There will be unrest

"There will be social unrest. There will be violence. There will be socio-economic consequences: dramatic unemployment'.  That's the widely quoted view of Jacob Wallenberg, leading Swedish industrialist and head of the Wallenberg dynasty.  

Wallenberg was warning about the possible consequences flowing from the adoption of harsh and protracted anti-COVID lockdown measures.  It's Trump's worry too when he warns that 'the cure may be worse than the disease'.  It's a view that is not without foundation. It attracts support from two ends of the spectrum: the elite with much to lose if the world turns upside down, and those suffering the most from loss of livelihoods during the lockdown, under pressure to put food on the table and desperate for a return to 'normality'.  The left needs to find a clear vision that appeals to the latter, goes beyond the public health arguments, and also builds a movement for radical change and a better life.

In Australia the elites are already preparing for post-lockdown life.  They have in mind their perennial objectives being put into law - reduced trade union rights (more precarious work), tax cuts for big business, and the removal of environmental regulations (yes the bushfires have taught them nothing), all with the alleged goal of boosting economic growth.  The ruling elite appears to imagine paying off the debt currently being racked up by a combination of austerity and kicking the problem down the road for the younger generation to pay.  Whether they get away with this, is still up for grabs.

It's unclear which direction we can expect to unfold both in Australia and elsewhere.  But we should not underestimate our own agency, if organised, in deciding where we end up.  In previous major crises, social discontent and unrest has either gone in a fascist and totalitarian direction, or in a socialist/left-populist, solidaristic direction.  The stakes are high.  There will be revolutions although perhaps not in the nations of the global North.

Hibernation, Exacerbation or Transformation?

What will be different after COVID-19?  Three broad viewpoints are emerging.

1) Hibernation followed by a return to business as usual as quickly as possible. The centre-right Australian government is a good example of this approach.  It has decided that, for the duration of the coronavirus lockdown, the economy needs to be put into 'cryogenic suspension', in the words of Treasurer Josh Frydenberg.  This has now morphed into 'hibernation' as the preferred term.  Scott Morrison has emphasised supporting business to hibernate so they can resume business-as-usual on the other side of the lockdown.

To support this strategy the centre-right Liberal-National government in Australia has committed to cornucopian levels of expenditure, currently running to hundreds of billions of A$, and rising with each new announcement.  The bulk of the money is going to business not citizens.  Let's put to one side the irony that this is from a government that, for years, has been banging on about cutting taxes, removing restrictions on business and getting rid of the budget deficit - a deficit blamed on the centre-left Labour government's stimulus packages in response to the 2008 financial crisis. The measures announced have been labelled temporary.  The cash-splash and many of the measures adopted may look like socialism, but the goal is to facilitate a return to business-as-usual and save capitalism.

2) Exacerbation, whether intentional or not, of many of the worst aspects of existing social order.  As economist Dani Rodrik has commented, the crisis has thrown 'the dominant characteristics of each country’s politics into sharper relief. Countries have in effect become exaggerated versions of themselves... it is likely to intensify and entrench already existing trends.'

In particular, on this view, we can expect an exacerbation of inequality in countries already highly unequal (Brazil, South Africa, India, the USA etc).  We can expect greater inequality between countries, with the poorest countries emerging with increased debt, and with the export-oriented development strategies they have been encouraged to adopt, looking less and less credible.  We can expect greater levels of surveillance (see China and Israel), and a contraction of democracy by the autocratically-inclined (eg Hungary).  The ways in which the existing elites, in a number of countries, have used the crisis to achieve their goals whilst attention is focussed on COVID-19, is sad confirmation of this view (see this account of the Keystone XL pipeline).

3) Transformation, and redressing the many shortcomings in our societies that the crisis has revealed.  The COVID-19 crisis has shown things like:

• the lack of social security systems that are fit for purpose, 
• the fact that those regarded as 'essential' workers are often the lowest paid and most undervalued,
• the majority of citizens in most countries live from hand-to-mouth and have few resources to call upon in emergencies,
• that many countries no longer make critical commodities or have privatised their ability to perform critical functions,
• if we can get homeless people housed within days, why can't we do so in 'normal' times? and,
• if we can tolerate this level of disruption and expenditure to address COVID-19, why can't we mobilise seriously to combat climate change?

There are already signs that such observations and questions are gaining traction, in some countries more than others.  Spain's economy minister has announced the intention to introduce a basic income.  Calls to improve the conditions of many low-paid workers and regulate the gig and casual economies may be hard to resist.  Poorer countries may look to renounce 'odious debt'.  Public health provision may see improved funding.

Which of these three strategies prevails will depend in part on the inclinations of the governing class in each country, and in part on the popular experience of the crisis.  Critically, much will depend on the extent to which people mobilise to ensure that the costs of this crisis are distributed fairly, in both class and generational terms.

That Financial Times editorial

Many of you will have seen the editorial on COVID-19 in the UK Financial Times yesterday.  It is, on the face of it, a very radical view, and perhaps surprising from such an establishment journal.  I read it, less generously, as a sign that the ruling elites are panicking.  Whilst it is indeed an acknowledgement of the magnitude of the crisis, we should not be lulled into a naive belief that now the elites too see that the system is broken.

Before explaining myself, here's the editorial in full - in case readers of this blog can't access it behind the paywall.  I've highlighted some bits.
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"Virus lays bare the frailty of the social contract

Radical reforms are required to forge a society that will work for all

If there is a silver lining to the Covid-19 pandemic, it is that it has injected a sense of togetherness into polarised societies. But the virus, and the economic lockdowns needed to combat it, also shine a glaring light on existing inequalities — and even create new ones. Beyond defeating the disease, the great test all countries will soon face is whether current feelings of common purpose will shape society after the crisis. As western leaders learnt in the Great Depression, and after the second world war, to demand collective sacrifice you must offer a social contract that benefits everyone. 

