COVID-19 and the bankruptcy of neoliberalism in the context of Global Shift
The coronavirus crisis could be the “opportunity of the century” for China to cement its place as the world’s global hegemonic power.
The situation we have found ourselves in during the last eight weeks is surreal. We are lonely and isolated, more than ever for many of us, and all this is extremely stressful and extremely disorienting. It is almost like there is no future.
One word explains the dramatic conditions more than any other – neoliberalism. The neoliberal phase of capitalism rests on fictitious capital, a vast expansion in debt creation, deregulation, outsourcing, and privatisation of almost all public services such as energy, water, trains, health, education, roads and prisons. Neoliberalism in healthcare systems has resulted in a deterioration of the extent and quality of healthcare services. Constant neoliberal restructuring focuses on profit rather than human rights indicators, which disempower people, whose health needs are subordinated to the needs of the market. Neoliberalism treats healthcare as a private good for sale rather than a public good paid for with our taxes.
This relocation of healthcare from the state to the free market has a detrimental effect both on access to healthcare services and the quality of what is affordable for many people. In many countries, the number of hospital beds were reduced, sections of essential healthcare were privatised and/or outsourced, and serious cuts were made in health budgets. The effects of neoliberalism can be seen as a form of structural violence, disproportionately affecting the most vulnerable sections of the population. Forty years of neoliberalism across the continents, especially in the so-called “advanced” western economies, have left the countries totally ill-prepared to deal with a public health crisis of this kind. More than anything else, this crisis has displayed the flaws of neoliberalism and disaster capitalism.
The centrality of public health care provision
Viruses mutate all the time. Every virus mutates, which is part of the virus life cycle. Such mutations are not always a big deal, but the circumstances in which a mutation becomes life threatening depend on pre-existing cracks and vulnerabilities in the socio-economic model. Based on previous similar cases, it should be possible to develop preventative medicine. But this is a massive undertaking which will require heavy investment in research and development. Only states can afford such preventative research and development. But because in the era of neoliberalism, public investment in infrastructure, equipment, research and development of vaccines, medicines and skills was significantly reduced, it is left to the private pharmaceutical companies. Corporatist big pharmaceutical corporations, however, have no interest in non-remunerative research on infectious diseases such as Covid-19. They rarely invest in prevention. Investment in preventive medical care does not contribute to shareholder value maximising the (average) rate of profit. Designing cures after we got sick is much more profitable. The sicker we get the more they can charge for their medicines, the more they see their profits increase.
The least neoliberal countries in the world, many in the global south, have so far come through the pandemic in better shape: China, South Korea, and Taiwan. Most impressively, New Zealand and Vietnam. Five weeks after launching an aggressive nationwide lockdown, even before the disease had claimed any lives, to combat the coronavirus pandemic, coupled with one of the most robust economic relief packages of any country, New Zealand’s government announced in late April that the new coronavirus is currently “eliminated” in the nation. New Zealand’s government has also been testing the public at one of the highest rates in the world. The pandemic has killed 19 people in New Zealand, fewer than one in every 100,000 people.
Vietnam, a nation with very limited resources, has so far stood out as a beacon of how to do more with less and provided probably the most effective case against the pandemic. Despite being located next door to China and having extensive social and economic links with China, Vietnam has had no fatalities as a result of the pandemic at the time of writing (3 May 2020). Vietnam’s proactive efforts come after two decades in which the country has experienced a large improvement in quality of life. Between 2002 and 2018, an economic transformation helped to lift more than 45 million of citizens out of poverty.
In Europe, Germany, with its centrally organised ordoliberal capitalist model, is showing other European countries the way forward because of its well-funded public health system. Immediately after the first few cases Germany has facilitated a rapid public health response. Germany has the highest number of ICU beds in Europe with 29,2 per 100,000 capita of population (this figure in the UK is less than one-fourth, 6,6). The pandemic has hit Germany hard, with more than 100,000 people infected. But the percentage of fatal cases has been remarkably low compared to those in many neighbouring countries. Germany’s fatality rate stood at 1.2 percent, compared with 12 percent in Italy, around 10 percent in Spain, France and Britain. This difference, the so-called “German exception”, can be explained by early and widespread testing and treatment, plenty of intensive care beds, coupled with decisive government action whose social distancing guidelines are widely observed. Also, the state financial support to thousands of ailing firms and millions of workers seems fair and competent, which helps to keep people at home during lockdown without feeling the need to go out to work.
