The dilemma of getting out of the corona crisis - money or life?

A sustainable economy researcher suggests taking advantage of the crisis, and correcting fundamental flaws that revealed the essence of the market economy that prices healthcare and education services workers cheaply, and air business consultants expensively. It was further revealed that human life is given zero value

(Update 22/4/2020 the title has been changed. The previous title was What will the world look like after the Corona? Four options)

By: Simon Mair, Research Fellow in Ecological Economics, Center for Sustainable Prosperity Research, University of Surrey, UK. Translation: Dafna Raviv

Where will we be in 6 months, a year, ten years from now? I lie awake at night wondering what the future holds for my loved ones. My vulnerable friends and relatives. I wonder what will happen with my job, although I am luckier than others: I get adequate sick pay and can work remotely. I am writing this article from the UK, where I have self-employed friends who are staring at months without income, friends who have already lost their jobs. The agreement that pays 80% of my salary expires in December. The corona virus is hitting the economy hard. Will someone look for employees when I need work?
There are several possible scenarios, all depending on how governments and society will respond to the coronavirus and its economic fallout. I wish we would use this crisis to rebuild, to create something better and more humane. But we might slide into something worse.
I think we can understand our situation - and what the future may hold - by looking at the political economy of other crises. My research focuses on the foundations of the modern economy: global supply chains, wages, and productivity. I observe the way in which economic dynamics contribute to challenges such as climate change and the deterioration of mental and physical health among workers. I argued that we need a completely different kind of economy if we want to build a socially just and environmentally friendly future. In the face of COVID-19, this has never been more clear.
The responses to the coronavirus are simply an intensification of the dynamic that drives other social and ecological crises: the prioritization of one type of value at the expense of others. This dynamic has played a major role in driving the global response to COVID-19. So as responses to the virus evolve, how might our economic future evolve?

From an economic point of view, there are 4 options for the future: a slide into barbarism, strong state capitalism, extreme state socialism, and transformation into a large society based on mutual aid. Variations on all of these options are entirely possible, even if they are not as desirable.

Small changes won't stop it

The coronavirus, like climate change, is partly a problem of our economic structure. Although on the face of it both appear to be an "environmental" or "natural" problem, they are actually socially driven.

Yes, climate change is due to certain gases that store heat. But this is a very superficial explanation. To truly understand climate change, one must understand the social causes that cause us to continue to release greenhouse gases. The same goes for COVID-19. True, the direct cause is the virus. But in order to manage the results, it is necessary to understand human behavior and the economic background in its broad context.
Dealing with both COVID-19 and climate change is easier if we reduce non-essential economic activity. Regarding climate change, it's because if you produce less, you use less energy, and emit less greenhouse gases. The epidemiology (theory of epidemic diseases) of COVID-19 is evolving rapidly, but the core logic is similarly simple. People meet and spread the infections. It happens at home, at work, and on trips. Minimizing this mixing will most likely lower the rate of transmission from person to person and thus lead to a decrease in total cases of infection.

Most likely, reducing contact between people will also help other control strategies. One simple strategy for controlling outbreaks of an infectious disease is contact monitoring and social isolation, where the contacts the patient has had are identified, then isolated to prevent the virus from further spreading. This approach is particularly effective when a high percentage of contacts are identified. The lower the number of contacts the person has, the less people it takes to locate to reach this high percentage.

We can learn from Wuhan (China) that social distancing and curfew are effective measures. Political economy helps us understand why these measures were not used earlier in European countries and the USA.

Fragile economy

A shutdown puts pressure on the global economy. We are on the brink of a serious recession. This pressure has led some world leaders to call for the easing of lockdown measures.

Even when 19 countries entered a state of closure, US President Donald Trump and Brazilian President Jair Bolsonaro called to go back and ease the measures. Trump announced that the American economy would return to normal within 3 weeks (now he admits that social distancing will have to be maintained for a much longer period). Bolsonaro declared: "We have to get on with our lives. We must preserve jobs...we must, yes, get back to normal."

And meanwhile in the UK, 4 days before announcing a 3-week lockdown, Prime Minister Boris Johnson was only slightly less optimistic, announcing that the UK could handle the tide within 12 weeks. Still, even if Johnson is right, it is still the case that we live in an economic system that threatens to collapse at the next sign of an epidemic.

