The COVID-19 package and the limits of capitalism

by Daphna Whitmore

The willingness to put human life before business shows that sometimes capitalism is capable of suspending its relentless drive for profit. For a short time it can behave differently.

Flatten the curve is the public health message since COVID-19 suddenly overwhelmed the hospital system in northern Italy. Now most governments have taken action and the movement of people around the world is almost at a standstill. Social distancing, mass testing and improved hygiene should prevent another unmanageable spike in cases of COVID-19 .S00318-044254(1)

The New Zealand government’s response package announced today of $12.1 billion is substantial. It will include a rise in welfare benefits by $25 a week. There will also be a significant increase to the winter heating allowance, taking it to $40 a week.  These payments will make a difference to the well being of beneficiaries.  However, it needs to be noted that this is Labour’s third year in office and they have ignored previous calls to raise benefits. If they were genuinely concerned about beneficiaries, the rises would have been in the first year, and not waited until a crisis was in the making. Furthermore, this increase is less than the government’s welfare working group’s recommendation of a minimum of $70 increase per week for beneficiaries.

Most of the package will be going to businesses. They will get $5 billion to use for wage subsidies and sick leave payments. Another $2.8 billion is for tax changes to free up business cash flow.

The government is acting now in order to stimulate business. Despite all the talk about the free market, the reality is the state invests heavily in all developed countries. Free market capitalism has been dead a very long time and it is not going to stage a comeback.

The stimulus packages in NZ and elsewhere show that the capitalists do not have faith in the markets. In crisis times, they demand states step in with bailouts and then make the most of the profit-taking as smaller capitalists go under.

State intervention is also entirely necessary for capitalist stability. Today people in the west (with the exception of the US) expect socialised health and education. They expect a livable unemployment benefit if they are out of work, and in old age they expect the state to provide an income. These are the dominant ideas and these expectations are the legacy of the socialist movements of the nineteenth and twentieth century. They are also necessary to maintain the social stability that is necessary for capital accumulation in the capitalist West.

These concessions are confined to the imperialist world and are partly funded out of the super-exploitation of the Third World.  For instance, most of the Third World do not have well-run socialised health systems.  Instead they are plundered to help provide such a system in the First World.

The arrival of COVID-19 is a public health failure. The live animal markets in China that have domestic farm animals alongside sickly wild animals, crushed together in filthy conditions, were the likely Petri dish for COVID-19. These markets were closed after SARS and should not have been allowed to reopen.

While governments are focused on an acute situation and willing to flatten the curve they show no sign of dealing with systemic problems. At the time of writing COVID-19 has killed just over 7,000 people. Left unchecked many thousands more would have died. Maybe it would have reached the 100,000 who die from seasonal influenza every year. Perhaps it would surpass this number if COVID-19 had spread into detention camps such as the one million Uighur Muslims in northwest China, or the 300,000 people in three refugee camps in Kenya. Today, there are more refugees and internally displaced people than at any time since World War II. These are the conditions in which the virus can become more contagious and more deadly and are a product of global capitalism and the differential positions occupied in the world order by First and Third World countries.

Across the planet, infectious diseases kill over 17 million people a year, many of which could be prevented with good sanitation. There are still 800 million people without access to clean drinking water and there are over 840 million people who are undernourished. Meanwhile $US3 billion is spent on the war industry every day.

These problems are capitalism’s failure. It is seldom talked about by governments, and little is done. When these problems are talked about they are presented as just the way things are.

The time to flatten this curve is long overdue.

One comment

  1. Great article and the comment the time to flatten this curve is long overdue is very pertinent.

    What is interesting is that in the face of a serious communicable disease sovereign governments including NZ suddenly find it in their power to act “for the people’ in the way that they have not and do not for climate change or poverty remediation. Observing this hopefully large numbers of people will come to understand that indulging capital owners when there are clear and present dangers is simply a matter of choice. Government with their own currency have and can again issue money to solve public problems, In this respect the work by Greenpeace (see about alternatives to the proposed rescue package which would see people rapidly employed in addressing housing quality and many other projects.

    Social Credit’s servies of press releases addressing the idea that the goverment should have the first use of created money not the banks. (See are interesting and have been endorsed by non other than Bernad Hickey.

    We are in that phase of capitalism when its utter incapability to solve problems is laid bare. It is governments around the world who are investing in covid virus medications, governments who will bail out airlines, governments that can ensure people are fed.

    The hope for the future is that we (the people) discover that activist governments can and should act for the will of the people and not the will of capital into the future.

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