by Leonard Gentle
Part 1: Global Upheavals and the Politics of Disease
As we enter the second week of South Africa’s lock-down to fight the Covid 19 pandemic much public comment has focussed on the tension between “doing the right thing” (the lock down) for the sake of public health and the consequences of “damaging the economy” (for which there are bail-out programmes).
President Cyril Ramaphosa’s State of Disaster measures have been much praised for “showing leadership” and there is much talk of us all “being in this together”.
Of course many have pointed out how in a deeply unequal country such as ours the poor and the working class will bear the brunt of the disease, are almost impossibly unable to observe “social distancing”, do not have potable water readily available to wash hands and will also suffer the worst of the economic consequences of joblessness, no pay, no livelihoods and insecurity. Workers’ organisations have noted that the measures in the bail out which claim to compensate workers for loss of earnings all require the employer to trigger.
Others have emphasised the extent to which this is an opportunity to re-think the way we live and what sort of society will emerge after the pandemic has run its course. Amongst this latter are some who have raised the opportunity the lock down provides for thinking about the existential threat to the planet posed by climate change and the possibility for the kinds of planetary production downsizing necessary.
So far the picture doesn’t look promising. Already in the 2020 Budget the ANC government cut the health budget, despite knowing that the Covid 19 was on the way since late 2019. And the cornerstone of that Budget was a commitment to cutting the public sector wage bill – that’s mainly about the employment of teachers, street cleaners, sewerage workers, nurses, community health workers etc. That was, ostensibly, to ward off the threat of a Moody’s downgrade.
Since then Moody’s done its downgrade – which had long ago been factored into the speculation of bond holders. Now Ramapahosa is serving notice that the government is going to make the “necessary structural reforms” – code for more privatisation and commercialisation and making it easier for employers to dismiss workers – and Tito Mboweni wants to go to the IMF so as “to help the health sector” (this is the institution whose structural adjustment programmes have systematically destroyed public healthcare throughout Africa).
Of course whether it’s all doom and gloom or whether it’s an opportunity to change the world for better and live in harmony with the natural world are political questions, questions of the political power of governments, and the power of people to mobilise to shape things in the direction of social justice.
So let’s examine Covid 19 through a political lens and see how diseased our politics has become and what we may have to do to get a different kind of politics.
A health crisis as a lens on, but not a cause of, global upheavals.
South Africa is of course not alone in declaring lock downs. When China first locked down Wuhan and the whole of the Hubei province, there was much sneering in the West at the apparent “primitivism” existing in China that a zoonotic virus could leap species at a wet market in Wuhan. And how much lock downs were only possible in an authoritarian country and were not replicable in democracies.
Bear in mind that the US has been sabre-rattling for some while about the Chinese military threat in the South China Sea and the apparent Wuawei 5G threat. And since Trump’s election much of his focus has been a “trade” war with China.
Then in early March 2020 global stock markets collapsed.
On the economic side all the major governments – having imposed austerity on their populations since 2008 – have now opened the taps. New rounds of interest rate cuts, tolerance of huge fiscal deficits and new rounds of printing money via Quantitative Easing”.
On the health side, now China’s lock down is “international best practice” and the Covid 19 pandemic and the economic crisis seem to be inter-linked.
Is this just a case of governments finally, even if belatedly, doing the right thing and listening to the science of the WHO and their own medical science advisors?
It is hard to impute noble motives to these shifts. As all these governments have been cutting healthcare and public service budgets for years. And have ignored the scientific consensus on climate change as too threatening to business as usual.
So, to see our way to understanding we should realise that there have been actually three major upheavals going on over the last 20-30 years …
1. Firstly, there is, since the early 1970s, an ongoing crisis of capitalism stuck in a long wave of stagnation – in terms of outputs, growth, employment and profit rates. The series of political and economic measures taken by almost all governments to address this problem – deregulating finance markets, the securitisation of debt, the commercialisation and privatisation of what were once public services, cross-border systems of production and the financialisation of economic life – unleashed the era of neo-liberalism.
But, far from neo-liberalism solving the crisis, it led to its own chapter – the 2008 “financial crisis”.
In response the major states all cut interest rates to near zero, pumped more than $10 trillion into private banks through Quantitative Easing, bailed out the corporations deemed to be “too big to fail” and even partially nationalised some companies.
What temporarily saved the day was not so much these measures but the fact that China was still in its upward trajectory of the resource cycle.
While the epi-centre of this crisis was the private sector in the USA, the re-packaging of money into arcane financial vehicles and the globalised system of financialisation saw European governments bear the brunt of the costs of these bail outs as a “public debt” crisis.
Their populations experienced this as a new obsession by European countries with austerity. The most ruthless cuts in public services – including health services – since the first emergence of the welfare state after WW2.
It was no accident that once global travel brought COVID 19 to European countries such as Italy, Spain, and France, they were simply incapable of coping.
But whilst the post-2008 pumping of easy money into the banks was meant to provide them with liquidity so that they could make loans available to investors to invest in the stagnant “real economy” the opposite happened. With a system of deregulated markets investors simply used the cheap money to indulge in a new binge of share buy-backs and arcane derivatives.
Those speculating on the JSE also got into the binge. They borrowed in the low interest countries of the US and the EU and bought bonds in South Africa where interest rates are high.
And made a killing!!
Many analysts, including main steam economists like Nouriel Roubini, have been warning for some time that this was leading to asset price inflation and that it was inevitable that at some stage the share markets would plunge.
That is what happened on the new Black Monday of 2020. On, Monday 9 March, world stock markets took their biggest tumble since the 1987 Asian crisis. The New York stock exchange declared – an unprecedented act – that they were suspending trade in derivatives for the day.
