Reflections on the Coronavirus and Economic Crises

A much expanded update to the article we previously published here:

For now we’ll leave aside questions — such as how much about the virus is fake news or the conspiracy theories that are circulating in the ether about its origins in genetic engineering, or the possibility that American or Chinese laboratories, by mistake or on purpose, released the "royal crown" and all the consequences that would have for international imperialism — since there are a couple of things we feel compelled to say.

First of all, as a sine qua non, the multifaceted break between the capitalist productive form and the world of nature must be flagged up and severely criticised. The phenomenon is certainly not new, it has existed for at least a couple of centuries, but never has it demonstrated all its devastating destructiveness as in the present period. The much-vaunted development in production has consisted of: increased output, technological innovation, producing more in less time and at lower cost, etc. Yet under the capitalist regime all this "progress" means greater riches for the ruling class and increasing poverty for huge numbers of working people. That same "progress", instead of promoting — through the development of the productive forces — free time to devote to a better quality of life, has imposed greater unemployment, the lengthening of the working day, greater exploitation, hunger wages for the overwhelming majority of workers and a progressive impoverishment of society. On the other hand, the search for maximum profit, made more difficult in recent times by the increasing difficulty of valorising capital as a consequence of the fall in the average rate of profit, has also ended up heavily affecting the relationship between society and nature. The increasing imbalance is having disruptive effects at all levels, from ecologically unsustainable pollution to deforestation. From intensive farms to the pandemics of the past thirty years. Organic waste from chemical production, or generically industrial waste, has polluted aquifers in the four corners of the world, handing over the duty of transporting and discharging the — sometimes radioactive — material to an appointed mafia. This is making the cultivation of vegetables and fruit from those areas dangerous, not to mention the dairy farms which use those waters and thus products such as milk and cheese. At the root of the phenomenon is the need on the part of producers (i.e. capitalists) to save on disposal costs, who thus discharge the consequences of their criminal behaviour onto the rest of the population.

Cutting down trees in the world’s rainforests, the real oxygen producers, is exclusively a function of the profit motive of the landowners (cultivation of corn, soybean rye, etc.) and cattle farmers, and this has two heavily negative effects. The first is the destruction of a balanced ecosystem, with the result that some animals, natural carriers of viruses, are forced to change their habits and invade other habitats in order to survive in a natural environment that is no longer their own. Thus these viruses reach the anthropised (human dominated) environment, preying on it, and — through the food chain — reach the human organism and infect it. If the traumatic environmental jump involves a prolonged contact with human societies, the "new" bacteria and viruses can become the trigger of a deadly infectious cycle, an inexorable process triggered by deforestation and the rupture of the ecosystem. Hence the easy connection between economic interests, the traumatic eco-environmental mutation and the spread of viruses which capitalism does not produce but which it is unable to fully control, thus favouring its spread.

Climate warming and glaciations are natural and cyclical phenomena, but when the "virus" of profit interacts with these spontaneous processes of the evolution of nature, the effects are increased tenfold and exacerbated, very often in a shameful and uncontrollable way. Greenhouse gas emissions and the holes in the ozone layer, which allow the sun's rays to penetrate the atmosphere until it overheats it by more than two degrees, have the immediate effect of melting age-old glaciers. In addition to the rising water levels which have serious consequences for the previous ecosystem, bacteria and viruses which could be lethal can emerge and come back to life. On this issue, around twenty International Symposiums have been held to contain the negative effects of these phenomena on humans. With zero results. Clearly, the fear of climate change has been significantly less than the rapaciousness of the capitalist interests which provoked it. In the clash between "noble" declarations and the pressure of international capitalist interests, there has been no contest: the latter has won.