The responsibility of neoliberal Britain
The UK, on the other hand, is being projected to have the highest death toll in Europe, and probably the second highest in the world after the US. During a decade of austerity, the financial squeeze on the health service has been immense, and the effects of this austerity regime are currently being felt across UK hospitals – there is a shortage of doctors and nurses, as well as a shortage of hospital beds and medical equipment. As a result of neoliberal austerity, 17,000 hospital beds were lost, and there are more than 40,000 vacant nurse posts across the NHS. Dr Richard Horton, editor-in-chief of the Lancet – a leading British medical journal – said, “austerity blunted the ambition and commitment of the government to protect its people”. Currently, the UK’s health service has one of the lowest levels of doctors and nurses per head of almost any western country.
The first two cases in the UK were identified on 29 January and the WHO declared a global health emergency the following day. Even before this, on 20 January, Richard Horton, on 20 January, provided a clear warning, pointing to a global epidemic: “Preparedness plans should be readied for deployment at short notice, including securing supply chains of pharmaceuticals, personal protective equipment, hospital supplies and the necessary human resources to deal with the consequences of a global outbreak of this magnitude.”
Despite the fact that the government had ample warning about the pandemic, there was no preparation whatsoever. Dr Richard Horton said that the UK “wasted all February when we could have acted. Time we could have ramped up testing. Time we could have got personal protective equipment ready and disseminated. We didn’t do it.” Here is a brief chronicle of incompetence:
On 3 February 2020 at a speech in Greenwich on Brexit, our PM said that “coronavirus should not be allowed to segregate the market” inasmuch as this “goes beyond what is medically rational”. At the time, Covid-19 was widely spread in China, especially in the North-east part of the country. Italy had its first cases on 30th of January.
On 3 March, with COVID-19 spreading rapidly and over 100,000 cases recorded globally, Boris Johnson told a press conference that he continued to “shake hands”, and even when he visited a hospital ward with COVID-19 patients, he said he had shaken everyone’s hand.
Two days later, as the UK’s first death from coronavirus was announced and the World Health Organisation designated the disease as a pandemic, Johnson was asked why there was no cancellation of public events or closing of schools. He replied, “One of the theories is, that perhaps you could take it on the chin, take it all in one go and allow the disease, as it were, to move through the population, without taking as many draconian measures.” “Basically, we’re saying”, the British PM argued, “wash your hands and business as usual”.
On 12 March, Johnson and his medical officers announced the so-called “herd immunity policy”. One day earlier a health minister, Nadine Dorries, announced she had caught the virus. She had been in touch with hundreds of people, including Johnson.
Despite the terrifying scenes from Italy and repeated warnings from health professionals, the government here did not do anything to prepare the country for this health crisis. The advice of the World Health Organisation (WHO) was ignored too. The WHO has continuously provided clear advice to all governments, emphasising on mass testing and rigorous isolation measures, both of which were successfully applied by China, South Korea, Taiwan, New Zealand and Germany. The Director General of the WHO, Dr Tedros Adhanom Ghebreyesus, repeatedly said: “you cannot fight a virus if you don’t know where it is. That means robust surveillance to find, isolate, test and treat every case, to break the chains of transmission.”
Such was the carelessness of the Tory government to contain the pandemic in the first three weeks of March, that France threatened to close its border with Britain unless the Tory government took stronger measures to stop the virus.
