‘Whatever it takes’: From corona capitalism to democratic corporatism?

Bryn Jones argues that the Covid-19 pandemic must be the signal for a new democratic political economy

Neoliberal politicians claim to be waging a war on the Covid-19, Coronavirus. A ‘war’ metaphor is invoked when they expand spending and need public support to combat a perceived evil. They promise that the Corona enemy can be defeated before too much damage is done to the population and its economic health. But when was the ‘war on cancer’ (begun circa 1971) or the ‘war on terror’ (2001) actually won? Non-military ‘wars’ tend to fade from the public and media gaze, rather than ending in victory parades and garlanded heroes. Nevertheless, the scale, conduct and outcomes of the Corona campaign may actually be closer to the total-war mobilisations of the twentieth century. If so, it will not only be a question of ‘who wins’ but of how much society and its governance will change.

Aspects of today’s total war governance include: whole sectors of the economy suspended or closed down; huge special funds generated from treasuries and channelled to the front lines of health equipment, logistics and support for businesses and employees. Closed businesses span whole swathes of the economy – retailing, cafes, bars, transport, sports and entertainment. Governments are awarding themselves extra-ordinary powers to control and police civil populations. In shades of martial law, citizens are forbidden from congregating in groups and in public places. Freedom of assembly is abolished. In the UK health sector 25,000 ‘reservists’ – retirees and students – have been mobilised to assist the medical “front line in the war against this virus” (Boris Johnson); assisted by a civilian corps of 250,000 ‘NHS Volunteer Responders’ to provide ‘community support’. Actual army personnel are allocated to deliver scarce protective equipment to hospitals and convert London’s commandeered Excel exhibition centre into a kind of field hospital.

Of more economic significance is the restriction of millions of ‘non-combatant’ citizens to their homes. This strategic retreat aims to defeat the viral enemy by depriving it of human breeding grounds. A strategy that recalls Marx and Engels’ wry observation that successful generals win wars by mobilising more recruits, but capitalism overcomes its crises by dismissing armies of workers: to save on their wage costs. The current ‘confinement to barracks’ may help on the biological front. But like other special measures, including also unheard of government subventions to replace lost revenues, rents and wages, it troubles the neoliberal mind.

‘Big state’ interventions are sacrilege against the primacy of markets. They are therefore hedged with caveats: described as temporary measures to speed up a return to free competition, mass consumption and small government. Government figures promise that the pandemic will soon peak and be brought under control, enabling a return to business-as-normal. Biological and economic considerations cast doubt on this aspiration. On the biological front, mass quarantines will deprive the virus enemy of fresh supplies. Eventually transmission rates should fall, as infection rates by those still in active employment decline and precautionary hygiene minimises contagions. A preventative vaccine will eventually provide mass inoculations. However, best estimates date this stage no earlier than early 2021. It is also possible that Covid-19 will mutate, making a vaccine redundant or less effective. Moreover, previous, related influenza epidemics occurred in waves, with the first peak of mass contagion followed some months later by another of similar magnitude. It is therefore possible that crisis governance will continue for at least two years.

On the economic front a full economic reboot seems unlikely without, at best, a lengthy transition. Government and central bank financial support is replicating that doled out in 2008. But in 2008 the main goal was to refinance and insure bank capital. Now, as detailed by Laurie MacFarlane, aid needs to go to businesses that have lost revenue through vanished sales and to absent workforces. The danger is that corporations may use new capital as they did with tax breaks: to restore balance sheets, reward their investors’ launch takeover bids or for financial speculation, rather than to reactivate investment and employment for social reconstruction. Such Keynesian transfusions may, anyway, not renew or boost consumer demand and employment. Because fear, or government fiat, are physically isolating buyers and workers from shops and workplaces in our predominantly service economy. Some online sales apart, millions of worker-consumers cannot produce and spend.

If fiscal and monetary remedies fail, restructuring of the market-state relationship, in which the crisis has revealed huge holes, may be inevitable. The frayed patchwork quilt of social welfare is patently dysfunctional for millions of workers in ‘atypical employment’ and self-employment. For example, policy camps and politicians are making a credible case for a statutory ’basic’ or ‘citizens’ income, overriding means testing and with almost automatic eligibility: a radical departure from neoliberalism’s market-welfare paradigm.

There is a broader opportunity to rebuild the worst-hit aspects of public services and social infrastructures, a chance to reverse the neglect and rundown of decades of financial mismanagement and austerity – especially since the looming Brexit conclusion requires new policies. Health services need renationalising and/or incorporation into local government, social and welfare services, vocational training and transport. Longer term, the housing sector could be switched from speculative building firms and transformed to speed the supply of new homes, with compulsory purchase of buildings and refurbishments. Only two months into the crisis and instant housing in unused buildings for thousands of homeless is already under way; a problem previously deemed almost insoluble.

In the corporate sector there has been de facto nationalisation of railway franchises and, in light of its vanished markets, some state restructuring of the aviation industry looms. Other affected and complicit sectors – especially the profit-prioritising pharmaceutical monopolies and import-dependent, high-waste food sector – could then also be considered for new, democratic forms of ownership and control by their stakeholders: workers, long-term investors and community representatives.

Privatisations and ‘hollowing out’ have stripped national government structures of the capacity they inherited from two world wars to organise and operationalise public programmes. For national and local projects to bolster the health, social care and food systems, government will need assistance to reallocate displaced workers and to meld funds, expertise and active leadership. So government will need to work with ‘social partners’ (unions), to use the EU rhetoric, plus civic partners (local government) and civil society partners (NGOs, community organisations and charities). Although right-wing ministers and the political establishment will resist, these other forces, as well as other political parties, will want guarantees that their cooperation is not only for discretionary patching up. They will want a say in planning and implementation. In the 1970s and 1980s such shared governance was called, often pejoratively, ‘corporatism’ and derided for its lack of transparency and accountability.

For these reasons, to repay the population for their sacrifices and to ensure it involves the right agencies, targets the right investments and benefits the right people, socio-economic reconstruction must, as the Foundational Economy Collective argue, be as decentralised, participative and democratic as possible: ‘Democratic Corporatist Capitalism’? A major drugs breakthrough, benign virus mutations, favourable political circumstances and effective propaganda may stifle such developments. But, and more likely, if the ‘war’ involves a prolonged campaign, with social and economic hardship, people and politicians may reject neoliberalism’s endemic insecurity and the dysfunctional markets that primarily benefit investors and corporate executives. Many will recognise that it was these conditions that allowed Covid-19 to flourish and kill. If they do, change may become unavoidable.