The Nature of Modern Capitalism: Why the US Government Failed in the Face of COVID

The strategy adopted by central governments to manage the economic downturn of COVID-19 was simple: bail out the entire capitalist class. Governments in the industrialized world, including that of the United States, have spent billions of dollars providing subsidies to owners, multinational corporations and financiers throughout the pandemic. Although vaccines have been heavily funded by the federal government, private companies continue to profit from them and hold intellectual property patents.

Naomi Klein defines this disaster opportunism, or disaster capitalism, as the exploitation of a sudden crisis for private profit. In this article, I explain why this contemporary political economy has prevented the United States from tackling COVID. Instead of looking for ways out of disaster, we learned to make the most of it.

In 1929, the previous economic order emerged after the near collapse of capitalism itself. The great Depression bring widespread unemployment and the collapse of the global stock market, and this has caused extreme distrust of financial institutions. It produced global political and economic upheaval, and there was little precedent for how to get out of it.

At the time of leaving the market to its failing devices, the United States turned to Keynesian economic policy to deal with the crisis. Franklin Roosevelt’s New Deal Order Was Drastic change from the unfettered economy that defined the previous decade to an era of government intervention in the economy unparalleled since the Civil War. The Keynesian welfare war state relied on public spending on national infrastructure, social programs and the military.

Over 40 years ago, the New Deal Order was replaced by the neoliberal regime. George Monbiot, columnist for The Guardian, Noted the Reagan administration’s “massive tax cuts for the rich, union busting, deregulation and privatization” personified this new era of American capitalism. Neoliberalism preserved larger-than-life defense budgets and place “corporate” in corporate welfare.

At the height of the New Deal Order, membership in private sector unions detained at 35%. However, at the start of the neoliberal regime, from 1973 to 2019, unionization in the private sector fell from 27% to just 6%. A power shift had taken place, centered less and less on the working class. The result? An era of capital domination which, when faced with a crisis, can control who floats and who sinks.

And so, the neoliberal school of thought triggered a reversal of Roosevelt’s New Deal order. It shifted America’s political economy from federal government supervision and regulation to free market principles adopted before the Great Depression – a society where the power of the working class remains extremely weak and the owners of capital are extremely unchecked. . This new power dynamic is the very nature of the modern political economy that has inherited from the pandemic.

Of the 500 million cases of COVID-19 worldwide, 79 million have come of the United States alone. As of April 6, 2020, the Coronavirus was the first cause of death in the United States, and unemployment had resurrected up to 14.7%. Many Americans reported difficulty meeting necessities such as food and rent.

Before there was any serious conversation about public relief, there was a concentrated effort to put the business community on life support from the government. The Federal Reserve immediately injected $1.5 trillion in the stock market in March 2020 supporting the benefactors of the system (shareholders) instead of investing heavily in its pillars (workers).

When American workers received their first direct government aid from the pandemic — checks for $1,200 through the CARES Act — Congress also provided $135 billion in tax cuts for millionaires. Subsequent relief bills continued to smuggle money unguarded to enrich the wealthy during a public health crisis. These policies gave lifeboats to those attending cocktail parties while leaving servers clinging to the rubble.

Profiting from the virus itself epitomizes how neoliberalism profits from disaster. Pharmaceutical companies like Pfizer reported record revenues of $3.5 billion for their vaccines, which are subsidized by the American taxpayer. And as unemployment soared, American billionaires won $1.2 trillion between March 2020 and April 2021. The capitalists weren’t just bailed out; they have made substantial progress.

Workers are beginning to realize the extreme power imbalance at play. America witnessed Striketober, a series of strikes in October 2021, where Massachusetts nurses, West Virginia steelworkers and Harvard graduate students went on strike. More recently, Starbucks employees are unionize in multiple locations, as well as the first-ever Amazon Labor Union authorized in Staten Island, inspiring hope for the future of the modern labor movement.

If neoliberalism persists, crises like the mishandling of the COVID-19 pandemic will continue as a mechanism to provide “socialism for the rich and robust individualism for the poor,” as Martin Luther King put it. , Jr. If the working class continues to fight back, there is hope for changing the nature of our society to once again prioritize the interests of labor over capital.

Picture by ​​Nicholas Hippert is licensed under the Unsplash License.