Also the use of the carry trade to buy bonds on the JSE boosted South Africa’s finance sector but left SA with one of the highest real interest rates in the world and also vulnerable to a shift in bond sentiment.
This was not caused by Covid 19 – although the fact that Covid 19 was disrupting production in China and China is today both the manufacturing capital of global value chains, was a factor. But it was the inevitable crash of fictitious capital.
But since this latest crash in 2020, governments have once again switched on easy money for the banks – lower interest rates, fiscal deficits and QE – and they have just been joined by South Africa.
2.The second global upheaval is the geo-political war between the USA and its old Cold War adversaries – China and Russia. But, today, this is not a war based on ideology. But is simply a product of US aggression against any competing power, even if it is its “allies” (like the EU).
At the fall of the Berlin Wall in 1989 US corporations and other Western TNCs stood ready to conquer the old Eastern Bloc and find new sources for accumulation, whilst the US extended NATO up to the crumbling remains of Russia. In response Putin’s Russia launched a nationalist project however, uniting and disciplining its recently privatised energy sector to establish itself as rival power to the USA.
China took notice of Gorbachev’s naiveté and decided to keep its Communist Party control and manage the transition to capitalism, without ceding power to US imperialism. Despite its talk of having “Socialism with Chinese Characteristics” it is a project of Chinese state capitalism.
China is clearly intent on challenging US and the current uni-polarity of the world order. It has two strings in its bow – the Renminbi is challenging the US dollar as the world’s trade currency and, more importantly, as the world’s reserve currency and, via its Belt-and Road project, it is hoovering up allies all over the developing world.
And with the Covid 19 pandemic it has become the world’s exemplar. Its lock down” strategy is now “global best practice.”
And during Covid 19 Russia has also taken centre stage in a new oil price-war. In the early 1970s it was the oil crisis – when OPEC countries summarily raised oil prices as a geo-political weapon in the Middle East – which tipped the balance of the crisis-ridden capitalist world. Now Russia has started a price war for oil with Saudi Arabia.
Briefly, Saudi Arabia as the dominant party in OPEC, wanted to cut production in order to raise the oil price. It is common cause that the Saudis were also acting as proxy for the US shale gas industry which needs high energy prices to be sustainable.
But Russia is having none of this and decided to flood the energy market – thus driving the oil price down to levels around $30 a barrel. The Saudis have been forced to follow suit and so there is a price war, which threatens the US.
In this geo-political power struggle with China and Russia there was no way that the Chinese example of dealing with Covid 19 was going to be followed in the West – until new political possibilities and threats were added up.
3.The Third global upheaval, which has not been caused by Covid 19 but which has been illustrated by the pandemic, is a political crisis. Whilst China and Russia have authoritarian regimes whose power is currently unassailable, none of the countries in the West has a government with any political authority to do anything decisive. And many of the countries in the global south share some of the same features of lack of legitimacy.
A common denominator in the USA and Europe is that the sources of this lack of legitimacy lie in the consequences of the actions pursued by the governing elite in responding to the 2008 Financial Crisis. Briefly, the strategy of bailing out the rich and foisting austerity on the poor, has caused so much public anger that the cosy Centre-Right-Centre-Left Party “gentlemanly” sharing of electoral cycles has been shattered. In France, in Germany, in Spain, in Ireland, in Italy …none of the post WW2 political parties have survived. Those that have – like in the USA – have seen the hollowing out of the centre of these parties.
It is this political crisis which is a factor as much as the pandemic that is making governments act as they do…
It’s not straightforward declare a lock down. Besides the economic impact for people who lose livelihoods, the main point is that it is a political gamble.
Over time it may be shown that it was the right thing to do. The infection rate curve flattens, death rates do not reach alarming levels and the public healthcare system does not get overwhelmed.
But it is an initiative that is enormously risky for governments that lack legitimacy in the short term. People may panic and civil order may break down.
It can threaten the political order if governments are forced to use martial law (which comes at its own price).
But yet it may be a risk worth taking for political reasons. Because, if it works, it establishes the moral authority of the leader. Going on TV and declaring something so radical like a lock down is establishing the credibility of the leader and co-opting all opponents. It is also an opportunity for governments to introduce new measures for the enrichment of the wealthy under the guise of “necessary reforms”.
It also ends social mobilisation – mass demonstrations, strikes, protest and even public meetings – that may put pressure on government. It is the equivalent of the war-scenario where governments can rule by decree. It is significant that almost everywhere leaders have evoked the “We are at war” analogy.
There is much at risk but there is also much to gain.
And it is this tension of risk vs reward in the context of a political crisis that accounts for the behaviour of many governments – including our own ANC – when it comes to responding to the Covid 19 pandemic.
Already a number of activist organisations all over the country – who well knew the threat posed by Covid 19 – met before the lock-down, and have used virtual spaces for discussion during the lock-down. They have raised both urgent immediate demands that are needed at this time to protect ordinary people from a disaster, and measures that can help us think about what things may look like after Covid 19 has run its course.
In a situation where government is clearly drawing its political agenda from the need to appease the markets rather than dealing with the threats posed to the poor majority, it tells us much, unfortunately, about the current weak state of the movement for social justice in South Africa and the organisations of the working class.
But it is also a wake-up call to activists for social justice. We cannot merely stay at home under lock down and leave all the big decisions to government. This health crisis is also a political crisis.
In our next piece, Part 2, we will look at the political patterns of the lock downs across the world and then come back to South Africa.
Leonard Gentle has been an activist since the 1970s and a trade union organiser for SACCAWU and NUMSA. He is the retired director of the International Labour Research and Information Group (ILRIG) and a former consultant in research translation to the SAMRC.