The same applies to intensive breeding, especially of cattle, which are fattened up by growth hormones, by meat and/or fish-based fodder and by that transgenic maize which comes to a large extent from the deforestation of the "green lungs" of the world. These factors contribute to the production of methane emissions, overheating and air pollution. In addition, intensive farming involves the administration of antibiotics, pesticides and, at its most extreme, anabolic substances that end up on the tables of human consumers who are unaware of what they are forced to eat. In addition, the incredible waste of water that these intensive cattle farms require must also be noted. A total of 12,000 litres of water are needed to produce a one-kilogram steak. Not to mention the various genetic modifications (required to pass through hybridisations) of intensively farmed animals which, always in the name of profit, must be heavier (to sell more meat), must produce more and more milk. (In a few generations cows that spontaneously produced 18 litres of milk per day, have been bred to produce 35 litres with a maximum peak of 40). If then someone remarks on the intensive breeding of chickens, or remembers the cloning experiments of Dolly the sheep and the genetic experiments on mad cows, and the dangerous experiments that led to bovine meningitis, we have squared the circle of a perverse path which is always accompanied by the disturbing presence of the god profit. It is true that today breeding conditions are much better than before. Cattle are generally kept in cleaner conditions. But, paradoxically, it is precisely the use of chemically conflicting molecules which can force some bacteria or viruses to find ways to resist sanitising treatments by means of genetic mutation, and then to spread, via food, within the human environment, with the consequences we know. (This is without taking into account the numerous "deviations" from the most trivial animal safety rules because they are too expensive.)

Thus also, in the vast areas where animals are industrially reared, extended tracts of land, groundwater and surface water are polluted with their sewage, which also involves releasing methane and other greenhouse gases into the air. Similarly, in the huge spaces dedicated to intensive arable farming, as in the plains of Brazil, Argentina, the USA and Australia, most of the agricultural zones are occupied by genetically modified agricultural monocultures of corn and soybeans, on land stolen from traditional farmers, polluting the soil and contributing to global warming. The impressive fact is that, in pursuit of the usual profit, modern intensive farming has exponentially expanded the number of cattle by multiplying all the harmful effects that we have just mentioned. It is estimated that the number of animals raised in the world increased from 7 billion in 1970 to over 24 billion in 2011 (FAO data), though the latest data suggest that the figure has now almost doubled.

Let’s conclude with the largest business in the world, the one that has triggered civil strife, international tensions and wars for decades. The one that is leading the world towards its own destruction, namely oil and all its derivatives (plastic), like coal and all fuels produced from non-renewable sources. Their colossal consumption has transformed the atmosphere of industrial centres, large metropoles, and more generally of the whole planet into a toxic and unbreathable bubble. Traces of gas created from burning oil have been found in the glaciers at the foot of the Himalayas while victims in particularly affected communities range from Taranto to Beijing, passing through the rest of the planet in the form of acid rain, air pollution and overheating of the atmosphere. The dead who succumb to all this are never considered victims of the "progressive extortion of surplus value", but hidden martyrs "of social evolution".

According to authoritative bourgeois scientists, fine dust (PM 10) resulting from environmental pollution acts as a convenient vector for the transmission of the virus itself. So it is not empty rhetoric to launch the slogan that "the real virus is capitalism" and that only by getting rid of capitalism is it possible to save humanity from being increasingly crushed by the iron grip of a mortally decadent society.

How Capitalist Economic Science Tackles the Coronavirus Problem

Now we can tackle the problem in simple terms by checking out what the theorists of how to exit this latest economic-financial crisis which is coronavirus have concocted for us.

The "gurus" of the international economy are approaching the problem of the coronavirus crisis from a financial, "central banking" point of view, and it could not have been otherwise. But in so doing they are committing a series of errors in the evaluation of the entire world economic-financial system which they think they control, but are, in fact, controlled by it.

