The Coming Social Collapse

Phil Hearse and Neil Faulkner argue that neoliberal capitalism is facing terminal crisis, and that what comes next will depend on what we do.

April 2020.

Government officials are desperately seeking light at the end of the tunnel. We are told the rate of increase of infection and deaths is declining in Italy and Spain, but still the corpses pile up alarmingly. In three weeks, Donald Trump has gone from saying it’s all under control in America to saying the US is likely to experience 240,000 deaths. Now the United Nations says this is the worst crisis facing humanity since the Second World War.

No-one knows how long lockdown and economic disruption will last. The feeling that this is a judgement on austerity and neoliberalism is widespread, on the Left and beyond. It seems self-evident that the rundown of health and other public services has hobbled the medical fightback, as has the extreme reluctance of the Johnson and Trump governments to disrupt economies by early testing, tracking, and containing.

In our view, however, the roots of this crisis go deeper and the implications for the system are much more profound than the loss of several months’ production and some tens of thousands of deaths. This corona crisis is triggering the third major crisis of human civilisation in the last century.

The first major capitalist calamity was the First World War and its aftermath, roughly 1914-23, the product of the insane attempt to solve inter-imperialist rivalries by industrialised warfare. It resulted in millions of deaths, economic collapse in Western and Central Europe, an international flu pandemic which also killed millions, and of course a revolutionary wave, especially in Russia, Germany, and Hungary.

The second major crisis was from 1929 to 1945, from the Wall Street crash and the 1930s slump to the end of the Second World War, in which more than 50 million lives were lost. That crisis was of course occasioned by the rise of fascism in Germany, Italy, and Japan.

This third crisis is the consequence of the social effects of neoliberal globalisation, and encompasses not only the coronavirus catastrophe, but the mushrooming environmental cataclysm and the imminent collapse of a stagnating global economy based on debt, manic consumption, and soaring inequality.

If this multiple crisis is disastrous and prolonged, as seems inevitable, it is likely to produce huge shifts in world politics. We are at a point of no return, and we have to ensure as far as possible that the final outcome is devastation for world capitalism not the working class.

What the American crisis shows

Vast quantities of derision have descended on US President Donald Trump, especially in liberal journals in the United States itself.[1] Much of this condemns Trump’s refusal to face unpleasant facts, his slowness to sanction lockdowns, his incapacity to take the steps to provide sufficient testing and PPE equipment, and above all his desire to keep the economy going, whatever the human cost. These things have doubtless gravely worsened the crisis. But tracking the outbreaks reveals deeper problems.

The spread of the virus and the rising fatalities are hugely concentrated in urban centres where the poor are crammed together in the ‘projects’ – dirt-poor housing estates. Following the pattern of poverty in the United States, the victims will be disproportionately from Black and Latino backgrounds. However, the failure of hardcore pro-Trump states to take timely action is going to impact other sections of the population as well.[2]

At the time of writing (30 March), there have been more than 1,000 deaths in New York State, with 34,000 cases overall. More than 8,000 people are in intensive care and at least 50% will die. Nobody really disputes that the official figures may be underestimates, but in the absence of mass testing an accurate figure is impossible. Many thousands of old and poor people will get the disease, and then just stay at home and die.

Los Angeles, New Orleans, and Detroit are following the same pattern. Experts warn of up to 200,000 deaths in the US. The explanation of why the world’s richest country has become the world coronavirus centre is not just the vast increase in the herding and poverty of the urban poor, but the absence of a real national health system.

While super-expensive private healthcare for the middle class and wealthy has mushroomed, 40% of Americans have no health insurance and have to rely on the few and massively overstretched public hospitals. New York is absolutely emblematic of the shameful consequences of neoliberalism: home of mega-rich ‘lords of human kind’ on Wall Street, and also of millions of increasingly impoverished workers living in urban ghettoes and slums.

Intersecting crises

The last 12 months have been symbolic of the climate emergency facing humanity. In Australia, record wild-fires choked most of the big cities, as the flames destroyed hundreds of homes and killed dozens. Record wild-fires also occurred in Russia and Brazil.

The United States suffered from bouts of chaotic extreme weather that also killed scores of people. This included the ‘Polar Vortex’ in January 2019, which crashed temperatures to as low as -56º C, unprecedented flooding of the Plains and MidWest in July, and a deadly heatwave also in July and responsible for many deaths. The nearby Bahamas were smashed into by Hurricane Dorian, one the most destructive on record.

These weather events were superimposed on a background of perhaps the most threatening consequences of climate change – the melting of the glaciers and polar caps and rising sea levels.

In January 2020, 11,000 scientists published a statement warning that the world’s people face ‘untold suffering due to the climate crisis’ unless there are ‘major transformations to global society’.

