Neoliberalism is in critical condition

10.06.2020 - The Conversation

Neoliberalism is in critical condition

Now is the moment to transition away from an economic system that thrives on exploitation.

The Covid-19 pandemic is tearing the neoliberal playbook apart as politicians and citizens realise that, in times of pandemic, markets won’t save the day.

The privatisation-deregulation-austerity recipe is becoming obsolete, leaving ways for a diversity of interventionist policies. Meanwhile, outside of markets, solidarity initiatives are blooming, creating the experiential and affective base for a paradigm shift away from self-interested individualism.

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This is an opportunity for a long-awaited transition away from an economic system that thrives on the exploitation of the vulnerable, from precarious workers to animals and ecosystems.

Healthcare

The Covid-19 wake-up call should be that a system organised around moneymaking is socially unfair and ecologically unsustainable.

This is a crisis of systemic vulnerability that is caused by capitalism and that capitalism cannot solve – it calls for wide and deep transformation. And this transition should start with the one sector we now wish we had been investing in more: healthcare.

Healthcare systems in many countries around the world are or have been on the brink of collapse because of a shortage of intensive care beds for all the people in critical conditions. And those countries that staved off such collapse managed to do so only through draconian lockdown measures.

The reason for the inadequacy of public healthcare systems even in many wealthy countries is that over the past decade they have been increasingly privatised and chronically under-funded. The privatisation of public healthcare can be seen as part of a broader dynamic of commoditisation, that is an extension of the realm of market exchange to new domains like education, health, or the arts.

In a society where firms and governments strive to maximise financial gains (profits and GDP respectively), turning open-access rights like healthcare into something one must purchase is considered economic progress because it pushes up GDP. But what is disguised as a story of so-called “growth” is only an accounting trick that re-allocates the burdens and benefits of already existing services, often at the expense of vulnerable populations.

Austerity

In parallel, public healthcare has been for many years chronically under-funded as a result of draconian austerity politics. Austerity consists in cutting the least productive (in terms of economic value) public expenditures to save the government budget for more productive ones.

But this is, again, an accounting delusion: economic activities are weighted based on their contribution to national GDP with the ultimate objective to boost economic growth. As essential as healthcare is for well-being, it remains a low-productivity sector which generates low returns on investments because it cannot be automatised. And that is why the neoliberal playbook says “slash it”.

These observations point to one contradiction of capitalism: the widening gap between exchange value and use value. Use value refers to the tangible features of a good/service which can satisfy a concrete need. Exchange value, on the other hand, has to do with the relative value of a good/service in relation to others, often measured in monetary terms. Poor people may desperately need a service, but if they have no money to pay for it that services will not exchange on the market at a value high enough to cover the costs of delivery with a profit for the investor.

Now, what happens if we privatise the healthcare system? Prices go up and so does healthcare spending as a share of national GDP. This is the reason why the USA spends 18 percent of its GDP on healthcare while Western European countries spend on average nine percent.

But this does not improve its quality. Actually, it often goes in the opposite direction: countries with private healthcare do worse than ones with public healthcare. For example, the USA is the 10th wealthiest country in the world by GDP per capita, but it ranks 64th in terms of national health. Trying to provide healthcare by looking at prices is as useful (and dangerous) as trying to drive by only staring at the fuel gauge.

Rights

Healthcare should be considered a universal right and more resources should be allocated to this essential public service. Healthcare is, however, only one form of care among many others, starting with taking care of nature.

This is all the more important if we consider the linkages between ecological breakdown and the spreading of Covid-19. For instance, recent research suggests that outbreaks of animal-borne and other infectious diseases (such as Ebola, Sars, bird flu, and now the coronavirus) are on the rise because of habitat destruction and biodiversity loss all over the globe.

If care is the watchword of human wellbeing and ecological resilience, then it is time to be careful – literally. Affluent countries must transition from industrial production (the moneymaking logic of growth) to social and environmental reproduction (the need-fulfilling logic of sustaining).

Welcome to post-growth: “less commodities, more communities” should become the slogan of the post-pandemic economy. This means focusing on the maintenance, recycling, repair, and restoration of environmental and infrastructural resources, as well as education, culture, and care — for both people and planet.