A collapse of the economy is quite simple. Businesses exist to make a profit. If they can't produce, they can't sell. This means that they will not generate profits, which means that they will not be able to hire workers. Businesses can hold on to workers they don't need immediately and they do (for short periods of time): they want to be ready for increased demand once the economy recovers and stabilizes. But, if things start to look really bad, they won't keep their employees. Therefore, more people lose their jobs. Therefore they buy less. And the whole circle starts again, and we spiral into an economic recession.

In a normal crisis the prescription for a solution is simple. The government spends more money and it continues to spend until the people start consuming and working again. (This prescription is what made the economist John Maynard Keynes famous.)

But normal intervention will not work here because we do not want the economy to recover (not immediately, at least). The whole point of a lockdown is to stop people from going to work, a place where they spread the disease. A recent study warned that lifting the curfew in Wuhan (including on workplaces) too soon could cause a second outbreak of cases in China later in 2020.
As economist James Midway wrote, the right response to COVID-19 is not a war economy - with a massive increase in GDP. Rather, we need an "anti-war" economy and a substantial reduction in production. And if we want to be more resistant to epidemics in the future (and avoid the worst of climate change) we need a method that is able to lower the production in a way that does not cause loss of life.
So what we need is a different economic mindset. We tend to think of the economy as a way to buy and sell things, mainly consumer goods. But that is not what the economy is or what the economy should be. At its heart, the economy is the way to take our resources and turn them into the things we need to live. When we look at the economy in this way, we can begin to see more possibilities for living differently in a way that allows us to produce less without suffering more.
I and other ecological economists have long been troubled by the question of how to produce less in a socially just way, because the challenge of producing less is also central to dealing with climate change. the central Assuming all other variables are constant, the more we produce the more greenhouse gas we emit. So how do you reduce the amount of things that are produced while maintaining jobs?

Suggestions include shortening the work week, or, as I explored as part of my recent work, allowing people to work more comfortably and under less pressure. None of these options are applicable to COVID-19, because the goal is to reduce contact and not output, but the essence of the proposals is the same. People's dependence on wages must be lowered in order for them to be able to live.

What is the economy for?

The key to understanding responses to COVID-19 is the question of what the economy is for. Today, the main purpose of the global economy is to enable the conversion of money. This is what economists call the "exchange value".

The dominant idea of ​​the current system we live in is that exchange value is the same as use value. Basically, people will spend money on things they want or need, and this act of spending money tells us something about how much they value "utility". This is why markets seem to be the best way to run society. They allow people to adapt, and are flexible enough to match production capacity with use value.

COVID-19 clearly highlights how misguided our beliefs about markets are. Around the world, governments fear that critical systems will collapse under overload: supply chains, social services, but especially health care. There are many factors that contribute to this. But we'll take two.

First, it is quite difficult to make money from most of the social services. This is partly because the main driver of profits is increased labor productivity: creating more with less labor. People are a valuable factor in many businesses, especially those that rely on personal interactions, such as health care. As a result, productivity gains in this sector tend to be lower than the rest of the economy, so costs in this sector rise faster than average.

Second, jobs in many critical services are not the most valued in society. Many of the most profitable jobs exist only to enable conversions; Make money. They serve no greater purpose than that for society: they are what the anthropologist David Graber calls: "bullshit jobs". However because they make a lot of money we have a lot of consultants, a huge advertising industry and a massive financial sector. Meanwhile, we have a crisis in the health and social care system, where people are forced to leave useful jobs they love, because those jobs don't pay enough to live on.

Unnecessary jobs

The fact that so many people are working in pointless jobs is partly why we are so unprepared to respond to COVID-19. The pandemic highlights that many of the jobs are non-essential, yet we lack enough key workers to respond when the going gets bad.

People are forced to work in pointless jobs, because in a society where exchange value is the guiding principle of the economy, the basic goods of life are available mainly through markets. This means you have to buy them, and to buy them you need income, which comes from a job.

The other side of this coin is that the most extreme responses we are seeing to the COVID-19 outbreak are challenging the supremacy of markets and exchange value. Around the world governments are acting in ways that three months ago would have seemed impossible. In Spain, private hospitals were nationalized. In the UK, the prospect of nationalizing various means of transport has become very real. And France has declared that it is ready to nationalize big businesses.

Similarly, we are seeing a breakdown in labor markets. Countries like Denmark and the UK provide people with income with the intention of stopping them from going to work. This is an essential part of a successful closing. These measures are far from perfect. Nevertheless, this is a shift away from the principle that people must work to earn their money, and a shift towards the idea that people are entitled to live even if they don't work.

This reverses the dominant trends of the last 40 years. During this period, markets and exchange value were seen as the best way to manage the economy.