‘We declare clearly and unequivocally that Planet Earth is facing a climate emergency,’ their declaration states. ‘To secure a sustainable future, we must change how we live. [This] entails major transformations in the ways our global society functions and interacts with natural ecosystems.’

The environmental crisis is not just linked to the corona crisis because it is happening at the same time. Deforestation, the destruction of traditional ecosystems, the spread of intensive factory farming controlled by giant agribusiness firms, the growth of filthy, overcrowded slum cities alongside, with minimal infrastructure, sanitation, and public-health provision, this creates the perfect environment for the generation and spread of new and more deadly virus epidemics. As Yasha Levine explains:

There’s a great academic by the name of Rob Wallace who has been doing amazing, pioneering work on this issue – looking at how our neoliberal globalised industrial economy pumps out deadly pathogens with increasing frequency.

Rob’s work shows that the real driver of corona isn’t China – it’s our oligarchic, hyper-industrial mode of food production. This monopolised, vertically integrated system was perfected here in America and then exported to every corner of the world. It paves over everything and prioritises concentration of wealth and maximum profitability for a tiny elite, while offloading the death and destruction it causes to everyone else.

It has created perfect conditions for producing deadly pathogens. It draws out deadly diseases from deep in the forests and jungles by destroying habitats, builds vertically integrated industrial ‘meat’ farms filled with cloned animals that breed the most virulent pathogens, and then hooks both of these disease factories up to a global supply chain that spreads the stuff around the world and to all of us.[3]

Causes of the economic crash

The advent of the corona crisis sent the world’s financial markets into a spin, demonstrating their extreme sensitivity to interruptions to immediate profit streams. This in turn reflects the fact that neoliberal austerity has failed to cure the underlying causes of the 2007/8 crisis; indeed, the cure – massive injections of debt into the system in the form of ‘quantitative easing’ – has only worsened the underlying crisis.

This is a combined crisis of over-accumulation (of capital) and under-consumption (by the working class). Stagnant demand then drives further stagnation of investment and production.

Financialisation is an expression of these processes: it sustains demand in the form of debt; it is an alternative source of profit because debt is a commodity like any other; and it can therefore absorb the rising mass of surplus capital which is not being invested in new means of production.

We have a full-blown crisis of the neoliberal model of financialised capital accumulation. Privatisation of utilities and national/local government services has stripped increasing numbers of working-class and middle-class people of any surplus income, a process worsened by downward pressure on wages, casualisation of labour (in Britain especially, zero-hours contracts), and massive cuts in welfare for the poorest. This is the bitter social fruit of the breaking of union power in the 1980s.

Many individuals and households sustain their consumption through credit-card debt, both for essentials like rent, food and clothing, and also for some minimal spending on socialising, like going to pubs, restaurants, and cinemas.

Companies are also addicted to expanding their operations through bank debt. Banks are only too willing to issue debt because this boosts their ‘assets’ and their revenue streams in the form of interest.

But once there is a significant interruption to production and consumption, the ability of debtors to repay, and thence the value of debts, is put in question. This is exactly what happened in 2007/8, when the ‘subprime’ mortgage debt mountain turned out to be worthless.

David Harvey explains why the present model of debt-based consumerism is especially vulnerable:

The modes of consumerism which exploded after 2007/8 have crashed with devastating consequences. These modes were based on reducing the turnover time of consumption as close as possible to zero. The flood of investments into such forms of consumerism had everything to do with maximum absorption of exponentially increasing volumes of capital in forms of consumerism that had the shortest possible turnover time.[4]

This has impacted particularly the ‘event based’ leisure commodities – tourism, hotels, airlines, restaurants, clubs, bars, theme parks, sports events, concerts, and festivals – a huge section of the world economy which now faces widespread bankruptcy and collapse.

This ‘experiential’ consumerism, incidentally, is the basis of ‘celebrity culture’ – the fetishisation of ‘stars’, the growing army of celebrities, their entourages, their media presence, especially on internet platforms like Instagram – all part of what Guy Debord called the ‘spectacle’ of capitalism.[5]

The crisis now upon us – the crisis that begins in 2020 and will run for years to come – begins with a collapse in ‘experiential’ consumption and in household consumption more generally triggered by a global pandemic. This in turn will tip the world into a global depression, with waves of bankruptcies, collapsing sales, investment, and production, and mass unemployment and social despair.

The system offers nothing but increasing human misery and ecological breakdown. It is historically redundant, utterly parasitic, and must be destroyed.

The perfect storm and the states of emergency

Italian fascist leaders peddle conspiracy theory. The Far Left must rise to the challenge of the neoliberal catastrophe - or the Far Right will fill the space.

