Two years of pandemic have shown the inhumanity of the capitalist road

By Prabhat Patnaik

For more than two years, the world has been facing a pandemic like the one that has not been seen for a century, and that has already claimed 15 million lives according to the WHO, without coming to an end. This is an unprecedented crisis for humanity as a whole, which requires a massive effort by all governments, especially the governments of third world countries where people are particularly vulnerable not only to disease but also to misery. what he brings with him. .

They have to expand hospital facilities, keep an adequate number of hospital beds ready, set up testing facilities, make vaccines available, and establish vaccination facilities, etc. In addition, governments have to provide relief to the people through transfers and relief to small producers who are likely to go under. All of this requires increased spending by governments. But precisely because of the pandemic, production suffers and with it government revenue at existing tax rates. Unless they raise wealth tax rates, they have to increase their fiscal deficits, thus as a proportion of GDP. In short, they must adopt policies that go directly against the dictates of neoliberalism, that violate all the restrictions imposed by the so-called “fiscal responsibility” and that abandon all concern for fiscal “austerity”. But let’s see what actually happened.

Precisely because of the slowdown or stagnation of the world economy, exports from third world countries suffer. No doubt so are their imports due to the slowdown in their own GDP growth rates; but even assuming that exports and imports are affected to the same extent so that the trade deficit or surplus decreases at the same time as GDP, the fact is that inherited external debt commitments must be fulfilled, the magnitude of which relative to GDP must increase . These debts must be renewed and their service must be deferred appropriately. In other words, even if trade flows relative to GDP remain the same for all countries after the pandemic as before, while GDP itself stagnates, external debt balances rise relative to GDP due to this stalemate. The debt burden therefore becomes greater and requires special accommodation to be offered to third world countries.

The most obvious way this can be done is to have a debt moratorium for a certain number of years; and within contemporary world capitalism, the institution that should be entrusted with the implementation of such a debt standstill is the IMF, which should also encourage countries to abandon “austerity” and spend on the health and welfare of people during the crisis. In fact, the current managing director of the IMF, Kristalina Georgieva, has often told some member countries to abandon “austerity” in this time of crisis, so one can get the impression that the IMF has finally seen the magnitude of the threat. humanity as a whole posed by the pandemic. For example, she recently urged Europe not to “jeopardize its economic recovery with the suffocating force of austerity.”

But it turns out that the reality has been very different. Oxfam has recently analyzed 15 loan agreements signed by the IMF with third world countries in the second year of the pandemic, and 13 of them explicitly insist on “austerity”. Such “austerity” measures include food and fuel taxes and spending cuts by governments that would inevitably affect basic services like education and health care. In the case of six other countries with which they have been negotiating, the IMF also insists that they adopt similar measures.

This insistence on “austerity” cannot be dismissed as an exception. Earlier, on October 12, 2020, Oxfam had reported that since March 2020 when the pandemic was declared, the IMF had negotiated 91 loans with 81 countries; and of these, as many as 76, that is, 84 percent of the loan agreements, insisted on “austerity” that would not only make life more difficult for poor people caught up in the pandemic, but would also result in in a squeeze on health spending. So the IMF’s insistence on “austerity” remains as strong as ever, even at a time when the world’s people can least bear its burden.

Not surprisingly, Oxfam has highlighted the contrast between Kristalina Georgieva’s advice to Europe not to be constrained by “austerity”, and the real program that the institution she leads insists on for the third world, which is to observe “austerity”. ”. On this basis, Oxfam has accused the IMF of using “double standards”, one for advanced countries and one for third world countries. The use of double standards is abhorrent at all times; but its use at the time of a pandemic that is affecting humanity as a whole is particularly abhorrent.

What Oxfam’s analysis misses, however, is the fact that the double standards evident in the IMF’s behavior are inherent in the nature of capitalism itself. In fact, a class society necessarily implies a double standard: a worker cannot go to a bank and apply for credit, but of course a wealthy person can apply and obtain credit. Put another way, the amount of capital one can obtain from “external” sources depends on the amount of “own” capital one has, which is why ownership of capital is an essential condition for being a capitalist. If this were not the case, anyone could become a capitalist, so there would be perfect social mobility instead of a hiatus equivalent to a class divide.

In fact, intellectual defenders of capitalism such as Joseph Schumpeter, who attributed the origin of profit not to ownership of the means of production, but to the fact that those who became capitalists had a special talent, which he called innovation, actually They claimed that anyone with such an innovation, that is, anyone with an idea that can be used to create a new production process or a new product, can get a loan from banks and set up a business. But such attempts to eliminate class divisions in society are palpably false; no farmworker, no matter how innovative an idea he may have, can start a business (although, of course, a rich man can steal the idea to start a business).

In exactly the same way, in a world of imperialism where countries are divided into two distinct categories – metropolitan countries and peripheral countries – metropolitan banks would be much more reluctant to lend to peripheral countries than to metropolitan countries; There will necessarily be “double standards” in terms of granting loans. The IMF, as the custodian of international finance capital dominated by metropolitan financial institutions, has to uphold this “double standard” when sanctioning loans and imposing conditions to recover loans. The Oxfam-style critique of “double standards” by the IMF, therefore, is based on the misconception that the IMF is a well-intentioned human institution that is supposed to look out for the interests of humanity, rather than of being a capitalist institution. institution that is supposed to watch over the interests of international financial capital.

The behavior of the IMF thus reflects the very nature of capitalism, of its essential inhumanity. I do not mean “inhumanity” simply in the sense that it puts profits before people, but also in the sense that follows from it, namely that it does not consider all human lives to be of equal value, which necessarily applies “double standards” in every sphere of life. For example, when the demand is raised that polluting industries move from the metropolis to the periphery, the obvious assumption behind this demand is that human life in the periphery is not worth as much as human life in the metropolis.

The envy of a social system that is based on this fundamental discrimination, or “double standards” if you will, becomes evident especially in times like now, in the midst of a pandemic. When both humanity and sagacity demand that we care about all human life, no matter where it is, a social system that discriminates between them, that considers some lives to have value and others not, stands out as inhuman and irrational. . (IPA Service)

Courtesy: Popular Democracy

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