Fear and levelling: The dawn of corona capitalism

Capitalism is changing. Here’s how.

Capitalism is a story of fission. What kind of fission? The separation between political and economic power beginning in the sixteenth to nineteenth centuries. And a separation between:

1. Expectations of stable technological development and the reality of unstable change in the availability of resources and the natural world (dynamic ‘technological scarcity’);
2. States and markets (‘state-market disunity’), and among states themselves (‘inter-state disunity’), in the absence of a world state based on public power (‘institutional disunity’);
3. The material and political power of the owner class versus that of the working class (‘distributional inequality’); and
4. Members of, and outsiders to, the sphere of the possibility of pursuing cultural (particularly philosophic) liberty, which is restricted to few, if any (‘cultural exclusivity’ or ‘cultural slavery’).

Corona capitalism exacerbates the fission in some respects. The initial fall in the stock market reflects a decline in capital’s confidence in the ability of states to keep it afloat—while the rise in panic buying reflects a precipitous fall in labour’s confidence in states’ keeping their citizens alive and well. The proposals for a large fiscal stimulus exceeded expectations, such that—whatever happens—technological scarcity looks set to continue. The same goes for inter-state disunity—despite my clamouring for a democratic-socialist federal world state, no-one seems to want that, yet.

What about state-market disunity? The UK government recently mooted nationalising the possibility of nationalising transport system—a dramatic step away from the neoliberal Conservative Party’s love (dating back to Thatcher) of the underregulated ‘free market’. The proposed Federal-Reserve, Bank-of-England, ECB, and US/UK/EU governmental fiscal stimuli look set to increase states’ spending dramatically. But the stimuli do tend to concentrate (with the exception of democratic-socialist Bernie Sanders’s whopping $2 trillion rescue package for the working class) on bailing out corporations, just as the financial-crisis response in 2008-2009 concentrated on bailing out banks. What about bailing out the global working class (everyone except the billionaire class)? State-market disunity isn’t exactly increasing as global trade flows dry up—but it’s not exactly being replaced with democratic socialism, either.

And distributional inequality? Well, that is the million-dollar question. Walter Scheidel, in his book ‘The great leveler’, argues that inequality tends to fall following violent events like war, revolution, state breakdown, or pandemic. The Black Death dramatically reduced inequality, for instance, and paved the way for the rise of capitalism by increasing the price of labour and incentivising a shift from peasant labour to wage labour. Could the corona virus do the same?

Not exactly. The Black Death killed 200 million people. Corona virus is unlikely to kill more than 10% of that total—which would be an absolutely tragic event, no doubt—in a population several times larger than in the Middle Ages. If this pandemic reduces inequality, it’s likely to be indirectly—via its effects on politics. Fiscal stimuli tend to reduce inequality a bit—but only when money goes into the pockets of the poor who spend, not the rich who horde and speculate. The White House seems to get this in a way it didn’t back in 2008-2009, as it’s planning to give each family a $1,000 cash payment. But that’s still poultry compared to, say, Bernie Sanders’s proposed $2,000 cash payment to each American family, every month—a truly universal basic income, as I proposed in my previous blog post. So far, it doesn’t seem that the crisis rescue packages are going to reduce inequality significantly, as they aren’t going to deviate from neoliberalism. Instead, they represent a transition from fiscally restrictive neoliberalism to expansionary neoliberalism—where the state realises it needs to take a greater direct role in production than it previously did. It’s likely this role may be greater than the financial crisis, given the scale of the challenge of feeding hundreds of millions of citizens quarantined in their homes and neighbourhoods, but it’s unlikely this role will be massively redistributive. If it is, neoliberalism proper will have ended, and a new phase of capitalism will have begun. But note that, since the civil oligarchy still exists and has a significant sway on politicians, it’s unlikely anything will be done (Bernie Sanders-style) to empower the working class in a permanent fashion. In the unlikely event this does happen, the end of capitalism may well be nigh.

But if you ask me, I’d suggest both scenarios are unlikely. Inequality is unlikely to fall massively, and the working class is unlikely to take control of political proceedings. It’s more likely that temporary measures will be taken by the professional elite of Western democratic states that alleviate concerns and settle people’s anxieties, but don’t fundamentally get at the alienation and exploitation which produced Brexit, Trump, etc. But the fact these temporary measures are largely being advocated by the Republican Party rather than the Democratic Party in the US is promising. After the Democratic Establishment (twice!) quashed the Bernie Sanders challenge through a media smear campaign and a forty-eight-hour splurge of centrist candidates dropping out to back Joe Biden in the run-up to Super Tuesday, the Republican Party—fresh from its populist Trump takeover—looks ready to embrace new ideas. It was Mitt Romney, none the less, who proposed the cash payment on Twitter before the idea was adopted by the White House—and President Donald Trump who smashed expectations with a $1 trillion stimulus proposal, not long after the Federal Reserve announced it would be doing a $700 billion stimulus of its own. Perhaps the Bernie Sanders’s of the future should run in the GOP, not in the Democratic Party, dropping the culture-war issues which destroyed Bernie’s rural and midwestern vote share and doubling down on class-war issues like Medicare for All, a federal jobs guarantee, a high universal basic income (yes, higher than Andrew Yang’s pitiful $1000-a-month sum), and high-quality universal basic services for all (public infrastructure, etc.). Corona capitalism is an age of fear—but it could also be an age of levelling—if only we have the courage to channel our shared feeling of desperation into a political project that can structurally transform the social political economy.

Let’s start now.