The tacit assumption of political leaders and the chattering class is that the economy will come back together in time, if not seamlessly, then at least without major political turmoil. The anodyne meme of “reopening the economy” suggests that, although we may have a rough road ahead, the end result will be a functional equivalent of the economy that we remember from last year.
Financial analysts imagine this is like an ordinary downturn in the business cycle amenable to familiar cures of deficit spending, tax cuts and bailouts for the “too big to fail.” It’s not. The proximate cause of the economy’s collapse is unprecedented state intervention in capitalist economies throughout the world. The world economy has not just slowed down, but has suffered a disruption that has undermined whole industries and created a vast army of unemployed.
Capitalist economics vacillates between apologetics, obscurantist mathematical fantasies and nostrums that advance the interests of the power elite while purporting to serve the common good. None of this will meet the challenge of rebuilding an economy that works for common folk, let alone one that can save us from looming ecological collapse — the catastrophe that awaits on the other side of Arundhati Roy’s portal.
In late March, the St. Louis branch of the Federal Reserve estimated that 47 million workers might lose their jobs in the coronavirus shutdown. Two months later, the official count of layoffs in the United States had already topped 40 million. The unemployment rate may hit 32 percent, topping the level reached in the midst of the Great Depression.
The Crisis Will Be Protracted and Profound
Trump’s risible claims to the contrary, the economy was in precarious shape before the pandemic. Many corporations depended on support from the Federal Reserve since the financial blowout of 2008. A dozen years later, the non-recovery recovery has come to an abrupt halt. The economic carnage is already on a scale that has economists speaking:
“I feel like the 2008 financial crisis was just a dry run for this,” said Kenneth S. Rogoff, a Harvard economist and co-author of a history of financial crises, “This Time Is Different: Eight Centuries of Financial Folly.”
“This is already shaping up as the deepest dive on record for the global economy for over 100 years,” he said. “Everything depends on how long it lasts, but if this goes on for a long time, it’s certainly going to be the mother of all financial crises.”
The sheer suddenness of the plunge feeds the fantasy that we might recover just as quickly, or at least without exacting an enormous toll on those of us who are not among the desperately poor or desperately sick. The right stimulus will jerk the economy back to prosperity, employers will recall their laid-off workers, football will return to packed stadiums, tourists will crisscross the globe and we’ll all get back to partying on Saturday nights.
There are many reasons to question this prognosis.
First, the pandemic and its disruptive challenges to profit-based decision-making are likely to be with us for a long time. Laurie Garrett, the science writer who literally wrote the book on modern pandemics, warns that this pandemic will be with us for three years under a “best-case scenario.” Even the best-laid plans cannot restore a market-based economy to a semblance of health while essential workers and their loved ones are getting picked off by a deadly virus.
Second, major parts of the economy are broken and will remain so for a long time no matter what we do. More than 100,000 small businesses in the U.S. have already closed their doors for good. Tourism accounts, directly or indirectly, for a total of 10 percent of the world’s economy. Here and abroad, millions of jobs that are dependent on people packing into crowded airplanes and spending freely in distant places are not coming back any time soon. Restaurants, bars, sports venues, retail stores, museums, movie theaters and gyms will be deserted or underpopulated for years to come. A generalized economic stimulus will not repair the damage to these workplaces any more than a calcium-rich diet will fix a broken leg.
Third, as job losses from sectors that cannot rebound depress demand for other goods, the economic slump will take on a self-reinforcing character. This is how a severe recession becomes a great depression. Wall Street bankers and corporate CEOs who command our economy have no interest in making investments that will not return a profit. As demand shrinks, outlets for profitable investment disappear. Employers will be slow to rehire and many will find ways to operate with a leaner workforce. Meanwhile, bailouts get swallowed up as fast as they can be paid out. Raw stimulus drifts upwards into the pockets of the rich, inflating asset values but doing little to promote employment.
“That’s why all the talk of a so-called v-shaped recession — you go down really fast and you bounce back really fast — is nonsense,” says David McNally, author of Monsters of the Market: Zombies, Vampires and Global Capitalism. McNally explains:
This is going to be deep and prolonged, even though it’s going to have waves and cycles within it — it’s going to look like the beginning of faltering recoveries, then they’re going to get short circuited, and so on.
So, let me give you a few thoughts about where we go from here. It’s going to be a crisis across the board. The United States is getting hit harder, because the U.S. healthcare system and its government responded so ineffectively to the outbreak of the pandemic. But it’s a huge threat to China’s growth model, which is export driven. Who are they going to export to in a slump like this?
Like the pandemic itself, the crisis of capitalism it has exposed crosses national borders and flies across oceans. There is no such thing as containment in the globalized world. As evolutionary epidemiologist Rob Wallace and his colleagues have argued in the Monthly Review, the circuits of capital and the circuits of pandemic disease have become inextricable.
Market fundamentalism, the neoliberal doctrine that the “invisible hand” of the market will produce optimal solutions for all the world’s problems, has been discredited in the eyes of all but those whose employment depends on their inability to grasp the obvious. As fantasies of a quick recovery fade, perhaps many more people will be open to a deeper discussion of our future.