As a result, public systems were under increasing pressure to market, to operate as if they were for-profit businesses. Similarly, workers became more and more exposed to the market - and the gig economy (eg Uber or Air B&B) peeled off the layer of protection from market fluctuations that a stable and long-term deal used to offer.

These changes give hope. They give a chance to save many lives. They even hint at the prospect of longer-term change that makes us happier and helps us deal with climate change. But why did it take us so long to get this far? Why are so many countries unwilling to reduce production? The answer lies in the new report of the World Health Organization: they did not have the right "thought".

Our economic imagination

For 40 years there was broad economic consensus. This limited the ability of politicians and their advisers to challenge the system, or imagine alternatives. This mindset was driven by 2 interrelated beliefs:

• It is the market that provides a good quality of life, therefore it is necessary to protect it
• The market will always return to its normal state after short periods of crisis

These views are shared by many Western countries. But they are particularly strong in the UK and the US, both of which seem unprepared to respond to the pandemic.

In Britain, participants in a private meeting summed up the prime minister's approach to COVID-19 as "herd vaccination, protection of the economy, and if it means a few pensioners die, bad luck". The administration has denied it, but if true, it's not surprising. At a government event early in the pandemic, a senior civil servant told me: “Is it worth the disruption to the economy? If you look at the Ministry of Finance's evaluation of Haim, then it is probably zero."

(Editor's note: As I recall, Britain later made a U-turn, and began to impose restrictions, but as of today, the death rate there is greater than countries that took steps earlier, and besides, perhaps ironically, Prime Minister Boris Johnson himself contracted Corona and is recovering.)
This type of view is unique to certain elitist groups. He is well represented by a public servant in Texas who claimed that many old people would rather die than see the American economy sink into an economic depression. This view puts many vulnerable people at risk (and not all vulnerable people are elderly), and as I tried to make clear here, it is a false choice.
One of the things that the corona crisis may do is expand the economic imagination. As the government and citizens take steps that 3 months ago seemed impossible, our ideas about how the world works can change quickly. Let's see where the simulation takes us.

Four alternatives for the future

In order to help us visit the future, I am going to use a technique from the field of future studies. We take two factors that we think will be important in driving the future, and we imagine what will happen under different combinations of the two axes.
The factors I choose are conversion value and concentration. Value refers to all the guiding principles of our economy. Are we using our resources to maximize conversion and money, or are we using them to maximize life? Centralization refers to the ways in which things are organized, whether as a collection of small units or as one large force. We can organize these factors on a grid, which can be populated with scenarios. So we can think about what might happen if we try to respond to the corona virus with 4 extreme combinations:

1) Political Capitalism: centralized response, prioritizing conversion value
2) Barbarism: decentralized response prioritizes conversion value
3) Political socialism: a centralized response, prioritizing the protection of life
4) Mutual aid: distributed response, prioritizing protection of life.

Political capitalism

Political capitalism is the dominant answer we see around the world right now. Typical examples are Great Britain, Spain and Denmark.
Capitalist society continues to follow the conversion value as the guideline of the economy. But she recognizes that markets in crisis require support from the state. Given that many workers cannot work because they are sick, and they fear for their lives, the state steps in with extended social assistance. It also runs a massive Keynesian stimulus through credit expansion and distribution of direct payments to businesses.

The expectation is that it will only be for a short period. The main task of these measures is to allow as many businesses as possible to continue trading. In the UK, for example, food is still supplied by markets (although the government has relaxed competition laws). When workers are supported directly, this is done in ways that aim to minimize disruption to the normal functioning of the labor market. Therefore, for example, in the UK, payments to employees are made through the employer. And the size of the grants is based on the conversion value that the worker usually produces in the market, more than on the usefulness of their work.

Could this be a successful script? Maybe, but only if the corona proves to be under control after a short period. Since a total shutdown is avoided to preserve market activity, transmission of the viral infection will likely continue. In the UK, for example, non-essential construction is still going on, leaving workers to mingle on construction sites. But it will be increasingly difficult to maintain minimal state intervention if the number of deaths increases. An increase in the number of patients and deaths will cause unrest and deepen the economic damage, forcing the state to take more and more radical measures in order to keep the market functioning.

barbarism

This is the worst case scenario. Barbarism is the future if we continue to rely on conversion value as the guiding principle and still extend support to those left out of markets by illness or unemployment. This is the situation that describes a situation like we have not seen yet. (Editor's note: reports of looting of supermarkets come from third world countries, such as South Africa and several countries in South America AB)