Today’s crisis is laying bare how far many rich societies fall short of this ideal. Much as the struggle to contain the pandemic has exposed the unpreparedness of health systems, so the brittleness of many countries’ economies has been exposed, as governments scramble to stave off mass bankruptcies and cope with mass unemployment. Despite inspirational calls for national mobilisation, we are not really all in this together. 

The economic lockdowns are imposing the greatest cost on those already worst off. Overnight millions of jobs and livelihoods have been lost in hospitality, leisure and related sectors, while better paid knowledge workers often face only the nuisance of working from home. Worse, those in low-wage jobs who can still work are often risking their lives — as carers and healthcare support workers, but also as shelf stackers, delivery drivers and cleaners.

Governments’ extraordinary budget support for the economy, while necessary, will in some ways make matters worse. Countries that have allowed the emergence of an irregular and precarious labour market are finding it particularly hard to channel financial help to workers with such insecure employment. Meanwhile, vast monetary loosening by central banks will help the asset-rich. Behind it all, underfunded public services are creaking under the burden of applying crisis policies. 

The way we wage war on the virus benefits some at the expense of others. The victims of Covid-19 are overwhelmingly the old. But the biggest victims of the lockdowns are the young and active, who are asked to suspend their education and forgo precious income. Sacrifices are inevitable, but every society must demonstrate how it will offer restitution to those who bear the heaviest burden of national efforts. 

Radical reforms — reversing the prevailing policy direction of the last four decades — will need to be put on the table. Governments will have to accept a more active role in the economy. They must see public services as investments rather than liabilities, and look for ways to make labour markets less insecure. Redistribution will again be on the agenda; the privileges of the elderly and wealthy in question. Policies until recently considered eccentric, such as basic income and wealth taxes, will have to be in the mix.

The taboo-breaking measures governments are taking to sustain businesses and incomes during the lockdown are rightly compared to the sort of wartime economy western countries have not experienced for seven decades. The analogy goes still further. 

The leaders who won the war did not wait for victory to plan for what would follow. Franklin D Roosevelt and Winston Churchill issued the Atlantic Charter, setting the course for the United Nations, in 1941. The UK published the Beveridge Report, its commitment to a universal welfare state, in 1942. In 1944, the Bretton Woods conference forged the postwar financial architecture. That same kind of foresight is needed today. Beyond the public health war, true leaders will mobilise now to win the peace."

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Shifts of view such as these are important.  They are evidence that 'left' critiques of rising inequality, business-centric policies, employment insecurity (and the 'gig' economy), the destruction of the public sector, and so on, are making sense.  After decades of marginalisation they suggest we are entering a moment where a new 'common sense' may be emerging.

But we need to treat this FT view with caution for two reasons.

Firstly, we have been here before.  Similar editorials were written at the height of the global financial crisis in 2008 when financial capitalism found its very existence threatened.  Then we had editorials on why banking could never be the same, why a different capitalism was needed, why the economics profession itself needed to be overhauled (why hadn't they foreseen the collapse?), and why the offerings of business schools should be radically transformed, perhaps even terminated.  But once the bail-outs of the rich had re-stabilised the system (although they never entirely did), such transformative visions were soon forgotten.  Certainly there was some additional regulation of the finance sector, but in many respects things rapidly returned to business-as-usual and inequality as usual.  And even that is a generous assessment.  Inequality has continued to grow in the years since.  Centre-right governments sought to pay for the bail-outs and reduce deficits by imposing austerity and hardship on the most vulnerable in rich countries, and by imposing debt conditionality on poorer countries.  Right-wing governments have successfully mobilised the populace against foreigners and minorities in their midst rather than against the rich.  Financial institutions and their overpaid CEOs have resumed their lobbying for regulation to be loosened, often with success.  Students of economics are still taught largely the same neoliberal economics as before the financial crisis. Whilst some FT journalists, notably Martin Wolf, persist in asking questions about the capitalism we have, the FT editorial line soon reverted to supporting market-friendly globalisation.

Secondly, the radical reforms the FT imagines 'need to be put on the table' arenas intended to stabilise the rich world (the global North).  The Atlantic Charter and the Bretton Woods institutions, which are cited approvingly, look very different when seen from the global South.  They can be said to have stabilised a global order post-War, and a model of development, which has been devastating for many billions in the global South and highly destructive of the natural environment.  The COVID-19 crisis is not only one of social security systems and public services.  It is also a crisis of globalisation. The rapid erection of barriers in the past month to entering nation-states, replicates barriers already in place stopping free movement of people from poorer to richer countries.  These barriers will not be coming down anytime soon.  Our model of globalisation itself needs to be put on the table.  What is the purpose of globalisation?  Who benefits from how it is currently organised?  Has the current crisis shown that we need shorter, more localised, supply chains to be resilient?  Is there an alternative to the current model of globalisation, one which prioritises keeping peoples and nations connected, which promotes wellbeing first, rather than profits and trade?

In short, democratic socialists of all types should take comfort that some of their ideas are being noticed (basic income! wealth taxes!).  It is a positive sign that the FT is doing so.  At this moment we should popularise our ideas more, and not seek common ground too quickly with the beneficiaries of the status quo.  Our task now is to make the emerging common sense 'hegemonic'.