For them, the crisis, and it seems all the crises that have occurred so far in recent decades, are due to a lack of demand. This was part of the discussions within the classical economy of Ricardo and Smith back in the nineteenth century. As good Marxists, we reply that the theory which attributes the crises which are intrinsic to capitalism’s unjust relationship between capital and labour to an absence of sufficient demand is false. So too is another imprecise and misleading definition which adds the adjective "financial" to the noun "crisis". It is false, because it only takes partial account of the contradictions within the capitalist system. It is false because its singular analysis means it loses sight of other contradictions that heavily mark the current crisis. It is false because it sees the essence of these crises only in the financial phenomenon of fictitious and speculative capital movements. That said, it goes without saying that ”too much" will always be produced in the form of goods and services at a time of absolute decline in the cost of labour power (wages). The productive forces have been developed by producing more at lower cost. After decades of declining profit rates the lower costs are, in large part, precisely the wages and salaries that contribute to the formation of demand. So less demand equates to a lower realisation of profits for the productive apparatus of goods and services, further encouraging capitals to move out of productive investment towards speculation. A perverse mechanism which, in the short term, can produce advantages for some capitals, but which in the end creates ever larger speculative bubbles until they burst. Outbursts that further jam both the financial system and the underlying productive system which, ultimately, is at the basis of speculation itself when the rate of profit, which stagnates more and more, pushes capital towards speculative adventure in search of extra profits. Thus, it is not in the market — its movement in terms of goods and capital — that the reasons for the imbalances in the system are to be sought, but in the mechanisms which govern capital growth, the formation of profit and the contradictory tendencies which result that we must go to understand the cause. It is not enough to remain within the terms of the market (crisis of supply or demand, overproduction or under-consumption) where only the effects of the underlying economic mechanisms which operate contradictorily within the productive and, therefore, distributive form of capitalism are manifested.

In fact, the root cause of the current structural crisis is the chronically low rate of valorisation of productive capital due to the law of the fall in the rate of profit. In simple terms, the development of the productive forces, that is the higher investment in constant capital (machinery, raw materials, etc.) compared to investment in the labour force, allows capital to produce more goods, but on the condition of reducing jobs and consequently to inevitably restricting the scope for the extraction of surplus value. It is the shrinking of the source of profit formation, which ends up further contracting the demand itself, further decreasing the number of wage earners. We are faced with one of the many contradictions of the capitalist production-distribution system in which, in order to maximise profits, more and more is produced in the face of an absolute or relative reduction in the number of workers and, therefore, a part of the demand. So the fall in the rate of profit is simultaneously synonymous with a decrease in the rate of capital appreciation and with the contraction of the mass of income from wage labour which, on the market, has the effect of decreasing demand, forcing capitals to take other paths to replenish the increasingly meagre "spoils" of the extortion of surplus value. This is why speculation is directly proportional to the decrease in the rate of profit. The more capital appreciation processes tend to slow down, the more speculation increases to create a huge mass of international speculative capital equal, today, to 13 times the world GDP.

Nonetheless, for the pundits the solution to this crisis is simple: yet more new public money should be given almost free of charge to the banks which, in turn, should give it to companies in the form of loans to gear production, in order to resume the "normal" cycle of financing-production-distribution (the latter increasingly unequal, as explained in our previous reference to the capital-workforce relationship, where the latter is penalised by a progressive decrease in purchasing power). Obviously, the experience of the 2008 crisis was not enough, despite the fact that in Europe as in the USA, trillions were poured into the coffers of the credit institutions with little to show for it in terms of economic recovery. The banks, swollen with fresh capital, first put their internal balance sheets in order, discharged the "toxic" securities, sold on a part of the assets that were no longer "performing" due the bankruptcy of indebted companies, then continued to invest mainly in the sphere of financial speculation and thus so many businesses have remained on the edge of bankruptcy. The only difference with the 2008 crisis is that today the cascade of billions of euros, €750 at first, later €2700 were added by the ECB, plus €100 billion as a fund against unemployment, and over $2000 and then $770 billion by the Federal Reserve which then added another $2300bn.(1) All this is money coming during the crisis and not after, both to the banks and directly to companies precisely to avoid the fatal traffic jam between the financial capital managed by the banks and the companies who haven’t enough working capital. Once the coronavirus crisis is over, the latter will be forced to close down, or work below capacity.