Businesses fail and workers go hungry because there is no mechanism to protect them from the harsh reality of the market. Hospitals do not receive additional measures that are out of the ordinary, and thus collapse. dead people. Barbarism is ultimately an unstable state that ends in destruction or moving to another part of the graph after a period of political and social destruction.

can it happen The fear is that it will happen accidentally during the epidemic, or on purpose after the peak of the epidemic. The mistake is if the government fails to step in with sufficient force during the worst part of the epidemic. Support may be offered to businesses and households, but if there is not enough to prevent the market from collapsing in the face of widespread disease, chaos will ensue. Hospitals may receive additional budget and staff, but if this is not enough, many patients will be turned away.

Austerity is possible and even consequential after the epidemic reaches its peak and governments seek to return to normality. Such a situation threatens Germany. It would be devastating. Not least because the cessation of funding of essential services during austerity affects the ability of countries to respond to the epidemic.

The result of the failure of the economy and society will be the trigger for political and social unrest, which will lead to the failure and collapse of both the state and the welfare system.

Political socialism

Political socialism describes the first of the options for the future we can see with social change that places a different kind of value at the heart of the economy. This is the future we are reaching with the continuation of the trend of the measures we see today in the UK, Spain and Denmark.
The key here is measures like the nationalization of hospitals and payments to workers not as a means to protect markets, but as a way to protect life itself. In such a scenario, the state steps in to protect parts of the economy that are essential to life: food production, energy and shelter for example, so that supplies are no longer dependent on the whims of the market. The state fills hospitals, and offers freely available housing. Finally, it offers citizens the means to obtain various products - both basic and consumer products that we are able to produce with fewer workers.
Citizens no longer rely on employers as intermediaries between them and the material world. Payments are passed to everyone directly and are not tied to the conversion value they generate. Alternatively, the payments are the same for everyone (on the basis that we are entitled to be able to live, simply because we are living), or they are based on the usefulness of the work. Supermarket workers, delivery drivers, warehouse workers, nurses, teachers, and doctors are the new CEOs.

It is possible that political socialism will emerge as a result of political capitalism and the effect of a protracted epidemic. If a deep recession develops and there are disruptions in the supply chains such as demand that is not met by the standard Keynesian policies we see now (printing money, making it easier to get loans, etc.), the state may take over production.
There are dangers in this approach - we must avoid tyranny. But if done right, it may be our best hope against an extreme corona outbreak. A strong state organizes the resources to protect the core functions of the economy and society.

Mutual aid

Mutual aid is the second option of a future in which we adopt the protection of life as a guiding principle of the economy. But, in this scenario, the state does not take a vital role. Rather, individuals and small groups are beginning to organize support and help within their community.

The dangers in this future are that small groups are unable to quickly mobilize the kind of resources required to effectively increase the capacity of the health system, for example. But mutual help can make it possible to prevent the spread more effectively, by building social support networks that will protect the vulnerable and monitor the isolation instructions. The ambitious form of this future appears to be the development of a new democratic structure. A grouping of communities that are able to move significant resources relatively quickly. People band together to plan a regional response to stop the spread of the disease and, if they have the skills, also treat the sick.

This type of scenario can grow out of any of the others. This is a possible way out of barbarism, or political capitalism, and possibly into political socialism. We know that a community is responding in places that are essential to dealing with the outbreak of the Ebola epidemic in West Africa. And we already see the roots of this future today in the groups organizing care packages and community support. We can see it as a failure of the state to respond, or we can see it as a practical, compassionate response to an emerging crisis.

hope and fear

These visions are extreme, cartoonish scenarios, and will most likely flow into each other. My fear is the deterioration from political capitalism to barbarism. My hope is a mixture of mutual aid political socialism: a strong democratic state that will shift resources to build a stronger health system, prioritize protecting the vulnerable from the vagaries of the market, and allow citizens to form mutual aid groups instead of working redundant jobs.

What I hope is clear is that all of these scenarios leave room for concern, but also hope. COVID-19 highlights serious deficiencies in our existing system. An effective answer to this will probably require a radical social change. I argued that it requires a drastic move away from markets and the use of profits as the main way of organizing the economy. The positive side of this is the possibility that we will build a more humane system that will make us more resistant to future epidemics and other foreseeable crises such as climate change.

Social change can come from many places and with many effects. A primary task for all of us is to demand that emerging social forms grow out of an ethics of values, life and democracy. The main political task at the moment during the crisis is to live and organize around these values.