In the first of a three-part series on the economy, Susan Newman examines what Coronavirus has revealed about the economy and what we should be calling for
On the night of the 23rd of March, the day that UK schools closed for the majority of students, Boris Johnson brought in new measures that has taken Britain to a situation resembling lockdowns in Italy, Germany, and Belgium. Measures to protect the population during the dual crisis of the pandemic and a chronically underfunded health service – that has seen shrinking capacity over the last decade - have by all accounts lagged behind almost all so-called developed economies.
The Tory government has been under heavy criticism for its resistance to act in the interest of the people. Many of the measures that have been taken have reflected government U-turns in response to the overwhelming actions of ordinary citizens acting together who have forced school closures and forced the hand of the chancellor to pay 80% of wages up to £2,500 for salaried employees unable to work in the crisis. The government now faces a legal challenge from self-employed and gig economy workers that had been left out of Sunak’s ‘comprehensive’ package. It looks likely that the government will move towards a scheme resembling Universal Basic Income (UBI) in the coming weeks.
But it is important to note that all these measures have come after a much more proactive stance by the government to protect corporations. Sunak’s offering to (waged) workers came days after the government announced a business bailout package worth £350bn.
As Boris Johnson was set to take the UK on a path towards ‘herd immunity’, the Bank of England cut interest rates to just 0.25% and then again to 0.1%, the lowest in history, a week later. But this move was not about providing credit lines and solvency for businesses and households who would inevitably struggle, but designed to bolster money markets on which the ‘health’ of the UK economy has relied for the last 30 or so years.
For 40 years, the British economy has been undergoing a radical restructuring that has involved the deindustrialisation and financialisation of the economy. When politicians and bourgeois economists talk about the economy, they are really talking about the financial sector and the wealth that this generates for the minority.
Johnson’s government was quick to act to maintain the value of the assets of the wealthy and slow to act on the needs and demands of the majority. A decade of Tory austerity has shown us that the state will be quick to bailout capital. Such is the understanding behind Richard Branson’s audacious demand for a bailout of Virgin Atlantic by taxpayers. Whilst the majority of us don’t get rich from financial markets, our daily lives are inevitably tied to them. From insurance payments for cancelled holidays to work-based and private pensions, our social security depends upon the returns on investments that insurance companies have made on financial markets.
The economic interruption resulting from the pandemic has brought some big questions about the economy, what it is and what’s its function, to the fore. The ‘coroneconomy’ has brought into relief the central and contradictory role of the state marked by the conflict between the drive-by capital to maintain value and its democratic mandate to meet basic needs. It has shifted the public’s view of the key and necessary activities for society, namely the production and distribution of food, caring for the most vulnerable in society, production, and logistics in supply chains for medical equipment, cleaning, sanitation, and waste management. And, it has shone a light on the extent to which vital and critical work has been outsourced and casualised.
The government is taking unprecedented measures that involve massive government borrowing. But it can and must do more. Moreover, just as we should be sceptical of Branson’s latest pledge of £215m to protect Virgin jobs being motivated by generosity and civic responsibility, we must evaluate Sunak’s successive announcements with an analysis of the tensions and contradictions within today’s economy and society. For example, we should be calling for universal basic services beyond universal basic income, as the latter acts as a subsidy for private capital in the absence of widespread public provisioning of services and security. This would involve the reinstatement and extension of provisions under the welfare state to include, for example, an affordable and extensive public transport system.
We must call for investment in sectors and activities that serve the needs of society and our environment rather than the growth in financial wealth. We must press for policies that transform our economy to one that serves needs and not profit. And we must beware of policies that keep the economy intact to the extent that ‘business as usual’ is resumed when all this is done and over.
More articles from this author
- Why does capitalism go into crisis? - video
- Sunak’s summer budget statement: short-cuts to business as usual - CounterBlast
- The Coronavirus debt: why we shouldn't pay it back
- Capitalism: do not resuscitate
- What is Modern Monetary Theory, and can it work?
- UK wage stagnation is not a puzzle to solve, but an injustice to fight
- Trump's trade delusion