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Coronavirus Against the Market

Coronavirus has exposed the fragility of global capitalism and left governments facing a choice – the survival of the market or the survival of humanity.

The coronavirus pandemic is upending economies around the world, with many forecasters predicting a drop in economic output comparable to the Great Depression. Most countries are contemplating emergency measures to keep their economies on life support while they slow the spread of the virus. These emergency measures are vital. But the coronavirus crisis reveals deeper shortcomings in capitalist society: by making our economic life so dependent on global, interconnected markets, we have left most people extremely vulnerable to economic and social crises.

This was a point incessantly advanced by the mid-century Hungarian political thinker Karl Polanyi, who died in 1964. Polanyi argued that the very ideal implicit in capitalism – that most if not all economic production and exchange could be organised based on markets – was a utopian fantasy that would unravel in the face of external shocks and internal crises. That is exactly what is happening today. In the face of a collective threat, we can see how the last forty years of gradual marketisation have undermined the resilience of our economies and society.

Beginning in the 1970s, Western economies, and especially the UK and the US, underwent an internal transformation towards increasing the scope of the market. Financial firms were unleashed from regulatory constraints; corporations became more dependent on stock markets for funding; capital roamed freely around the world; production was reorganised around complex global supply chains. All these changes produced economies that relied on high degrees of leverage and razor-thin margins to squeeze every ounce of profit. More than a mere act of ‘dis-embedding,’ the neoliberal revolution was supposed to shield capitalism from mass democracy by embedding it in new, antidemocratic institutions, exposing populations to the randomness of market power.

Polanyi argued that crises in capitalism consist of more than businesses’ inability to turn a profit. Crises, rather, were always total events, threatening society’s political, economic, and moral fibre. In these situations, Polanyi argued, the groups and interests harmed by the market mechanism would coalesce into a “counter-movement,” demanding protective barriers against a market run amok. Polanyi thus argued that crises of capitalism affect multiple classes simultaneously, and that so the counter-movements against capitalism will always require cross-class alliances.

To capture these cross-class effects of capitalist dysfunctions, Polanyi often talks of “society” defending itself against the market. Some classes, to be sure, seek protection from the market not in order to overcome capitalism, but to rescue it. But in seeking protection, such cross-class alliances will create new political institutions that can enable, although they do not guarantee, a more fundamental democratic transformation of the economy. 

The coronavirus crisis is Polanyi’s counter-movement on steroids. Facing an overwhelming threat to their societies, governments made the radical decision to sacrifice the market to collective safety. Such counter-movements need not be left-wing. When Brazilian peasants faced famines in the late nineteenth century they turned to religious prophets. German employers in the 1930s hankered for war production. Polanyi’s ‘society’ can thus be defined in numerous ways – a set of market relations, a perfect racial community, a group of equal citizens before the law. Polanyi himself was keenly aware of the way fascism offered a response to the crisis of capitalism in the 1930s. 

As well as for using an overly homogeneous ‘society,’ critics have often accused Polanyi of obscuring the degree to which his ‘counter-movements’ would save rather than bury capitalism. If the United States implements public healthcare after the crisis, it will be to keep the labour force alive and docile, not out of humanitarian or socialist concerns. But Polanyi saw the alternative to such ‘counter-movements’ as pure, destructive anarchy; something evinced by the wars that tore Europe apart from 1914 to 1945. There thus was an inevitability to the counter-movement: it was either the survival of the market or the survival of humanity. 

Predictably, one of the most striking casualties of the pandemic has been forty years of neoliberal commonsense. In America and the United Kingdom, the desperate search for mechanisms that could keep people alive during a general economic crisis shows the threadbare nature of our social safety net. It embodies a blunt recognition that the institutions that are meant to fill the gaps in the market, like unemployment insurance or free healthcare, have been cut to tatters, oriented towards penalising the unemployed and forcing them back into the market. The current situation is simply generalising the crises that the poor, precarious, and unemployed face every day.

There is no guarantee that the outcomes of the coronavirus crisis will be amenable to the Left. Exceptions such as Podemos seizing private hospitals in Spain notwithstanding, the organisational capacity for a strong progressive response is lacking. Yet the crisis has already initiated its own unpredictable counter-movements. Suddenly, the randomness of several economic arrangements is on full display: suspended water and gas bills in France, cash transfers in the US, nationalised flight companies in Italy, wage protections in the UK, with political leaders rushing to keep up with the moment.

There are pluses and minuses to each of these measures. Basic income might keep purchasing power going but is hardly sufficient to rebuild America’s crumbling infrastructure. Nationalised companies might be put back into private hands once the crisis cools down, fattened on public funds. Cash injections might be carried out with a trickle-down aim, only benefiting employers over workers. Not all forms of crisis-fighting are left-wing.

There is a deeper lesson here, however. Capitalism remains an intrinsically unstable system, generating crises from within and vulnerable to crises from without. It is hard, for instance, to qualify the virus as a purely ‘exogenous’ phenomenon, even if this might be its appearance on balance  sheets. The virus was only able to move due to global supply chains and our system of air travel. Coronavirus itself is partly the result of monoculture in Chinese farming. As usual capitalism regularly threatens to kill its very carrier – human beings.

Remarkably, many conservative public figures have begun making this explicit: if the choice is between a higher death toll and “keep the economy going,” they say we must choose the latter. For now the measures might be designed to simply keep the labour force alive – another counter-movement from above for those above. But in the meantime a wholly new space has opened up: to not just keep people alive but to let them live different lives, where rent, bills and bosses don’t determine their flourishing. That would also be the kind of counter-movement Polanyi himself hoped for. 

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About the Author

Anton Jäger is is a doctoral student at the University of Cambridge, working on the history of populism in the United States. Together with Daniel Zamora, he is currently working on an intellectual history of basic income.

Steven Klein is assistant professor of political science at the University of Florida. Later this year, he will be a lecturer in the Department of Political Economy, King's College London.