Political Economy and Politics – Covid-19, Critical Political Economy, and the End of Neoliberalism? (RN06)
Bernd Bonfert, Radboud University, Netherlands and Roskilde University, Denmark
RN06 Critical Political Economy Coordinators and Board Members 2019-2021
Covid-19 threatens to bring an end to neoliberalism. Back in October 2019, when we drafted the call for papers for the ESA’s Critical Political Economy Research Network (CPERN) mid-term workshop – What’s Next? Critical Political Economy at the End of Neoliberalism? – we could not have known how close to the end of neoliberalism we would now seemingly find ourselves. The replacement of neoliberalism has gone from being an urgent matter for discussion, to a transformation that may already be upon us. In such a context, we need the insights of critical political economy more than ever. That means focusing on (and seeking to change) the power relations and inequalities associated with the current socio-economic model, going beyond the mere technical description of how those economies (dys)function.
Endogenous Ecological Harm
It had already become abundantly clear – before the Covid-19 Crisis – that the global neoliberal economy is largely indifferent to the impact it has upon the environment. The expansion of a globally interconnected production-consumption nexus is driven by the pursuit of profit-maximisation, cost-efficiency, and the increasingly intensive extraction of natural resources. This has scant regard for ecological consequences. Economists have been quick to portray and analyse the coronavirus crisis as an ‘external shock’ to the global economy. But as a number of critical epidemiologists have shown, the causes of the coronavirus pandemic are rooted in the globalisation of the food chain. This has served to radically transform and accelerate systems of exchange. Agricultural commodities, produced in rural contexts with a proximity to forest diseases, where deforestation has damaged natural constraining mechanisms and facilitated the development of harmful pathogens (such as Covid-19), are now closely interconnected with densely populated urban centres around the world. Neoliberalism has driven globalisation and de-/re-regulated global supply chains, and now globalisation has enabled the production and rapid spread of a pandemic that threatens the socio-economic system that spawned it. The Covid-19 Crisis cannot be excused as an exogenous shock to neoliberal productivism – it is but an expression of the many endemic crises that were already waiting to happen. We need a radical rethinking of the dialectical relationship between humans and nature.
The End to Neoliberal Hegemony: State Capitalism or ‘Re-Setting’ Neoliberalism?
The current crisis inevitably raises the question: what next? On the surface, the political responses to the Covid-19 Crisis appear similar to those adopted in the wake of the 2008 global economic crisis. Governments have poured colossal amounts of money into failing economic sectors, rescued private corporations, and socialised losses. And, indeed, if capital has its way, then there is a good chance that governments will eventually repeat the same routine that followed 2008 – blaming the crisis on a supposed lack of fiscal discipline and economic competitiveness, in order to justify another round of ‘necessary’ austerity. The fact that debt-laden Italy was the first of the EU member states to contract the pandemic is only likely to fuel that narrative. We have already seen Dutch Finance Minister, Wopke Hoekstra, blame profligate Southern Europeans for failing to build up enough reserves prior to the crisis, in part as justification for Dutch opposition to the introduction of new EU ‘Coronabonds’. This threatens only to consolidate the EU’s long-term fetishisation of a neoliberal competitiveness agenda.
But this disciplinary approach may have fewer chances to succeed than it did following the 2008 crisis. Hoekstra has already been forced to soften his stance as a result of public pressure and an apparent consensus emerging among other EU member states that some form of EU rescue package is necessary, even if it will not be in the form of Coronabonds. Does this signal the end of neoliberal hegemony? Governments have drained healthcare infrastructures across the globe. This was accompanied by a decade of ultra-loose monetary policy that largely financed a rise in the equity market (including through the much-criticised practice of share buybacks), without any corresponding increase in employment or investment. The future looks bleak for neoliberalism now that is has unleashed a crisis more catastrophic than the one of 2008. Governments and international institutions appear to accept that the neoliberal age of austerity is over, for now. The EU has lifted its neoliberal fiscal restrictions, allowing national governments to engage in counter-cyclical crisis management. The United States has adopted a $2 trillion bail-out plan, whilst the Federal Reserve has announced a commitment to unlimited quantitative easing. Likewise, German Finance Minister, Olaf Scholz, announced a ‘bazooka’ package that included unlimited liquidity assistance to German companies. Japan has announced an economic stimulus package that totals 20% of national economic output.
These measures are actively reshaping the ‘real’ economy. Most of the core capitalist countries have adopted some kind of wage protection system akin to Germany’s Kurzarbeit scheme, whereby governments subsidise employees’ wages despite them being unable to work. We have seen moves to partial or full nationalisation of multiple industries in a number of countries, including many airlines, such as Italy’s Alitalia, private hospitals in Spain, the rail network in the UK, and the adoption of a €100 billion fund in Germany to be used to directly buy shares in struggling German firms. Each of these measures are fundamentally at odds with the neoliberal principle of protecting and extending the ‘free’ market. Or are they?
In an incredibly short space of time, ‘state capitalism’ has gone from being vilified by the global political and economic ruling bloc, to being widely accepted as the only means by which to ensure the survival of the global capitalist economy. But similar developments, and questions about the end of neoliberalism, were also witnessed during and after the 2008 global economic crisis. National interventions and bailouts saw many hail a new Keynesian dawn. Yet, rather than the end of neoliberalism, we witnessed a successful ‘re-setting’ of the neoliberal paradigm, or in Colin Crouch’s words, the ‘strange non-death of neoliberalism’. The worst failures of the previous cycle of neoliberal growth were written off, and the conditions were put in place for a return to the next cycle. This saw firms and governments identify new opportunities for financialised economic expansion, including through the commodification of new aspects of social life, the privatisation of further functions of the state, the shifting of more workers into precarious work and with zero hour contracts faced by many in the new ‘gig economy’. This also included the placing of additional burdens upon those (gendered and classed) households that were forced to adapt to these changes. Much of this was accompanied by a shift in political support towards far right parties that claimed to challenge the political status quo, but promised little more than a nativism that often (contradictorily) embraced neoliberal economic principles.
