Richard D. Wolff: Viruses like Covid-19 are a part of nature we must accept. But Capitalism-2020 must be destroyed

…from Russia Today, Mosocw

By Richard D. Wolff, Professor of Economics Emeritus, University of Massachusetts, Amherst, and Visiting Professor in the Graduate Program in International Affairs of the New School University, NYC.

Wolff’s weekly show, Economic Update, is syndicated on over 100 radio stations and goes to 55 million TV receivers via Free Speech TV and his two recent books with Democracy at Work are Understanding Marxism and Understanding Socialism both available at democracyatwork.info.



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[ Editor’s Note: Finally we are beginning to see articles on a needed topic, which is how did we get into the mess we are in now with Covid and the economy, and what roads do we have really change the power structure that left the back door for Covid-19 not only unlocked, but open.

We had a highly leveraged economy whose foundation is highly leveraged securities that are collateralized by other highly leveraged securities. People inside the market know this and they know what kinds of threats can tank their positions.

If they are trading “open” positions they are exposed to going broke in an hour, but regulations allow such. Conservative traders I know looking for modest supplemental or retirement income, always trade using straddles so they are automatically punched out of a position with a bearable loss in a market turn.

The US health system, along with most others have their own version of this leverage game, which excludes things like tying up capital in pandemic inventories, and even more so for those that require “maintenance”.

The private market has never been prepared for something like this, nor did it expect to be asked to do it as it was obviously a national level problem that would require a national level solution with the cost spread out “democratically”.

So on our doorstep Mr. Reality check has knocked, saying “I’m here”, and there was no way to duck the consequences which will be painfully paid for, in not by cash then by someone’s mortgaged future. 

Look at this like the student debt bubble for an over priced educational system where legions of drop outs and even grads can’t work in the high paying field they took the bait on, with many ending up in $15 to 20/hr jobs.

We have one hell of an election year issue in front of us. This is the political “Burning Tree” event possibly of all time. Can we measure up to the challenge, or are we going to get suckered again into the path where someone else is expected to pay, but would like to do so with an IOU they can bankrupt. Welcome to a long hot summer… Jim W. Dean ]

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Show me the money

– First published … April 08, 2020 –

As economies reel from the meltdown triggered by the novel coronavirus pandemic, governments scramble to build the system back up. But it’s the system that brought about the fall, and if we keep reviving it, will do so again.
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The desperate policies of panic-driven governments involve throwing huge amounts of money at the economies collapsed in response to the Coronavirus threat. Monetary authorities create money and lend it at extremely low interest rates to the major corporations and especially big banks: “to get them through the crisis.”

Government treasuries borrow vast sums to spend the collapsed economy back into what they imagine is “the normal, pre-virus economy.” Capitalism’s leaders are rushing into policy failures because of their ideological blinders.

The problem of policies aimed to return the economy to what it was before the virus hit is this: global capitalism by 2019 was itself a major cause of the collapse in 2020. Capitalism’s scars from the crashes of 2000 and 2008/9 had not healed. Years of low interest rates had enabled corporations and governments to “solve” all their problems by borrowing limitlessly at almost zero interest rate cost.

All the new money pumped into economies by central banks had indeed caused the feared inflation but chiefly in stock markets whose prices thus spiraled dangerously far away from underlying economic values and realities. Inequalities of income and wealth reached historic highs.

In short, capitalism had built up vulnerabilities to another crash that any number of possible triggers could unleash. The trigger this time was not the dot.com meltdown of 2000 nor the sub-prime meltdown of 2008/9; it was the virus. And of course, mainstream ideology requires focusing on the trigger, not the vulnerability.

Thus mainstream policies aim to re-establish pre-virus capitalism. Even if they “succeed,” that will return us to a capitalist system whose accumulated vulnerabilities will soon again collapse from yet another trigger.

In the light of the Coronavirus pandemic, I focus criticism at capitalism and the vulnerabilities it has accumulated for several reasons. Viruses are part of nature. They have attacked human beings – sometimes dangerously – in both distant and recent history. In 1918, the so-called “Spanish flu” killed nearly 700,000 in the US and millions elsewhere.

Recent viruses included SARS, MERS, Ebola, etc. What matters to public health is each society’s preparedness: stockpiled tests, masks, ventilators, hospital beds, trained personnel, etc. to manage dangerous viruses. In the US, such objects are produced by private capitalist enterprises whose goal is profit. It was not profitable to produce and stockpile such products, that was not and still is not being done.

Nor did the US government produce or stockpile those medical products. Top US government personnel privilege private capitalism; it is their primary object to protect and strengthen.

