Covid-19: How States Respond to Crisis

As governments around the world enact measures to blunt the impact of Covid-19, Marnie Holborow asks whether the state, under capitalism, can ever truly respond in the interest of the 99%.

Leo Varadkar interrupted transmission on national tv on St Patrick’s Day and assumed his role as Irish head of state – by default as it happens – to solemnly announce how Ireland would be responding to the coronavirus crisis. The state, he said, would deploy its full resources to keep essential services, workplaces and public transport operating. It would introduce emergency financial measures to pay people infected by the Coronavirus or those who have lost their jobs.

Likewise, states around the world are intervening very directly in the economy, in a way unimaginable before Coronavirus. The Italian state has suspended mortgages and rents. France has suspended utility bills for small businesses. Denmark has agreed to pay up to 75% of the wages of some employees rather than see them laid off, only topped by 80% in the UK. In the US, where Trump’s government refused initially to take the crisis seriously at all, the state now plans to send cheques directly to American citizens for emergency financial aid.

Change of tune 

The UK government’s new financial measures are also a change in tack. By committing to paying wages, releasing a £350 billion package of loans and grants, finally stepping in to close schools and committing to doing ‘whatever it takes’ to get through the crisis, Boris Johnson has done a 180 u-turn since addressing the nation repeatedly to explain a herd immunity approach based on now disproved scientific evidence.  His new plans even reference direct state involvement  in industrial production, in this case directing some production to switch to making ventilators.  

Central Banks – nominally independent but in practice the financial wing of states –    have moved in to cut interest rates and pump money into the system. In the US, Central Bank the Fed has announced an $850 billion stimulus package, considerably more than the hefty TARP bank bailout package of the 2008 financial crisis. The European Central Bank (ECB) has introduced a €750 billion ‘Pandemic Emergency Purchase Programme’ which will be used to help Eurozone countries to borrow, in order to pay for their coronavirus crisis support programmes. It will buy up government and company debt across the Eurozone, including the (once branded toxic) Greek and Italian debt.  This move casts aside old taboos of fiscal rectitude. 

In language very different to the Troika Bank bailouts of 2007-8, the ECB now claims its supportive financing needs to apply to all sectors of the economy – ‘families, firms, banks and governments’. Extraordinary times require extraordinary action, according to ECB chief Christine Lagarde.

On the face of it, these measures by governments, banks and the EU go against their own economic mantras.  State intervention, as laid out in the many liberalisation directives of the Lisbon Treaty, used to be inadmissible. And slavish adherence to this neoliberal orthodoxy in Ireland led, not surprisingly, to the severe running down of public services. In health, it has left behind chronic underinvestment, lack of acute beds and equipment, alarmingly low staffing levels and greater reliance on private healthcare – defects which have come to haunt us now. 

The brutal impact of neoliberalism is not all that has been laid bare by this pandemic. The role played by many thousands of service, health, transport, and public sector workers – long dismissed in the neoliberal  economy as ‘unskilled’, or not worthy of decent wages nor regular hours of work – has been proven essential to the basic functioning of society. So too has their unconditional commitment, and the extent to which the state has previously relied on their ‘over and above’ unpaid labour. 

Similarly, state provision of social support has moved centre stage. Successive neoliberal British and Irish governments made welfare payments, already slashed during austerity, to remain punitively difficult to access. This was the logic behind brutal Tory welfare reforms. Claimants are made to jump through labyrinthine ‘job-seeker’ hoops, and millions were spent on campaigns to rid out and shame benefit fraud. Amid the pandemic, where workers are actively encouraged to stay home and isolate, that has changed. 

Self-isolation itself has uncovered the social architecture behind the doors of homes and households upon which our society relies. With schools closed and health staff unable to depend on grandparents, volunteers, or babysitters because of social distancing, governments are forced to face up to inadequacies in childcare provision, and how individuals – primarily women – have shouldered caring responsibilities unpaid.  As the nurses’ union INMO pointed out, this has made even more glaring the demand for a national childcare system – public creches, reduced hours and flexible rostering.

Enabling state?

British Keynesian academic Mariana Mazzucato believes new state intervention opens up “a way of doing capitalism differently”, with the state enabling “innovation towards new public goals”. Irish Times writer, Shauna Cohen, sees it as a new opportunity to shift from “the politics of me to the politics of us”, a narrative that supports collective awareness and common interests.

Clearly there is a popular mood for the kind of state intervention and provision of public services which would normally send British and Irish Tories into a tailspin. But we need to understand what it means when state intervention is introduced on capitalist terms. Those terms are about getting back to capitalism-as-normal as quickly as possible. Naturally, companies have come first. Johnson’s government, for example, earmarked their initial £370 million cash package for businesses. 

Equally, measures taken by the banks, despite the talk of concern for both customers and businesses, prioritise the interests of capital. Irish banks – already system-protected to the tune of €64 billion during the last financial crisis – say that they will work out how mortgage customers can get a payment break. But as it transpired, that meant they will actually look at “how to re-profile the mortgage over a period of years”. This is not a mortgage freeze for mortgage holders who have lost their jobs but an arrangement in which the discredited banks will yet again have the last say. 

For businesses, the banks have come up with a much more amenable approach. The Banking and Payments Federation Ireland (BPFI), whose CEO former Fine Gael MEP Brian Hayes has the close ear of the government, commits the banking system to ‘standing ready to provide working capital support’.  