In responding to the Covid-19 Crisis, states have been quick to highlight that the economic interventionist measures adopted are not in any way permanent, but rather should be considered emergency measures utilised during times of ‘war’. This has allowed stock markets to experience a partial recovery and speculators continue to gain from the crisis. The market mentality (to borrow from Karl Polanyi) of the neoliberal system appears firmly entrenched in the norms, practices and workings of the global economy. Whether we will see neoliberal hegemony shaken in earnest after the Covid-19 Crisis depends largely on whether successful resistance can be mounted in order to oppose those who will seek a ‘re-setting’ of neoliberalism once the immediate crisis is over. The form, and degree, of neoliberalisation that we experience will likely reflect the extent to which social groups in civil society are able to mount successful opposition.
Resistance Before and After the Coronavirus Crisis
The austerity that followed the 2008 global economic crisis sparked a global wave of protest that remained visible throughout the 2010s. As the Covid-19 Crisis has prompted a massive and sudden round of job losses, it is likely also to prompt a further outpouring of public dissent. This potential unrest has been largely suppressed, for now, by the widespread restrictions placed on public engagement and individual movement. Clearly, this has concerning implications for the state of contemporary democracy, risking an escalation of the authoritarianism that already characterised neoliberalism prior to the Covid-19 Crisis.
In response, activist groups, trade unions and political parties have already shifted their communications entirely online. But as the recent move to widespread digital working has already highlighted, new technologies can be both a means of control and an opportunity for resistance. Movements such as Fridays for Future and the International Women’s Strike are planning to organise online protests in the coming months. The flexibility of online infrastructures has the potential to accelerate political networking, and the greater accessibility of online events might increase the reach of emancipatory messages. Crucially, the success of those social movements that seek to resist a return to neoliberal normality will depend on the ability of those groups to break out of their own sub-cultural ‘bubble’ and attract new audiences. Promising signs that this might be possible include the rapid emergence of neighbourhood solidarity groups such as the Mutual Aid networks created across the UK to provide such simple services as grocery shopping for vulnerable and immobile social groups. This reflects an ongoing trend whereby communities pragmatically apply radical ideas to achieve practical goals, as witnessed by those seeking to obstruct evictions during Spain’s housing crisis.
In the longer term, however, the potential for resistance will likely face conflicting pressures. The economic insecurity associated with a prolonged recession has the potential to dampen the capacity for organised labour to mobilise. At the same time, the Covid-19 Crisis has clearly illustrated the vulnerability of global production chains and the scale of disruption that can be caused at any point along that chain – all of which has the potential to empower workers and encourage transnational solidarity and collaboration. Major retailers like Amazon, who have recklessly pressured their employees to work even at the height of the pandemic, and who have already seen staff walkouts, now face the prospect of transnational strikes, online campaigns threatening reputation damage, and public demands for state regulation. Lockdowns and public dependency on delivery services add to the urgency and potency of such strikes. Further, the Covid-19 Crisis has made clear the crucial role played by key workers, including healthcare staff, transport workers and retail employees, providing those groups considerable political leverage. The importance of the arts and humanities are once again brought to the fore as the public finds solace, entertainment, and social bonding through music, films, TV, radio, online galleries, online learning, reading, and so on. Germany led the way by rolling out a €50bn aid package to the arts community, with the Culture Minister stating that ‘artists are not only indispensable, but also vital, especially now’.
The current emergence of state capitalism also raises the possibility that solidarity initiatives and forms of resistance will be largely carried out from within reinforced national territories, rather than adopt a transnational character. The inability of left forces to adequately organise beyond national borders in order to challenge the global entrenchment of neoliberalism might see the re-emergence of ‘left nationalism’ that characterised 20th century forms of social democracy. In this sense, a return or retreat to the ‘national’, that has already been seen with developments such as Brexit, might see left parties pursue national-first strategies in a manner that would reinforce both state capitalism and complement the rise in right-wing populism seen since the 2008 financial crisis. This has the potential to further compartmentalise global labour and facilitate the divide and conquer game that sustains the rotting corpse of neoliberal capitalism.
Critical Political Economy at the End of Neoliberalism?
Coronavirus has brought the future of neoliberalism into question, and not for the first time. Whilst the Covid-19 Crisis has witnessed a rapid turn to state capitalism, once the initial stage of the crisis has ended, we can expect a political struggle prompted by those who seek a re-entrenchment of neoliberalism. What follows will in part reflect the different forms of resistance that emerge during this struggle. In order to understand, explain, and contribute to that struggle we will need a vibrant critical political economy research community. Fortunately, the ESA’s Critical Political Economy Research Network (CPERN) is well placed to provide just that. We encourage you to join us!
Bernd Bonfert, Radboud University, Nijmegen, The Netherlands/Roskilde University, Denmark
David Bailey, University of Birmingham, UK
Owen Worth, University of Limerick, Ireland
Yuliya Yurchenko, University of Greenwich, UK
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