Bank of England. Photo: Flickr/Alexander Johmann Bank of England. Photo: Flickr/Alexander Johmann

Capitalism hasn’t been suspended. Change that benefits ordinary people can only come by pressure from below, argues Dominic Alexander

The news that the government is using the corona-virus crisis to accelerate the privatisation and breakup of the NHS is a stark warning that the agenda of private profit will continue to drive all policy decisions, whatever harm results to the general population. Any hope that this public-health catastrophe will force governments to abandon the primary focus of neoliberal economics, profit-making, is gravely mistaken about the nature of capitalism, and of state economic intervention.

One economist has gone so far as to say that capitalism ‘has been suspended’ during this crisis. Agreeing with this, the ex-Syriza finance minister, Yanis Varoufakis, made a comparison to the situation during the Second World War, as if that represented a breach in capitalism also.

The hope of some commentators, like these two, is that a different kind of capitalism will emerge out of the need for state intervention to deal with this existential crisis. Of course, the fact that the government has had to step in and intervene in the economy at such a colossal scale is a break with at least the rhetoric of neoliberalism. It opens up a discussion about solutions to the crisis other than straightforward reliance on the market.

Nonetheless, to suggest that the Tories, or any other Western government, are abandoning capitalism is completely misguided. Itis based firstly on a total misunderstanding of what happened within capitalist economies during the Second World War, confusing state intervention with alternatives to capitalism. Secondly, it is based on an illusion that our rulers can be convinced on rational grounds to abandon the underlying aims of the last four decades of neoliberal policy.

Lessons of the war economy

During the Second World War, capitalism was no more suspended in Britain than it is today. The state intervened in the economy in order to direct resources to the war effort, and in that sense took charge of great swathes of private property. This limited the freedom of private companies to allocate capital where they wished, but no more than that. Capital was not expropriated, and profits, while under some limitations, continued to be made. Indeed, the huge market created by state demand for war production meant that economies were dragged out of depression. In the United States, profit-making was restored to levels not seen since the onset of the Great Depression.[1]

Capital exacted a price for all this, even so. In Britain, this came in the form of massive austerity for the bulk of the population, both during the war and for many years afterwards. The supposedly radical Labour government of Clement Attlee actually turned to draconian measures against striking workers to enforce a regime which shifted the burden of war debt as much onto working people as possible.

Clearly there were some important victories of collective provision in these years, such as the creation of the NHS, and extensions to state welfare and education systems. However, it was only the pressure of a strongly organised working class, and widespread public feeling against a return to pre-war norms, that ensured this Labour government did introduce significant reforms. Previous Labour governments had entirely failed to achieve anything similar, in their anxious concern to reassure capital that it would not act against its interests.

The post-war nationalisation of some industries did not, in fact, represent a turn away from capitalism. Rather, it suited capital for coal, iron and steel, for example, to be taken over by the state. These were not industries with high rates of profit at this time, but they remained essential for other sectors. If the state took on the management of these essentials, then capital was freed to invest in other areas which promised higher rates of return. State intervention, and limits on the free market, do not, by any means, ‘suspend’ capitalism. They are only a different strategy to maintain profitability. So long as the social power of capital over labour remains, then however restricted the market might be, then capitalism remains fully in operation.

Crisis capitalism

It is in this light that we need to consider the nature of state intervention in the present circumstances. State co-ordination of private capital to provide essential resources will prioritise the ability of corporations to make profits. The social good will be secondary, which is the clear truth lying behind the scandal of PPE provision in hospitals. The government will certainly be planning to provide enormous, even unprecedented, quantities of credit to banks and corporations, but this effort will be directed towards the restoration of profit-making.

Much of this credit is likely to be wasted from the point of view of ordinary people, as rather than restoring job-creating economic activity, strategies like quantitative easing will tend to inflate asset prices instead. This strategy increases the quantity of notional wealth at the top of society, but, since 2008, it has not done anything for the living standards of working people. Worse, the resultant state debt will create massive pressure for another round of austerity in public services and infrastructure, wage restraints, and restrictions on any kind of investment that does not immediately restore profit rates. The argument will be that the debt has to be paid, and the idea that capital might pay will be out of the question. There will be no room for the building of green infrastructure in this scenario.

The present government, and other governments around the world, will not be moved by any appeals to reason, or warnings about the consequences to social fabric or the environment. Their concerns will be focused on the restoration of profit-making. Any illusion that the crisis, and the severe recession that is sure to follow, will create a necessity for state intervention benefiting ordinary people, suffers from the fallacy that state economic action is good in itself. It depends entirely on whose interests it is designed to serve.

Capitalism is, in the end, about social power. The state will only introduce measures that benefit labour, and put costs on capital, if it is forced to do so by pressure from below. This will require organised protest by working people in trade unions and social movements, to demand investment for social and environmental goods, regardless of the cost to capital.



[1] See Michael Roberts, The Long Depression: How it Happened, Why it Happened and What Happens Next (Chicago 2016), pp.54-8.

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Dominic Alexander

Dominic Alexander is a member of Counterfire, for which he is the book review editor. He is a longstanding activist in north London. He is a historian whose work includes the book Saints and Animals in the Middle Ages (2008), a social history of medieval wonder tales, and articles on London’s first revolutionary, William Longbeard, and the revolt of 1196, in Viator 48:3 (2017), and Science and Society 84:3 (July 2020). He is also the author of the Counterfire books, The Limits of Keynesianism (2018) and Trotsky in the Bronze Age (2020).

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