What a Real Recovery Might Look Like
Arundhati Roy calls us to use this moment of pandemic shutdown to “rethink the doomsday machine we have built for ourselves.” We need to solve multiple problems at once — the pandemic, the economic ruin and the ecological collapse that threatens the future of organized human society. An economic recovery that re-energizes the fossil-fueled doomsday machine will ultimately lead to death and destruction far greater than that wrought by COVID-19.
The right wing is on the march, ready to exploit the crash of 2020 as pretext to shrink what remains of the New Deal and Great Society; expand police and military budgets; close libraries and schools; enhance mechanisms of surveillance and social control; undermine freedom of the press, speech and assembly; crush the nascent strikes among “essential workers”; and accelerate the concentration of wealth and power. Unable to deliver a V-shaped recovery from the pandemic or the recession, the right will whip up xenophobia and racism against Black, Latinx, Indigenous and immigrant communities, adding to their devastation from the virus and the crashing economy.
Fortunately, prior to the COVID-19 crisis, the left was already hard at work building a lifeboat — a comprehensive and realistic alternative to the dystopian nightmare that the right has on offer. The radical Green New Deal espoused by democratic socialists and young activists has the potential to address the converging crises of pandemic, massive joblessness, extreme inequality and the climate emergency. Its promise is to unify diverse movements for social, racial, economic, climate, environmental, and gender justice around a politics of care and repair and just transition.
The vast ambition of the Green New Deal suddenly seems like less of a liability and more of a practical necessity. Its massive guaranteed jobs program is precisely what it will take to build an ecological life-sustaining economy and to ensure that the millions of unemployed can get on with their lives. Only an improved Medicare for All will address the impending loss of employment-based coverage by millions of workers as well as the tragic shortfall of medical coverage in the Black and Latinx communities hardest hit by the virus. Free public education through college and cancellation of student debt can avert lifelong damage to an entire generation struggling to make their way in the midst of a world depression.
While recognizing that the 1930s New Deal had many shortcomings (for example, in its failure to protect agricultural and domestic workers) and ultimately functioned to quell working-class rebellion, today’s radical Green New Dealers use the term “New Deal” to suggest that what is needed immediately to avoid catastrophe is a decade or more of societal transformation, not a single piece of legislation. For them, the Green New Deal is not just a plan for a green economy, but a plan to rebuild our society according to the vision of social, racial, environmental and climate justice.
When Bernie Sanders put forward his $16.3 trillion Green New Deal proposal, “centrist” candidates and the corporate media doyens who moderated the Democratic Party debates dutifully sought to discredit the plan with queries of “How you gonna pay for it?” — the question they never ask when the military budget and other capitalist priorities are discussed.
Energy researchers and social scientists Ray Galvin and Noel Healy recently assessed the economic viability of the Green New Deal. They decided to review Sanders’s plan because it was “the most ambitious, full-fledged and financially detailed plan.” Their conclusion: The Sanders proposal provides a viable roadmap for “a broad spectrum of policies, programs and legislation.”
If the pandemic has driven one lesson home, it is that the ruling class can always find money when it comes time to save capital. As in 2008, budget hawks and their apologists and enablers welcome the flow of trillions of dollars from Congress and trillions more from the Federal Reserve. But so far, the Democratic Party leadership and Democratic presidential candidate Joe Biden have not embraced Sanders’s Green New Deal proposal, Medicare for All, or put forward an adequate proposal for recovery.
“Is what Nancy Pelosi is proposing different than what Trump and the Republicans want or believe?” asks Jeremy Scahill. “Absolutely. But it’s hardly a testament to big thinking or courageous and bold visions. If anything, it reeks of milquetoast think-tankery and paltry means-tested economic half-measures.”
The young people who are flooding into organizations like the Sunrise Movement, Democratic Socialists of America, Fridays for Future and the myriad groups in the Climate Justice Alliance are fed up and ready for generational warfare. They know that neoliberal economic shibboleths were quickly abandoned and suddenly trillions of dollars that were not available to assure them of a decent future are readily dispatched when the capitalist system is threatened by an imminent crisis.
The Green New Deal has become a demand with international dimensions. The Global Green New Deal and the Green New Deal for Europe are two such initiatives. Left-leaning critics have critiqued the Green New Deal for insufficient recognition of the legacy of imperialist domination of the Global South and racial oppression and settler colonialism within the United States. The Green New Deal is a work in progress and its advocates should improve their vision by taking these constructive criticisms to heart.
The bigger the lifeboat, the more we can save.
Briefly, we wanted to update you on where Truthout stands this month.
To be brutally honest, Truthout is behind on our fundraising goals for the year. There are a lot of reasons why. We’re dealing with broad trends in our industry, trends that have led publications like Vice, BuzzFeed, and National Geographic to make painful cuts. Everyone is feeling the squeeze of inflation. And despite its lasting importance, news readership is declining.
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