It must be said that not all of this promised money will end up where promised, either with companies or the wider population. In any case trade will suffer, as will logistics and all the production-distribution related industries, including part of the service sector. This will inevitably lead to an increase in unemployment and yet another demand for sacrifices as Confindustria, with the unions’ approval, is already calling for. And certainly, the forms of insurance that the banks have are not enough to avoid the risk of failing as in 2008. So the credit system, as has already happened in the last ten years without great success, takes money from the State at zero cost, if not below cost, only partially investing it productively in the form of receipts/revenue due from "guaranteed" companies, while the rest still goes to speculation, either on the most attractive stocks or on the money market (dollar in the first place, but also renminbi, yen and rouble, depending on the world’s monetary imperialistic trends). It will also go towards the bond market, if a "competitive" enough interest rate is guaranteed and on condition that the firm or state which issues them is creditworthy. Conclusion, with these familiar financial policies there will be an increase in public debt, a decrease by the end of 2020 of 10/15 points in world GDP, a progressive indebtedness of the whole world economy. Despite this second massive injection of capital, those factories that cannot bear the difficulties of an increasingly narrow and competitive market will close. A frightening increase in speculation beckons: one that, despite the new injections of capital, foreshadows an even bigger financial crisis than the one we have not yet come out of.

Initial Economic Consequences…

Another difference with the 2008 crisis lies in the tragic fact that the coronavirus crisis not only overlaps with the previous one by adding economic disasters to financial disasters, but highlights the impoverishment of families who in the past ten years have had to face stripped down welfare, precisely in the key sectors of poverty support. Staying with the USA, which is in the privileged position of being the subject of investigations into the birth of all the latest crises, it is true that the Trump administration has provided for an unemployment fund. But, given that in just two months (February and March) there was a 5.6% drop in production, and a 16% decrease is expected by the end of the year, with an average loss of almost 12%, there is little to hope for, since the worst is yet to come. The closure of hundreds of thousands of factories and companies in general has already led to a multiplication of requests for unemployment support to the tune of 16 million.(2) The subsidies envisaged, even if nominally large, will not be able to cover up all these new holes which add up to those of the "old" crisis. Before the outbreak of this crisis, data from the Bureau for Labor Statistics showed that over 20% of American families were unemployed. (For the umpteenth time we need to remember that the trick has always been to produce a positive picture by calculating only the officially unemployed, that is, those looking for a job up to four weeks after the loss of their employment, after which they come off official statistics). Almost 90% of the new jobs which the Trump administration boasted had been created during the first two years of its Administration were only short-term and often part-time. (From 3 to a maximum of 6 months contract, mainly, but not only, in restaurants and fast-food restaurants, with an average salary of $350 per week). Not to mention that those who work one or two weeks a month, and not every month, with fixed-term contracts and starvation wages are also calculated as "employed". In this way, at least 90 million American proletarians and petty bourgeois should have been considered unemployed or underemployed, instead of appearing fully employed in official statistical calculations. If we add that within these 90 million there are 50 million underprivileged (homeless, very poor workers, who live in caravans, cars or dilapidated houses) living below the poverty line and, as we have said, the additional 16 million unemployed in just three weeks between late March and early April, the picture is complete. This testifies that even before the coronavirus crisis the American economy, like the international one, was far from having overcome the "sub-prime" crisis and that the second has added to the first in a permanent crisis path whose end is not in sight.

The same fraudulent statistical manipulations, artfully packaged and made available to the public, also occur in the calculation of GDP (including opportunist adjustments, such as taking the highest quarterly GDP as the base and transforming it into the annual). In addition, military and so-called "research and development" expenses are classified as "fixed investments". All this is once again passed off as "growth", part of the attempt to blow smoke into the eyes of public opinion which must be reassured and must be pacified in order to keep the social peace in a climate of growing uncertainty. Then there’s the icing on the cake of lies from these fraudulent accounting operations in the shape of the health insurance policies that are transformed into "investment expenses for consumer goods". Last but not least, it should be said that only 20% of wages (BLS data) have increased in recent years, and then not by very much. Meanwhile, 80% of workers’ wages have fallen sharply, with purchasing power equivalent to the 1980s.