The various elements of the present crisis are fusing to create a perfect storm. The pandemic, looming climate catastrophe, the breakdown of the international order, the distortions of the permanent debt economy, the sinister character of the global military-industrial complex, the growing social decay and inequality, this and more implies a stark choice: a descent into barbarism, or mass popular struggle from below to overthrow the lords of capital and create an international democracy.

· The virus is creating millions of desperate people, made unemployed or just deprived of work, unable to access creaking welfare systems or just not covered by them – for example, the huge number of people reliant on the ‘informal’ economy in Italy and Spain. Economic desperation is likely to lead to a rise in criminality, violence, and social unrest. Who will organise it? Who will lead it? The Far Right or the Far Left?

· The likely rapid spread of the virus to monster proportions in poor countries with no national healthcare system could create repeated ‘waves’ of infection, with potentially more deadly strains, making it difficult to suppress the disease even in countries with relatively good health systems.

· The longer the health crisis persists, the longer the lockdown persists, the more businesses will go bankrupt and the less credible debt-based relief for businesses and individuals will become. It is particularly ominous that the United States – with China, one of the two key hubs of the world economy – is the country worst affected by the pandemic. An economic slump is certain. Only the full depth of it remains unclear.

States everywhere are passing emergency laws that give them sweeping powers of arrest, detention, and suppression of dissent. Hungary’s ruler Viktor Orban has assumed the power to rule by decree. In Britain, the law passed on 20 March gives the Government powers of detention on suspicion of ‘terrorism’, with little chance of judicial oversight. The United States has these powers anyway, a result of the Patriot Act that followed 9/11.

Like any other crisis, different political forces will attempt to impose their own explanations and solutions on it. From Donald Trump to racist attacks on people of Chinese or East Asian appearance, we can see the outlines of the far-right approach – this is a ‘Chinese virus’, foreigners are responsible, we need to close our borders.

Narrow nationalism is all-too-obvious in the response inside the European Union, where Germany and other states refused to sell protective equipment to Italy. Now the attempt to bring relief to the economies of Italy and Spain has – insanely – hit the wall of refusal from super neoliberal deflationists in the governments and banks of Germany and the Netherlands. According to Keith Johnson:

Countries in Southern Europe, led by France, Spain, and Italy, have called for a common European response to the challenge – such as a massive ‘Eurobond’ underwritten by richer and less rich countries alike to better share the pain. Even Christine Lagarde, the head of the European Central Bank (ECB), has called for Europe to step up and do what it’s never done before.

But countries in the North, led by Germany and the Netherlands, have balked at the idea of a Eurobond, which they say is a nonstarter because it would mean their own taxpayers would be on the hook for countries they say have long lived beyond their means.[6]

The narrow nationalism and social vandalism of this response is almost beyond belief. It is sounding the death knell of the European Union, more surely than any number of Brexit votes could.

In Italy, the far-right leaders, Matteo Salvini of the Lega party and Giorgina Meloni of the more openly fascist Brothers of Italy, have backed conspiracy theories that Covid-19 was engineered in a Chinese lab and then unleashed upon the world.

If solidarity among EU states is all but absent, there is precious little concern among mainstream politicians and the Right for the fate of people in poorer countries, for the hundreds of thousands in refugee camps, or for that matter people in refugee detention centres in the advanced countries.

This is where Covid-19’s massive comeback and possible mutation is developing. The brutal character of the lockdown is India has sent hundreds of thousands of informal workers from the big cities, walking huge distances, in massive crowds, back to their towns and villages of origin.

Back home they can expect some support from extended families: in the cities, they now have nothing. Unfortunately, they are likely to have taken the virus with them. India’s middle class can retreat behind its well-guarded gates: the poor have nowhere to go.

Hundreds of thousands of Afghan informal workers in Iran, who have no access to healthcare or any social support, have now gone back over the border. We can expect the virus to sweep Afghanistan,[8] where 19 years of American-led war and billions of US military dollars have done nothing to alleviate poverty or build even the most minimal health service.

The Left response: internationalism, social solidarity, militant anti-capitalism

Neoliberalism is now reaping the acrid fruits of the inequality, poverty, and social devastation it has created – and millions of people, mainly from poorer communities, are likely to pay the price.

Against the lies of governments that stifled health and social care services, there is a counter-logic from below of social solidarity and community-based mutual support. As Simon Hannah has explained on this site:

And always circling, the racists and fascists see an opportunity to whip up race hate, attacking East Asian people in the street, promoted by the sneering talk of Trump and Fox News of the 'foreign Chinese Flu'. The conspiracy theories are now enclosing us as quickly as the virus, sowing mass confusion and doubt.