This is a propitious moment as the lockdown has suddenly made us realise that we have been taking an array of everyday chores for granted. How many of your needs can you satisfy alone, at home? Not many. Taking care of children, the elderly, and the sick forces us to recognise the value of collective arrangements around care tasks.

Necessity 

The Covid-19 pandemic shows that the neoliberal ideal of resilient individuals surviving alone is in fact a priviledged illusion that actually shifts burdens onto others. The heroes of the pandemic are the zeroes of capitalism: cleaners, cashiers, farmers, nurses, garbage collectors, teachers, mail carriers, food couriers, among other – often precarious – workers who are today holding society together.

The neoliberal playbook says these jobs are marginal and dispensable because they reap little money, and this is why for too long their work has remained invisible and underpaid. Lesson learned: the neoliberal playbook was wrong.

Such considerations also shed light on a question that most people are now asking themselves for the first time: Should I go to work or not? It is impossible to answer this question without knowing what kind of work. Yes, nurses and bakers should go to work even though this creates a risk of contagion, but the same logic does not apply to those selling perfumes or making ads for SUVs.

The risk of contagion is forcing us to differentiate between necessities and luxuries, with only the first category being worth taking the risk of spreading the virus.

What many people may have realised over the past few weeks is that their jobs are not as important as they thought. A good portion of them might actually be ‘bullshit jobs’ without which the world would be just fine, or even better. And now that this is clear to everybody, let us start paying good wages to those whose work creates real social value and downscale that part of the economy that is just bullshit.

Intersectionality

It is also worth noting the intersectional dimensions of the Covid-19 crisis. As collective care institutions are shut down, it is women who in most cases have to shoulder the added burden of individualised care work.

Today women do more than three-quarters of all unpaid care work – a total of 12.5 billion hours a day. The market estimation of unwaged work globally totals $10.8 trillion, but that is only an estimation because, ultimately, no money is being paid.

A first step in rectifying this situation can involve the adoption of a Care Income to be made available to all those who take care of human and non-human others. If the economy should be centred on care, it is crucial that care tasks are equitably distributed and fairly remunerated.

Before the crisis, the idea of a Care Income sounded ludicrous to most, but today, it has become common sense, and so have a long list of other bold policies. For instance, Spain is about to distribute a universal basic income and, in France, the government guarantees unemployment benefits to those who cannot go to work and cannot work from home. Australia has adopted a six-month moratorium on evictions and New York City has suspended mortgage payments for 90 days.

Brazil has prohibited the distribution of dividends and Italy grants babysitting vouchers to professionals working in industries considered essential. Institutions are changing at an unprecedented pace, showing that there is nothing pre-determined and natural about that social construction we call ‘the economy’.

Imagination 

And now that we have witnessed the creativity we are capable of when it comes to bending economic laws to serve the common good, it is time to apply the same logic to address the ecological crisis. If there are too many environmental pressures, let’s put a legally binding cap on resource use at a level that is sustainable.

Surely this is less radical that putting half of humanity on lockdown. After the “stay home” for Covid-19, there will be the “stay grounded” for climate change, the “work less” to lower unemployment, the “share more” for economic equality, the “waste less” to avoid pollution, among all the other challenges that stand against social and  ecological justice.

And to those who say that this will “destroy the economy,” let us remind them that the economy is not an autonomous entity out there, but a social construction. A social construction we have deconstructed to face the pandemic and that we can deconstruct again.

This spring, it is not only daffodils that bloom but also unorthodox policies. This is the political imagination and courage that we have been waiting for. It is amazing what was possible all along, and the good news is that it will remain possible forever.

We must, therefore, let this moment radicalise us and realise that there is no status quo to return to. And now that all these policies have been adopted to deal with the Covid-19, it is time to deploy them to face another virus that spreads exponentially and ends up killing its host: capitalism.

This Author 

Riccardo Mastini is a PhD candidate in political ecology in the Institute of Environmental Science and Technology at the Autonomous University of Barcelona. You can follow him on Twitter and Facebook.

Image: Michael Fleshman (2013), Flickr.

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