Right at the beginning of this crisis, there were cries of alarm from some authoritative American analysts, who are familiar with innermost workings of the domestic economy, while remaining victims of the statistical falsehoods we have mentioned. For example, Mickey Levy, an economist at Bank Berenberg and former chief economist of the Bank of America, states that "The US economy is in recession". He bases this on his latest update of economic data and surveys. "We will have a severe contraction in economic activity and GDP in the first half of the year, with a drop of 4.5% in the first quarter and 11.7% in the second." But he is not alone in fearing that the crisis will deepen. Citigroup estimates a 40% probability of a collapse of the entire system, in the long, but not so distant, term. If this is the picture at the beginning of the crisis, the scenarios that await us are certainly not comforting, not even on the level of "anything for a quiet life". Even the attempt to buy social peace with a few pence could end up further disrupting the plans to revive the capitalist economy both in the US and in Europe. Plans which, alongside the investments promised to key sectors of the economy as well as small and medium-sized industries, must necessarily foreshadow a long period of blood, sweat and tears for the workforce.

In the meantime, and we're only at 20 March, many of the American majors foresee the use of the new QE. According to Bloomberg’s estimate, after the refinancing of CEC Entertainment, the Metropolitan Transportation Authority, Diamondrock Hospitality, Tailored Brands, J Jill, Boyd Gaming and National Vision, and the support given to Ford ($15.4 billion), Kohl's ($1 billion) and TJX ($1 billion) as part of a daily value adding up to $21 billion, there followed AT&T ($3 billion), Delta Airlines ($2-4 billion), Edison International ($800 million) and Pioneer Natural Resources ($1 billion). But the most worrying aspect is that these are, in the vast majority of cases mentioned, amongst the very companies who, after taking advantage of the longest and most favourable monetary phase in American history (2009-2019); after engaging in buybacks (bringing payouts to shareholders through the repurchase of shares and increase in dividends) amounting to hundreds of billions (2016-2019), after having benefited from the largest tax cut in the post-war period to today (2017) and since recording record profits (2018), are today forced, (viz the recent case of Boeing), to resort to public bailouts, under penalty of the risk of bankruptcy. This is in the US, but the situation is not unlike Europe and Italy which were already in a technical recession at the end of last year.

Hence, while trillions of dollars and euros will still be targeted on businesses and banks, the working class will feel the weight of some very heavy measures amongst the crumbs that land on us, all delivered in the name of the emergency and the need for everyone (?!) to make sacrifices. Because there is only one boat and it must be saved at all costs. Forgetting to say, as usual, that in this one boat there are those who do the rowing and others who crack the whip over the crew. Furthermore, the coronavirus crisis is shedding light on what the capitalist system has been giving way to for years. The dismantling of welfare has taken place on all fronts, from pensions to education, from cuts to services to those for scientific research funding. And today what dramatically stands out above all are the cuts in healthcare, which highlight all the tragic shortcomings and critical issues regarding the pandemic.

Spain and the UK started to face up to the coronavirus crisis criminally late and have already declared that their health services are not equipped to deal with the emergency. In the US, things are no better. Aside from the delay caused by the president's criminal lack of awareness, the US health system — with Obama's attempt to extend healthcare to the least wealthy stopped, and aborted due to the tenacious resistance of the insurance lobby — is at the centre of the emergency without adequate structures to deal with such a serious and vast situation. As if that weren't enough, Trump's worst mistake was cutting back on virus research. The Predict program, funded by USAID, the American agency for international cooperation, had been supported over the past decade. Thanks to Predict, 900 new animal viruses, including 160 new coronavirus strains, had also been identified in Africa. But Trump in October 2019 decided to close Predict, deeming it too sympathetic towards environmental and ecological concerns.

The US health system lacks everything from respirators, to swabs and chemical reagents to check the positivity of the swabs themselves. The US government was even forced to import a few million masks from China, because its health system did not have them and no factory was able to convert production to sanitary materials in good time. As usual, those who are rich can hope to save themselves by taking advantage of the hospitals of excellence. Those who are poor die. An example is given by the recent statistics that have come out of America regarding the difference in deaths between the white and black population which, by definition, belongs to the poorest layers. For example, in Illinois, the infection rate for white people is 27.5% and for black people 29.4%, while those deceased from coronavirus are 42% black and 37% white. A relatively small gap, it might be said. But if we break down the data it would show that African Americans are only 13.8% of the entire population, which is mostly white. In Chicago (we are now at 8 April), we learn that 70% of the deaths are among the black population. And black people represent only 29% of the entire metropolitan population. In North Carolina, the infected are black in 37% of cases compared to 21% of the rest of the (of course white) population. Then in Michigan, where the state population is 14% black, African Americans constitute 35% of those infected and 40% of the dead. In the city of New York, the cases of greatest contagion are counted in the areas with the lowest incomes, in the suburbs where the homeless "live", in South Bronx or in Queens, where the least affluent, the unemployed and some of those 16 million desperate people who applied for unemployment benefits live. No wonder. It is not the coronavirus that is racist, but American society which does not grant health protection to the poorest social strata who, as was said before, if they do not have the money to get insurance, die.