But we have also seen outpourings of solidarity and hope, embryonic community self-organisation to help the vulnerable through a period as close to a world war as most of us have seen. A world war where the enemy is invisible, microscopic, ruthlessly global in its spread. Neighbours support each other, offering whatever they can for people they barely know. Workers volunteer to undertake dangerous services just to save lives, to keep essential amenities functioning.[9]

The Left has to build on the anger of health and care workers, the defiance of workers who have walked off the job in dangerous situations, the widespread disbelief in the torrent of lies being pumped out by the Tories and their tame ‘experts’ in the guise of ‘government guidelines’.

But the Left must champion an internationalist response. We must demand help for the poorest and most vulnerable internationally, especially people in the poorest African and Asian countries, and people stuck in refugee camps that could be devastated by the virus. The 30 March bombing by Israel of a new coronavirus clinic in Gaza is ominous in this regard.

According to Adam Hanieh:

The widespread prevalence of malnutrition and other diseases (such as the reappearance of cholera in Yemen) make these displaced communities particularly susceptible to the virus itself.

One microcosm of this can be seen in the Gaza Strip, where over 70% of the population are refugees living in one of the most densely packed areas in the world. The first two cases of COVID-19 were identified in Gaza on 20 March (a lack of testing equipment, however, has meant that only 92 people out of the 2-million strong population have been tested for the virus).

Reeling from 13-years of Israeli siege and the systematic destruction of essential infrastructure, living conditions in the Strip are marked by extreme poverty, poor sanitation, and a chronic lack of drugs and medical equipment (there are, for example, only 62 ventilators in Gaza, and just 15 of these are currently available for use).

Under blockade and closure for most of the past decade, Gaza had been shut to the world long before the current pandemic. The region could be the proverbial canary in the COVID-19 coalmine – foreshadowing the future path of the infection among refugee communities across the Middle East and elsewhere.[10]

Incredibly, World Bank President David Malpass said at the G20 virtual meeting of Finance Ministers a few days ago:

Countries will need to implement structural reforms to help shorten the time to recovery … For those countries that have excessive regulations, subsidies, licensing regimes, trade protection, or litigiousness as obstacles, we will work with them to foster markets, choice, and faster growth prospects during the recovery.[11]

The unashamed arrogance of the neoliberal global elite is staggering. At a time when the failure of market responses is so dramatically obvious, when thousands are dying because we live in a world in which private profit always trumps social need, we have leading representatives of capital advocating yet more austerity.

We have been warned. The international ruling class plans to make the international working class pay the cost of the pandemic.

The Left must meet the challenge

Several things are essential:

1. We must connect with the rising anger among a growing minority of workers – health workers, care workers, others providing essential services, but also people trapped in poverty, at risk from the disease, in danger of starvation, as a result of the lockdown. Growing numbers are embittered against the Tories, the NHS bosses, the systematic lying, the negligence and incompetence at the top, the shocking callousness of their ‘herd immunity’ strategy, and much else. This minority will grow, and increasingly the anger will lead to outbreaks of struggle from below.

2. We must expose the failures and lies of the regime, and we must advance a raft of class-based demands – for testing kits, for personal protective equipment, for ventilators, for critical-care beds, for universal basic income, for price controls, for suspension of rent payments, and much more.

3. We need to explain how the pandemic is rooted in the agribusiness practices of neoliberal capitalism, how it was allowed to spread out of control by state and corporate cover-ups, how it has overwhelmed public-health services devastated by 40 years of private greed and 10 years of Tory austerity. And we need to explain how this is only one aspect of a compound crisis of a system that now presents a stark choice: capitalist barbarism or democratic revolution.

4. We need to break absolutely with the pathetic response of most social-democratic leaders, in Britain and internationally. The outgoing Labour leadership appears to have suspended all serious criticism of a criminally negligent Tory regime. The trade union leaders appear to have declared some sort of ‘social peace’ for the duration of the crisis. The three Labour leadership contenders appear to have nothing whatsoever to say about a once-in-a-generation global crisis that demands … well, leadership.

What is at stake here is the future of the social system we live under. We cannot – not in relation to the European working class, nor in relation to the mass of the poor across the world – allow the Right to seize the initiative as the crisis unfolds and impose their mendacious, authoritarian, and anti-social narrative on the outcome.

A more united Left, a radical fighting Left, arguing a clear anti-capitalist alternative for the working class, will find a ready audience.

Phil Hearse and Neil Faulkner are, with Samir Dathi and Seema Syeda, joint authors of Creeping Fascism: what it is and how to fight it.

[1] See for example [2] For a scary account of one man’s escape from virus hit Florida to the relative sanity of Canada see [3] A more detailed explanation is in [4] [5] Guy Debord and the Society of the Spectacle is the subject of a forthcoming article by Phil Hearse [6]

[8] [9] [10] [11] Quoted in Hanieh, op cit.

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