Result: neither private capitalism nor the US government performed a most basic duty of any economic system: to protect and maintain public health and safety. US capitalism’s response to the coronavirus continues to be what it has been since December, 2019: too little, too late. It failed. It is the problem.

The second reason I focus on capitalism is because the responses to today’s economic collapse by Trump, GOP, and most Democrats carefully avoid any criticism of capitalism. They all debate the virus, China, foreigners, other politicians… just never the system they all serve. When Trump and others press people to return to churches and jobs despite thereby risking their and others’ lives, they place reviving a collapsed capitalism ahead of public health.

The third reason capitalism gets blame here is because alternative systems – not driven by a profit-first logic – could manage viruses better. While not profitable to produce and stockpile everything needed for a viral pandemic, it is efficient. The wealth already lost in this pandemic far exceeds the cost to have produced and stockpiled the now missing tests, ventilators, etc. that contribute so much to today’s disaster.

Capitalism often pursues profit at the expense of more urgent social needs and values. In this, capitalism is grossly inefficient. This pandemic is now bringing that truth home to people.

A worker-coop based economy – where workers democratically run enterprises, deciding what, how, and where to produce and what to do with any profits – could and likely would put social needs and goals (like proper preparation for pandemics) ahead of profits.

Workers are the majority in all capitalist societies; their interests are those of the majority. Employers are always a small minority; theirs are the “special interests” of that minority. Capitalism gives that minority the position, profits, and power to determine how the society as a whole lives or dies.

That’s why all employees now wonder and worry how long our jobs, incomes, homes, bank accounts, etc. will last if we still have them. A minority (employers) decides all those questions and excludes the majority (employees) from making those decisions even though that majority must live with their results.

Of course, the top priority now is to put public health and safety first. To that end, employees across the country are now thinking about refusing to obey orders to work in unsafe job conditions. US capitalism has thus placed a general strike on today’s social agenda.

A close second priority is to learn from capitalism’s failure in the face of Corona. We must not suffer such a dangerous and unnecessary social breakdown again. Thus system change is now also moving onto today’s social agenda.

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11 COMMENTS

  1. They are both responsible in their respective domains. For business it has been the wonder of “just in time” supply chains where money tied up in inventory was minimized and so earnings could be maximized that drove stock prices up and created “wealth”. But the problem with just in time inventories, well, we have had a mega display of that when the order to ramp up testing kits ran into the “reagent” shortage as all those producers were configured to handle a predictable supply, and not to be able to ramp production quickly as they depended on their own suppliers, which is more of a problem during a lock down and sick people.

  2. Jim you are missing out on the whole picture of overpriced education. I can attest that even those who graduated with Masters and above are getting the full shaft. Most coming out of the those programs and getting work with pretentious firms are working for ‘peanuts’ and paying off those loans is mathematically ridiculous. Their only option is to take a 20 year plan towards forgiveness. They pay proportionately to their salary for 20 years and the balance is forgiven. And that is saying they do not succumb to the peddlers of lower interest unforgivable loans that they are constantly lured to take.

    • I have not seen a shred of interest in any “consumer protection” in this area. By that I mean that anyone planning to go to college via a big loan campaign has to be supplied the statistics of the current student load debt loads and the earnings capability of those with a degree, and those without, which is the boat many of them are in. And they have to sign a release that they were fully aware of the risks and did not want taxpayers to subsidize their loans. I would do the same for any family steering a daughter into the military, to have to see the stats on sexual abuse, the total failure to put a dent in it, and then sign that they are OK with the risk.

  3. The US has still not learnt…all the bail out is to prop up zombie corporations and the parasitic banks. The US complains about China being the global manufacturing hub but the US hold on the world’s financial system is worse.

  4. I think we were about due for a reset. Just look at the cost of: healthcare, education, housing, sporting events, theme parks, theater tickets, hotel rooms, air travel , etc. And now these greedy industries want to be bailed out.

  5. Perhaps all the tRump supporters have to die Jack? However, before demographics kicks in I fear the damage will be astronomical.

    And to them are we not supposed to fight all wars for Isnotreal down to the last American anyway?

  6. Quote 1 – “Of course, the top priority now is to put public health and safety first.”
    Quote 2 – “What matters to public health is each society’s preparedness: stockpiled tests, masks, ventilators, hospital beds, trained personnel, etc. to manage dangerous viruses. In the US, such objects are produced by private capitalist enterprises whose goal is profit. It was not profitable to produce and stockpile such products, that was not and still is not being done.”
    In think there is pretty much a 100% consensus among those who would know that this is biological weapon. It must be assumed that those that have this weapon have more of the same, if not something more lethal. If quote 2 is true, and we know it is, then the top priority of quote 1 is not being met. I’m just wondering how many Americans will have to die before they get the message…

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