In Italy over the last ten years, finance for healthcare has fallen by a massive €37 billion. Thousands of jobs have been cut (doctors, nurses and research laboratory workers). Local health centres closed with the loss of 70 thousand beds, thus arriving at the fateful appointment with the coronavirus crisis in a condition of high health insecurity. In the institutions for the elderly practically everything is missing and the mortality rate of the patients is shockingly high, so high that the Milanese judiciary is conducting investigations into the major hospitals in Lombardy, including the "mythical Bagina" less well known as Pio Albergo Trivulzio.

And Beyond…

This is the tragic scenario of a coronavirus crisis lasting only four or six months, because if it lasts longer, things will be much, much worse. The rebound effects in the financial sector which the "experts" are expecting from the beginning of the fourth quarter of 2020, are a pious illusion. The statistics provided in this regard are a projection based on nothing, such as obscure studies on the positive trend of the world economy before the 2008 crisis, which hardly any other analyst shares.

The economic recovery, if there is one, will take a long time and will only be temporary, and not decisive, in this phase of decline of the capitalist economic system. Even when the spectre of coronavirus fades we will not go back to things as they were before in a week.

China is economically on its knees. The latest data on the increase in GDP there gives a paltry 2.8%. The US is up to its ears in debt and deficit financing. It only survives by virtue of the supremacy of the dollar and the most powerful army in the world. Half of Europe is in a technical recession, including Germany, and the future is increasingly bleak. The new money that the ECB is planning to disburse should serve, to a minimal extent, to maintain household incomes, stave off lay-offs in the case of employees, or provide direct subsidies in the case of the self-employed. But the main aim is to provide businesses with the necessary liquidity to pay off debts and suppliers and prevent them from going bankrupt, or being forced to lay off employees. Meanwhile, as mentioned above, the most substantial tranches will go to inflate the banks' coffers, and consequently speculative bubbles, since company profit rates are so low that they do not merit new investment, always subject to the usual exceptions such as the big Majors who enjoy direct state intervention when funding from the banks is not sufficient or even absent.

In a report produced by the International Labour Organisation (which brings together governments, unions and industrial organisations from 187 countries) it is suggested that the pandemic crisis could cause the loss of at least 25 million jobs on an international scale, affecting a productive fabric in which, as of 2019, there were 188 million unemployed in the world. A much higher number than after the 2008 economic crisis, which led to an increase in world unemployment of 22 million. Again according to the estimates of the ILO, the old Western capitalist economies will be the most affected by the crisis, with a loss of earnings that is expected to reach €3 trillion by the end of 2020.

Yet the ILO does not take the least account of the devastating economic and financial conditions of the countries on the periphery of capitalism, such as Brazil, Venezuela, India and Russia itself which is partially saved by oil and gas fields, while suffering the damage of the collapse in the price of crude oil. It also predicts that "Between 8 and 35 million people will fall into the category of so-called "poor workers" (those who earn less than €2.90 a day)", while it had previously thought that in 2020 the total figure of these, equal to 630 million people, would have decreased by 14 million people. More alarming from this Geneva-based United Nations agency is a report published before March 18, which predicted that the crisis would produce at least 25 million unemployed, but only at a European level. In its latest estimate the projections for the effects of coronavirus internationally and by groups of economic regions have worsened significantly. The agency predicts that the crisis will drastically reduce the number of hours worked in the world by 6.7%, starting from the second quarter of 2020, which equates to an excess (layoffs) of 195 million workers. According to a further estimate by the same agency, in the driving sectors of the world economy there could be "about 1.25 billion high risk workers from the drastic and devastating increase in layoffs, reductions in wages and working hours".

