Will the coronavirus end capitalism?

Xavier Ricard Lanata: The dilemmas of the reconfiguration of capitalism

The crisis of globalization comes from 2008. Commercial exchanges have been declining. There was a contraction process that predated the virus. Now the virus has aggravated this situation.

What is going to happen? Those who are creditors of capital will look for ways to increase the value of it at any cost. In the northern countries that have excess liquidity, large capitals will undertake the purchase of local companies. As these large companies no longer have the value of their capital globally, they will do so locally, buying from the smallest and forming new industrial and financial conglomerates. The Chinese do not want that because they need to put their productive apparatus into operation.

China has an existential problem and now with the coronavirus, its situation has worsened and they are going to try to push their integration program harder through what is known as the new silk route and the granting of loans to reactivate demand.

In other words, make it easier for the financial system to inject liquidity into the world economy.

In Europe, what is the best way to stimulate an economy that is falling due to lack of flows? If banks are given money, there is no guarantee that they will use that money in favor of local companies because there is no demand for that production, even if the loans are at low rates or even loans with rates equal to zero. Companies are unlikely to accept debt to buy resources for production knowing that they will not be in demand because people are at home and do not spend.

So instead of channeling liquidity to companies, it is better to go directly to the pocket of consumers, but consumers cannot consume locally because production has fallen and local companies cannot hire workers. In other words, giving money to consumers could end up stimulating demand for products imported from China. This would make the Chinese very happy, because it would be like giving them money to restart their production apparatus at the expense of borrowing from European buyers. In the end it would be like an injection of money into the Chinese economy.

Stock markets that always need solvent assets to be able to revalue their capital are going to redirect their assets and liquidity to Asia that is emerging first from the crisis and seems to have more efficient control of the spread and treatment of the virus. For now, investors are going to try to place their financial assets in the Asian productive apparatus. With all this, we do not end capitalism in any way. What we see is a reorganization of flows and a new way of distributing wealth worldwide.

The only answer that would take us out of this logic would be to enter a deglobalization process that would point to the viability of life to prevent epidemics from reproducing and guarantee coexistence with the living world around us. That would require very different measures. Not only to relocate production but also to intensify energy networks and regenerate ecosystems. This implies forms of solidarity between human beings and nature.

In this sense, the coronavirus offers us an opportunity, which is up to us to take advantage of, to direct an alter-global civilization process that ends an organization of the planet ruled by capital and multinationals. Globalization is not the same as world integration. We can be part of a planet without necessarily implying the uniformity and reign of the market as the only one capable of articulating ourselves.

Pablo Solón: The capitalism of chaos

The coronavirus will not end capitalism. What we will see will be a reconfiguration of capitalism. On the one hand, there will be sectors of capital that will lose a lot, companies that will go bankrupt, billions of dollars that will disappear.

This reconfiguration of capitalism will lead to a greater concentration of capital and to greater intervention by the state. Some companies will disappear, others will be absorbed by larger companies, others will be acquired by the state to save capitalist investments. That is the trend, however it is not clear what the future of competition will be like between the different capitalist sectors worldwide. On the one hand, China has an oversupply capacity to sell to the world, but on the other hand, trade restrictions have been exacerbated by the coronavirus and the crisis. China’s overproduction capacity is a time bomb. China will not necessarily be the winner for the processes of enclosure of national economies.

There is another element to consider which is from the informal sector. In some Latin American economies it reaches and even exceeds 60% of the population. The application of necessary quarantine measures are very hard for this sector that lives from day to day. The sector can accept these measures for a few days and weeks, but it is impossible for it to accept this situation for months. Dying of coronavirus or starvation becomes a real dilemma over time. Another central variable to take into account is time. How long will the quarantine and the coronavirus crisis last?

In Bolivia, as in other countries, the government offers bonuses, food baskets, payments for essential services, deferred payment of credits and other support measures for families who live day to day. If the crisis lasts for several months, it will be very difficult to maintain these measures. The economies of our countries do not have the muscle of the northern countries to maintain subsidies for a long time.

In this context, we enter a very explosive situation, of looting, protests, violence and social confrontation, because a quarantine cannot be maintained when there are no conditions for eating and living. To face this scenario, it is necessary to start to think and adopt structural measures and not only to take circumstantial relief measures.

