How Disaster Capitalists Have Exploited Covid-19
From dodgy bailouts to crony outsourcing, sweetheart deregulations and welfare profiteering, Covid-19 has provided plenty of opportunities for disaster capitalists – and they've been only too happy to take them.
For a fleeting moment, it appeared as if Covid-19 had exposed the failures of the market to everyone. Furlough showed that the state could fill vacuums of destitution by helping people directly: now the cat was out of the bag, there was surely no need for any more corporate bailouts. Instead, we had a bottom-up approach that defied the Thatcherite mantra of trickle-down economics.
With the cogs of the capitalist machine in reverse and the world in a period of suspended animation, some of us were given the opportunity for a breather. Others were not. Cleaners, care workers, bus and train drivers and others re-established the country’s sense of labour as the backbone of the economy. This was a stark reminder that it is workers who are the wealth creators, providing real financial service in keeping society ticking.
Months later, that sense of change has worn off. Covid turned out to function as a smokescreen behind which the corporate elite could conduct their business unchecked.
‘Only a crisis—actual or perceived—produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around.’ These words from economist Milton Friedman—the darling of neoliberalism—encapsulate how the Covid-19 pandemic could be exploited by corporate and Conservative interests to advance their agenda: the sell-off of the state apparatus, the deregulation of business, and the erosion of protections. The burden of this disaster is shouldered by the taxpayer – through a direct transfer of funds from the public purse to corporate bank accounts.
Paying for Private
The advance of the market into the National Health Service has not and will not take place overnight. Privatisation has been going on since the 1980s, from the Private Finance Initiative, to the introduction of the ‘internal market’, to the Social Care Act of 2012.
The coronavirus pandemic is now writing another chapter in this story. Tory ministers have awarded a plethora of exclusive coronavirus-related contracts to private firms; according to the New York Times, responsibility for PPE and medical supplies were distributed among 1,200 contracts worth £18 billion, and half of that sum went to companies who either had no previous experience in the field, or to companies comprising of friends and associates of the Conservative Party.
One example is Serco, a company given responsibility for overseeing the test and trace system, which was awarded up to £400 million. Sage, the government’s scientific advisory team, has since warned that issues with ‘engagement’ and ‘delays’ means that the programme is only having a ‘marginal impact’ on reducing the spread of the virus.
Who will be blamed? Serco is accountable only to its shareholders, and shares have soared as profits are predicted to hit £165 million. If there is an inquest, Serco have subcontracted the service to 29 other companies, meaning 9,000 of the 10,500 staff working on the programme are not its direct employees. Accountability will most likely be lost in the web of bureaucracy. And as Boris Johnson has labelled this test and trace system the ‘NHS track and trace’, the public health service is liable to bear the worst of the public anger over the failures of its outsourced factions.
The ethics of profiting from a disaster are questionable to say the least. But something more insidious is at play. Randox, a private healthcare firm that employs Tory MP Owen Patterson was awarded a £133 million contract, which made it responsible for distributing testing kits, 750,000 of which had to be returned due to quality concerns. For their failures they have since been awarded another contract worth £347 million. Covid has created a new national norm: one in which companies can spectacularly fail to fulfil their obligations, act negligibly, and be awarded an even larger role within the state apparatus. One cash payment upfront isn’t the goal; long-term access is.
Slashing Regulations
Along similar lines, corporate executives have taken steps to make sure they leave the pandemic more powerful than they entered it. In Canada, new executive powers to deal with the public health emergency allowed for the suspension of environmental protections – some indefinitely. The province of Alberta alone has amended its Pipelines Act, its Environmental Protection and Enhancement Act, and its Oil and Gas Conservation Act, all for the worse.
Below the border, the Trump administration suspended all environmental laws under the mask of the pandemic, asking only that oil companies ‘act responsibly’. The consequences of these deregulatory steps are already becoming evident: the Keystone XL Pipeline, which will ship around 370,000 barrels of crude Canadian oil to the US per day, got the final go-ahead last month, despite the concerns of climate campaigners. Biden has since claimed he’s committed to stopping it, but whether that commitment manifests after inauguration day remains to be seen.
Rising Corporate Welfare
And, of course, it wouldn’t be a disaster without a good old-fashioned corporate bailout, otherwise called the Coronavirus Aid, Relief, and Economic Security Act in the US. Of the $2.2 trillion in the bailout, $500 billion has been roped off for the corporate sector. The justification is that large firms don’t have the capital to stay afloat during the pandemic.
This bailout comes only months after many of these companies were engaged in share buybacks, in which the executives of the companies buy back company shares, inflating stock market prices and increasing their bonuses in the process. Price gauging of this kind was illegal in the US until 1982.
According to Bloomberg data, the largest US airlines have spent 96 percent of their cash flow over the last ten years on buybacks: Boeing, which has asked for a $60 billion bailout, spent $11.7 billion on stock buybacks over the last two years alone. Stock manipulation of this sort allows zombified companies to stay alive, feasting on financed debt and creating a bubble in the stock market which often leads to a cataclysmic financial crash.
Anyone thinking that such casino capitalism is reserved for the US should think again. In the UK, a corporate relief fund potentially worth up to £67 billion has been made available due to the pandemic. So far, 53 companies have received £16 billion in total. Some of those companies include Ryanair, which collected £600 million—despite recently buying out EasyJet’s 300 air slots—and oil companies such as Baker Hughes, who, despite repurchasing $250 million of their own shares less than a year ago, received £600 million, too.
Corporations know that when they mismanage funds and price gauge, they will be bailed out. Socialism for the rich and market mechanisms for the poor has become the structured response of governments and corporations to disaster and financial crisis.
Austerity 2.0
When the pandemic does eventually end, the next stage of disaster capitalism will emerge. The platitudes we remember from 2008 will be rolled out, about belt tightening and fiscal responsibility, and the burden ultimately shouldered by the workers via austerity measures that hit the most vulnerable the hardest – assuming, of course, that by then they haven’t already paid with their lives.
Data taken between March 9 and May 25 around England and Wales states that of the 4,761 deaths involving the coronavirus, people working in ‘elementary occupations’ had the overall highest rate of death. Security guards had the highest rate of death: meanwhile, security firm G4S International Finance Plc received a coronavirus bailout of £300 million.
This pandemic has caused incredible misery. But corporate executives and government elites have taken that despair as an opportunity to advance their ideological agenda. Socio-economic inequalities continue to deepen, increasing the threat to working-class lives made clear by the unequal death tolls over the last ten months; company vultures, nestled in their homes, continue to receive cheques on the premise of softening the blow of the pandemic – their enrichment in the process nothing, they say, but a coincidence.