As deaths mounted, Johnson was eventually forced to announce “social distancing” measures and then a lockdown on 23 March. In the end, Johnson announced he had the virus himself, admitting, against his erstwhile mentor, Margaret Thatcher, that “there is such a thing as society”. On 5 April, after ten days of self-isolation, he entered the intensive care unit of St. Thomas’ hospital in London. Being entirely the victim of his own free market policies, as he exited intensive care, he happened to be full of praise for the NHS.
The Chinese way
The coronavirus pandemic has had serious impacts on existing power structures in the global system. As the world is overwhelmed by the coronavirus, China is slowly but swiftly moving out of the crisis phase, and acting like a leader, sending medical staff and aid to western countries such as Italy that has suffered tremendous losses as a result of the virus. This form of “soft power” has allowed the Chinese leadership to control the narrative, showing itself to be proactively assisting in alleviating suffering globally.
It was the 2008 crisis that first shifted the psychological balance spectacularly, generating a widespread perception that American hegemony had reached its utmost limits. Whereas the responses to the Great Recession of 2008 in the West were the deepening of neoliberalism and austerity, China pursued a pro-Keynesian path. This can be seen from the real wage growth and from budgetary increases in health care provision. On the contrary, real wage growth in “advanced” G20 countries is rather non-existent, whereas the welfare state is being retrenched further, because of the enormous pressure by private companies and neo-liberal governance to commodify every public economic space. Real wage growth in China has sustained labour productivity since the Great Recession. After 2009, labour productivity in China rose by 7-8 percent per year, whereas in the USA the increase was a bare 1%. In the EU, productivity growth was worse than the USA, especially in the Eurozone, which “hovered below 1 percent” post-2009.
Patently, the USA and the UK have the worst welfare provision from the states of the transatlantic core. Further commodification/privatisation plans have currently been put on hold, due to the Covid-19 emergency, which placed the entire transatlantic economic bloc at a standstill. Asia and the Pacific have seen annual wage growth increase since 2000 of up to 5,5 percent. Also, in terms of welfare reforms, China’s response to the Great Recession of 2007-08 was qualitatively different from that of the West.
In 2009, China put forth an “Equalisation of Basic Public Health Services” (EBPHS) policy aiming to promote universal health care and strengthen public health care provision. Contrary to widely-held views in the prevailing supply-side mindsets of western governorates, Chinese authorities consider health as the “core premise of human development”. Following a time-series and cross-sectional analysis, including comparisons with 131 countries, China’s 2017 Modernization Report drafted by experts in China’s Academy of Science, put forth a radical proposal aimed at applying engineering “super-highway practises” to modernise the country’s health system. Recognising that the country’s investment in its health system is low compared to western economies (10 percent as opposed to 15 percent of government expenditure), the Report proposed an overhaul of health governance in China based on increased investment, modernisation and technology application aiming at well-being and healthy ageing.
The recommendations of the report have informed China’s health policy since and assisted the country in its dealings with the Covid-19 pandemic. Further, digital monitoring of citizenry mostly through their mobile devices and “Bentham-like panopticon” cameras placed in buildings, helped China to deal with the pandemic rather competently. Chinese bio-political authoritarian intrusion into private lives proved efficient, if not more efficient, in dealing with the pandemic, whereas the neo-liberal authoritarian polities of the transatlantic core, with their pro-business attitude, austerity agendas and neglect of human life, have failed to coordinate and produce a joint response.
Currently, as the US government struggles to test its citizens and build enough supplies of essential healthcare materials, such as facemasks, the Chinese government and prominent Chinese firms are providing a large amount of supplies to western countries including the US. This is in line with the fact that in recent years, China has expanded its support for global health. The Health Silk Road, established in 2017, intends to further strengthen its health spending and extend health and research cooperation between countries within China’s Belt and Road Initiative (BRI). In January, even before the pandemic fully hit the country, the Chinese managed to build a hospital with 2,000 beds in just 10 days from start to finish. When Trump is threatening the WHO by withdrawing American financial support, China is promising additional funds to assist the organisation.
The coronavirus crisis may mark the final shift of global power away from the United States and could be the “opportunity of the century” for China to cement its place as the world’s global hegemonic power.
Get our weekly email