The situation in Latin America is much more explosive in the medium term than that of Europe or China. The flattening of the COVID19 contagion curve will reverberate differently in northern and southern countries, and will have different impacts on capitalism in each country and globally.

This means that we are going to an extremely chaotic reconfiguration of capitalism, of multiple reactions that are going to be contradictory to each other at the level of the countries and the world economy. We have entered a period of permanent crisis of capitalism, where the respite times will be increasingly shorter and the times of worsening of the crisis will be increasingly intense and prolonged.

This crisis situation will lead to the emergence of police states, to increasingly sophisticated and violent surveillance and coercion mechanisms depending on circumstances and countries. In short, capitalism is going to be reconfigured, giving rise to a chaos capitalism in which capital will seek to maximize its profits by taking advantage of the crisis without trying to reestablish periods of relative stability such as those experienced in the past.

XRL: The informal sector and the solidarity-based social economy of ecological viability

The problem of the informal sector is its fate because the State does not pay attention to it. Neither does capital pay attention to it because it is a sector that does not give large profits, its productivity is low, it is a highly fragmented sector of an infinity of small actors where the State washes its hands and formal companies also. It is a drama because it has no access to banking services, but on the other hand it is an advantage because this can allow it to organize itself in other ways.

In France, companies are highly organized based on performance. The system has been designed to make the production chains as profitable as possible. The productive apparatus has a series of internal constraints that, with the coronavirus, go bankrupt. On the other hand, the informal sector is organized as it pleases, no one watches or controls it. Small local merchants, artisans and producers have the possibility of becoming more reliable due to the interpersonal relationships established between their different actors. On the contrary, formal companies are in a disorganized process because they cannot guarantee their operation due to the crisis. The informal can become a vector of reorganization of local chains that would rest more in a form of mutual aid, of flexibility according to the possibilities of one and the other. This could foreshadow a solidarity-based social economy with ecological viability.

At a time when you have to have a very agile capacity to adapt, you can revive the collective feeling that things are done based on personal networks of solidarity and little by little we can realize that one depends on the other and that when alone, nobody can get ahead.

Hospitals are currently making a great effort even though doctors and nurses will not be paid for their overtime. They begin to move voluntarily and driven by an ethical drive; which are the fundamental springs of what is called the social and solidarity economy.

Countries in Latin America that have a high level of employees in the informal sector are more likely to reorganize than countries where the system has the rigidity of the productive apparatus. It is important to explore the positive content of the informal sector.

PS: We need to build alternatives in times of continuous crisis

There are sectors that can be reconstituted and reorganized based on a solidarity economy, for example, there are producer initiatives that are directly related to consumers. However, one thing is the “informal” food producing sector and another is the small merchants who make a living from selling products that used to be smuggled. The reconfiguration of these sectors will be much more complicated and traumatic. To this we must add that the social distancing due to the coronavirus totally hampers the traditional ways of organizing collectively through meetings and assemblies in informal popular sectors that do not manage the internet as do the sectors of the middle classes. There is a different complexity in the formation of solidarity networks between different sectors of society at the level of northern and southern countries.

We are living a systemic crisis that will not be over in 3 or 6 months and we have to learn to build solutions for times of continuous crisis. The alternatives that were developed in the past are a starting point but they are not enough in this new phase of chaos capitalism. The interaction of the different crises (environmental, social, economic, health, political, etc.) and the national, regional and global particularities force us to have more holistic, dynamic analysis, which take into account the increasing uncertainty and chaos.

There is the possibility of bunker states, fortress states that are closed to protect their elites. But there is also the possibility that within the states territories or bunker neighborhoods are created to protect certain privileged sectors, while outside the rest of the population lives a situation of misery and desolation.

The transition will be more complex and traumatic than we imagine. Proposals must cover the local, the national, the global and uncertainty. Local alternatives such as agroecology, family farming, urban exchanges … are key because human solidarity relationships materialize there. However, they are not enough. It is essential to build proposals at the state and country levels. Alternatives that go beyond conjunctural relief and that are aimed at structural transformations such as the nationalization / socialization of large banks, the cancellation of external debt, the reformulation of national budgets to strengthen the health sector to the detriment of budgets of war. And finally, it is necessary to work on new proposals for regional and global integration at the service of the most vulnerable countries and the restoration of the life cycles of the planet.