Coronavirus and the Contradictions of Capitalism
Updated: Apr 10
by Erdem Yörük
Coronavirus has revealed yet another contradiction of capitalism: the capitalist tendency to globalize as a solution for the profitability crisis has undermined the capitalist capacity to profit. The virus has exacerbated an already deepening capitalist crisis into a catastrophe and illustrated how vulnerable global capitalism is to any external risk.
Globalization, which emerged as a solution to a previous crisis of profitability, has rendered the world capitalist system extremely vulnerable because of the unprecedented connectedness that it has created. Also, the retrenchment in public healthcare, which was supposed to heighten capitalist profits, has disabled the attempts to contain the coronavirus, and hence paralyzed the capitalist economy.
Let me clarify what a contradiction means. German sociologist Claus Offe defines a contradiction as an inherent tendency in a system to destroy the conditions on which its survival depends. This concept constitutes a key element in the Marxist analyses of capitalism because capitalism is thought to continuously and inevitably undermine itself. Marx himself argued for several such contradictions that weaken and maybe wipe out capitalism.
For example, each individual capitalist tends to lower wages in his or her workplace, which is entirely “rational” for a capitalist, but the overall effect of these individual decisions is to dampen wage levels in the larger society to such a low level that workers become unable to buy the products produced by the capitalists. This is the so-called over-production crisis. Capitalists do their best to maximize their interests, but they happen to undermine their own interests.
Likewise, each capitalist tends to increase the level of technology to make each worker more productive so that they can exploit each worker more. In a way, they replace workers with machines. As an effect, the total number of workers and the total volume of exploitation decline. So does the total volume of profit. Marx calls this the law of falling rate of profit.
Coronavirus seems to be the latest instance of such contradictions. The virus is singled out by scientists by its extraordinary rate of spread and death rate. This rate of spread is not only natural or biological, but it is also determined socially – meaning the demography, culture, and most importantly connectedness of the society.
Connectedness is a function of the social division of labour, which has exponentially escalated during neoliberal globalization. Mobility of goods and people has unprecedentedly increased, just like almost two hundred years ago, when a previous wave of globalization had connected the world, as The Communist Manifesto makes clear:
“The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere. The bourgeoisie has through its exploitation of the world-market given a cosmopolitan character to production and consumption in every country.
All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilized nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones; industries whose products are consumed, not only at home, but in every quarter of the globe.”
Contemporary globalization is, in no small part, a result of the falling rate of profits that occurred by the 1970s because of the rising political power and wage levels of working classes in national developmentalist economies. So, the solution was to remove the borders for production and to stimulate a race to the bottom among workers.
This enhanced agility and mobility have rendered countries vulnerable to any external shocks, be it economic, political, or biological, in our case. Global air traffic, that is, the number of passengers carried, has increased more than ten-fold to 4.1 billion people per year between 1970 and 2017. How can you stop the spread of a very contagious virus in such traffic?
Similar to the rate of spread, the death rate of the virus is not biologically given. Instead, varying death rates across countries (1.3% in Germany and 12% in Italy) show that it is the social conditions that shape the final death rate. Among these conditions, the capacity of public healthcare system is the most critical factor in translating the biological threat of the virus into actual rate of mortality.
The differences in German and Italian medical capacities and precisely in the number of intensive care units are considered the main factors behind this huge gap in mortality rates. Italy, like other southern European countries, underwent significant retrenchment in public healthcare programs in order to be able to eligible for the bailouts needed during the debt crisis of the early 2010s.
Therefore, a key facet of the contradiction of contemporary capitalism is that the capitalist drive to retrench public healthcare systems to minimize taxes and social security costs have disqualified most public healthcare systems from responding to the outbreak. That observation has abruptly led the Spanish government to nationalize private healthcare system.
These two tendencies, high rate of spread and high death rates, which are, to a large extent, consequences of the capitalist strategy for profit maximization, have undermined the capitalist capacity to profit.
As we are observing, the economic harms that are being created by the virus are unprecedented and disastrous. Businesses stop, services stop, finance stops, streets are emptied, life is abandoned. The interventions by the FED and IMF do not suffice to calm the markets and feed the economy. We are headed for one of the grandest economic crises of modern times.
The fact that national economies are so interdependent and that public healthcare systems are so weakened makes each economy extremely vulnerable to such an external threat. This is not to be for or against globalization; this is to say that a strategy to foster a capitalist economy, which was by and in itself very rational for capitalists, has turned into a fetter.
A point of bifurcation, and what is to be done?
What will come out of this contradiction? I think there are two paths: One towards more authoritarianism and one towards more liberty. On the one hand, governments around the world are taking extraordinary measures to contain the outbreak, which included emergency state rules of a varying degree, such as curfews, closure of public spaces, limits to human mobility, etc.
This is happening on top of already ever stronger authoritarian trends almost everywhere. Governments will definitely make use of the coronavirus to establish, consolidate, and escalate authoritarian policies during and after the outbreak. Many people now see authoritarian governments as better equipped to cope with the crisis, as these governments are thought to coordinate the preventive measures better.
This perception will create extensive legitimacy for authoritarianism. Moreover, governments are developing new methods, techniques, and knowledge to govern and discipline the population. The question that most people will ask will now be what type of authoritarian governments are performing better.
On the other hand, in these extraordinary times, ordinary people experience solidarity on top of the cruelty of capitalism. And it is the time to share the message that capitalism, be it authoritarian or liberal, cannot but create a disaster, just because of its own dynamics. The left must take this opportunity to organize itself internationally and to offer emancipation out of these disastrous contradictions of capitalism, today and in the future.
Erdem Yörük is an Associate Professor in the Department of Sociology at Koç University and an Associate Member in the Department of Social Policy and Intervention at the University of Oxford. He is the principle investigator an ERC-funded project, Emerging Welfare.
This article first appeared on the LeftEast Website. Reproduced with permission.