The state and crisis

The state may want to appear to be acting above class interests, dealing with the crisis in the national interest. But as Marx argued, the state under capitalism is not a neutral body; it always works in tandem with capital and provides a social environment in which profit making can thrive.  In times of crisis, like now, this aspect comes sharply to the fore, as the state mobilises society towards the goal of allowing capital to weather the storm. 

We saw this clearly in the banking crash, though the response to the Coronavirus is more akin to capitalist response to war.  While the 2008 crisis was a threat to the banking system and the workings of capital, Covid-19 is a threat to the labour from which capital makes its profit.  Its spread disrupts how the system reproduces labour power and upsets the whole regime around work. 

War, too, affects the normal functioning of work, as a large chunk of the working population are lost to fighting.  A break in the normal supply of labour requires that the state itself takes over production to keep capitalism going. During the second world war, for example, state and capital worked visibly together for their shared interests, relying on severe military discipline and on ideological propaganda about pulling together in the national interest. 

Today’s crisis has clear parallels. French Prime Minister Macron declared that French society is ‘at war’.  Johnson talks of a peace-time ‘blitz spirit’. Even Varadkar quoted Churchill of all people, to evoke standing together in a time of crisis. These nationalistic ploys seek to mask the real divisions in society, in order to keep it functioning. 

The state in crisis also relies on social control measures. The emergency bill introduced to the Dáil will give the Minister for Health powers to restrict the movement of people,  detain people who have Covid-19 (or are carriers) but refuse to self-isolate, and be able to quarantine entire areas into lock-down. Anyone who breaches these restrictions can be fined or even imprisoned, as is happening in Italy and France. In the North, Stormont seeks to adopt legislation introduced in Westminster which would allow Public Health Officials, Immigraton Officers, and ‘Constables’ to restrict movement of ‘potentially infectious persons’, detain them or move them to quarantine. 

Capitalist market & class divisions

Those in large houses with large salaries, who can work from home and self- isolate relatively comfortably, may experience some stress and tensions. But for millions of low wage workers, as well as the homeless, those in direct provision will suffer the full fearful impact of the pandemic. Covid-19 has exposed the worst elements of class division. Varadkar, Macron, Johnson, nevermind every millionaire celebrity with access to twitter, claim that we are all in this together, but the uninterrupted workings of the capitalist market allow those with money to ride this crisis much better than everyone else.

Rocketing prices for hand gels and sanitisers mean that only the well-off could buy them. Masks, unavailable from any pharmacy, are sold on Amazon at sky high prices (up to $50!).

In the North you can buy a Covid-19 testing kit for the whole family at £120 a pop. Elsewhere in the UK, they go for £295 each. One Irish based private company, Assay Genie, plans to release a  rapid test kit globally at €1399, and already some Irish hospitals have been in touch. It is scandalous that anyone should have to pay for these, especially when hundreds of thousands are now out of work, let alone the health service with public money that is so badly needed elsewhere in the system. Testing and research for the virus should not be left up to profit making companies. Genuinely socially responsible government action would take this urgent and vital research into public ownership and make it widely available.  

As Mike Davis has shown, the unequal impact in epidemics has always been the case. Few know that the majority of deaths in the Spanish epidemic of 1918 were in India under British rule. Today again, as a result of the structures of massive inequality, capitalism ensures that it is the bottom of society that gets thrown to the wolves.

Our interests 

It is undoubtedly the case that the UK government, and others, have been forced to u-turn on their inaction because of public outrage and pressure. The same public pressure must be used to make sure our interests are put first throughout this pandemic. As People Before Profit TDs, MLA and councillors have tirelessly highlighted, the financial relief packages do not go far enough, particularly in the North, and there are other measures which should be taken to blunt the impact of the virus, and to save lives.

Private health facilities should be requisitioned into the public system, more healthcare workers should be recruited, and their pay increased. Community testing must be ramped up. The direct provision system should be broken up and hotels and other accommodation requisitioned for self- isolation. Governments should impose permanent rent freezes until the pandemic ends, and mortgage payments should be waived. There should be a  one tier income support of €305 per week for all those who have to stay at home or who have lost their job. Any financial support for businesses should carry conditions about employment. Demanding and striking for these things from the state will break the illusion that it acts in an undifferentiated ‘national’ interest.

In Italy, where Covid-19 devastation has been most acute, the population has shown incredible resistance. They demanded the state close down car factories, that shop workers have proper protective gear and as in the case of a Fiat Chrysler factory in Termoli West of Rome, they took strike action to win their rights. These actions have happened from below, from spontaneous workplace organisation. 

This stands in stark contrast to organised labour across Ireland. The deafening silence from the top of the trade union movements North and South, and their dismal falling behind the state is astounding. When Supervalu management announced measures, they had put in place for checkout cashiers, Mandate leader John Douglas on RTE News agreed. The issues of flexible rostering, shorter shifts, fuller protective gear, breaks for washing hands – the actual demands of his members – simply did not figure in his unions- behind- the- state positioning.

While the threat of the virus can cause a sense of powerlessness and disarray initially, not least because those of us who have organised together in numbers are restricted in mobilising, and as the overwhelming of our health service hits, and deaths cause us fear, it will also cause many to think about the priorities of our society. 

No capitalist state can deliver the sort of change that people need – nor the change they recently demanded at the ballot box in Ireland. This is reflected in the heightened need for community solidarity, which has spontaneously appeared in response. From this, a broader anti-capitalist  movement must be built – our health and lives depend on it.