crises, which are clearly exacerbated by neoliberal policies, into opportunities to deepen neoliberal attacks. Neoliberal states, while ideologically promoting budgetary surpluses, have massive spending programs primarily aimed at subsiding capitalist profits.

While government responses to the Covid-19 pandemic have seen massive levels of spending on stimulus packages, this spending has overwhelmingly been directed at propping up profits. For example, wage subsidies are for the most part really a subsidy to business profits with mechanisms built in to allow stripping away of workers’ rights.

At the same time, the spending on stimulus has triggered widespread discussion among the media and establishment of the ‘dangers’ of government deficits and the need to limit the length of the stimulus packages, particularly subsidies, irrespective of the length and dynamics of the crisis.

In addition, there has been a discussion of the need to ‘pay’ for the response to the current crisis at the same time as enabling capital to recover and rebound. These calls lay the foundations for two parallel pushes. First, a move to further curtail social spending, most likely with an accompanying privatisation of public services, which will result in a both a massive increase in the cost of these services and a corresponding drop in quality. Secondly, a move to further reduce company taxes whilst shifting the burden of paying for government spending even more heavily into working people.

Building working-class power today

Given this trajectory, how do we build a better system – one in which workers lives are prioritised over profits? How do we build a world where nature is valued and protected?

While the call for the creation of socialism in the here and now is appealing, nowhere on the planet do working people have the level of organisation and confidence necessary to achieve this objective now. Instead, we must build the power and confidence of the working class as it exists today in defence of existing rights; in demanding steps forward, no matter how limited; in guaranteeing livelihoods, in the hope we can extend and expand them; and building the capacity to win more.

In the short term this means:

• Ensuring that working people, whether they are in employment or not, and whatever their residency/visa status, have liveable incomes; and

• Ensuring that all those workers engaged in employment have safe working conditions, which in the context of Covid-19 has never been more urgent.

In the medium to long term this will involve:

• The struggle to maintain liveable incomes, particularly for those on government pensions;

• Mass construction of energy efficient and high quality public housing;

• Massive reinvestment in the public health system both in terms of capacity and working conditions for the workers within it;

• Support for public research within the universities and independent research centres; and

• A just transitions across the economy to move away from fossil fuels and to transform the economy to one based on meeting human needs rather than constant growth, in order to draw down the atmospheric carbon dioxide.

It is not enough to simply call for a better world, it is necessary mobilise and struggle to achieve it. At the same time it is necessary to recognise that with the extent of the pandemic and the necessity for social distancing, in most industries and social sectors social mobilisation and industrial action will be extremely difficult.

Our immediate demands of both governments and capital are for action to ensure economic livelihoods, and to ensure that workers and communities are able to operate in as safe a way as possible. As the economy reopens, our ability to disrupt and mobilise will increase, as will our political horizons and demands.

Lisbeth Latham is a contributing editor of Irish Broad Left and blogs at Revitalising Labour. Follow her on Twitter @grumpenprol.