But, beyond the inevitable short-term fluctuations, profit rates are not going to increase, even given the huge increase in super-exploitation of the international proletariat. The organic composition of capital is too high, and irreversibly so (given the ratio between the mass of constant capital value and the number/value of the labour force units used in the production cycle). It is estimated that in the metalworking sector (production of cars, trucks and earthmoving machinery), the workforce accounts for only 7% of the cost of capital. Back in the last quarter of 2019 when the coronavirus crisis was not on the horizon, the status of the world economy was already on the verge of collapse. With this crisis, economic disaster will follow economic disaster, with a multiplier effect which impacts on the whole international scenario.

From the economic and financial data, we now turn to those of global debt: a symptom of a sick economy that tries to survive by oscillating between speculation and debt, in the hope of repaying debts sooner or later and "sealing" the leaks that the profit rate crisis is creating within the real economy by speculation. Hopes destined only to aggravate the situation and not to resolve it. According to the Institute of International Finance, debts accumulated up to the third quarter of 2019 by families, non-financial companies and states amounted to the astronomical figure of $253 trillion, 322% of world GDP. Given their vital need to find financing on the international market, the low cost of borrowing and a weak dollar have also pushed emerging countries further into debt, which has reached a nominal record of $72 trillion. Foreign currency debt grew particularly strongly, which created a potentially explosive financial exposure, especially if in future the US were to "normalise" (increase) interest rates. And, as is happening, the coronavirus crisis will run its course and further destabilise these weak economies, throttled by unsustainable public debt, the international recession and the fear that the cost of servicing their dollar debts could be increased by a rise in American interest rates. The fact is that the debt of "emerging" countries, calculated in precious currency (almost exclusively in dollars), has peaked at $8.3 trillion, more than doubling in just 10 years. Overall, the debt of emerging countries, excluding the financial sector, reached 187% of GDP, with an incredible peak in Hong Kong (365%). The coming years will only worsen the situation, throwing economies into the abyss, and dragging hundreds of millions of proletarians with them.

If this is the general framework in which the global economy finds itself in the midst of crisis, there are two possible prospects of "salvation" for the entire capitalist world. The first consists of super-exploitation based on the lengthening of the working day, increased production rates, holding down wages, reducing pensions and, more generally, on the further dismantling of welfare. Operations are already in progress, but not yet substantial enough.

Nevertheless, even within the current phase, for proletarians working in strategic productive organisations (those that cannot be suspended or slowed down) the situation will become unsustainable. The lack of adequate hygiene-sanitary equipment, the forced proximity between worker and worker, the scarce availability of masks and overalls, not to mention the need for the construction of showers and other decontamination systems from scratch, could encourage an internal epidemic — and then external — in workplaces, as has already occurred: see the provinces of Brescia and Bergamo, where the local bosses opposed the establishment of "red zones" when the infection was already widespread. Then, on top of the sacrifices already underway and those to come, the fear of infection will mount, with the risk of losing your life and no longer just your job. So the bourgeoisie could well face a class response involving strikes over economic and workplace safety claims that are difficult to manage. In this case the "militarisation”, which today, in a soft way, presents itself as a necessary aid to the administration of the behavioural order of the population under a social emergency, would immediately turn into real militarisation against workers' riots in the name of social peace. Otherwise the solution of the solutions (the second) would be a "beautiful" war that would destroy everything in order to rebuild everything, giving the capitalist system the economic space for a new cycle of accumulation.

If these are the real scenarios that the crisis of capitalism holds for us, in the face of the financial "solutions" of the "experts", only the resumption of the class struggle on an international scale, led by its revolutionary party, can save us from yet another carnage that imperialism is criminally preparing, because, let us repeat, the most deadly of viruses is capitalism.


10 April 2020


(1) Since this article was written the IMF estimates that the total worldwide stimulus = $14tn.

(2) By the end of April, US jobless claims had reached 30m. (See, for example, Demetri Sevastopolu in the Financial Times, 1.5.20)

Wednesday, May 6, 2020