Speaking to Richard Eskow and The Zero Hour, Prof. Richard Wolff explains why capitalism failed to handle efficiently the recent pandemic crisis, which is another sign for the fact that it's an obsolete system that needs to be replaced.
Key points:
We are witnessing a systemic breakdown. This is the third crush of the capitalist economic system in the first two decades of this new century. In the spring of 2000, we had something that came to be called the "dotcom" crush of the economy. A few years later, in 2008-09, we had what came to be called the sub-prime mortgage crush of the economy. And here we are, ten-eleven years after that, and we have the coronavirus crush of the economy.
We have those names for the crushes because we desperately do not want to admit that the problem might not always be something external. Like, technology, or mortgages, or a virus. We don't want to face the fact that what we really need to explain, is why we are vulnerable, as an economy, to things that we have gone through before.
A new technology with companies that became very valuable overnight, didn't happen for the first time in the 1990s, with the Internet and high-tech and telecommunications. That happened before with railroads, electricity, modern atomic energy and so on. There was nothing new.
We have had real estate booms and busts throughout American history. The sub-prime mortgage crisis was another boom, namely giving mortgages to relatively low-income people, and it went bust. Like, say, Florida real estate had done repeatedly in the previous century.
And then, we come finally to this one. There is absolutely nothing new about having a virus. And a virus that can be deadly. In recent past, we had SARS, MERS, Ebola. They were all viruses. They were all dangerous and deadly. They all had problems with people spreading them from one to another. A hundred years ago, we had the Spanish flu, which was a virus that started in a military base in Kansas and ended up killing 700,000 people.
We know exactly what these issues are, we know how to prepare for them. We didn't do it. That's a problem of the system.
The reason we don't have enough masks, or tests, or ventilators, or hospital beds, is because it isn't privately profitable for the companies that we permit to be in the business of producing these life-saving items. They do it, if it's profitable. It isn't profitable to produce it for periods of time that there is no disease. It isn't profitable to stockpile these things, even if you imported them from abroad. And our government is so besotted by the private capitalist mentality that that's what they've got to love, support, subsidize, and cheer on that the government didn't step in to offset the grotesque failure of private capitalist enterprises to do what we know is necessary to fight a pandemic.
We have already lost in wealth, many, many, many times more than it would have cost to produce and stockpile tests, ventilators, masks, beds, hospitals, you name it. What that means is that the private capitalist system, with the government on top of it that we have, proved itself now to be monumentally inefficient. It didn't understand that the logical lesson from the viruses of the past, was to accumulate stockpiles of the necessary medical equipment, to prevent a virus from becoming the next great depression.
But the private capitalist profit-driven center didn't do it. And the government that's complicit with that system, didn't step in to fix it either.
That's our problem. Not that there is a virus, but that there is a system that is incapable of learning from the past, to avoid repeating the disasters of the past. This is the most dramatic demonstration that capitalism, as a system, has outrun its historical tolerability.
When private capitalist enterprises focus on profits (most of the time) and disregard public needs (often), gov't fails to compensate (often).
Example: preparing for Corona virus in US, a systemic capitalist failure. #HowCapitalismWorks— Richard D. Wolff (@profwolff) April 5, 2020
Beyond Wolff's thorough analysis, there is another feature of the neoliberal capitalist system that makes it even more unsustainable. It's the unprecedented inter-connection of the national economies, driven by the enormous power of the international banks and corporations. In a more-than-ever globalized system, mostly due to modern technology, a major crisis of the capitalist system can start anywhere and spread like a disease globally.
As we mentioned almost two years ago, in our days, the financial system is so interconnected globally that it's almost impossible to predict the 'when', 'where' and 'how' of the next financial meltdown. Will it start from the student debt bubble in the US? Will it start from the zombie-bank Deutsche Bank in Europe? Will it start from another real estate bubble, this time in China? Will it come from something else, elsewhere? No one can tell.
So, in his analysis, Wolff referred to the American economy. Yet, specifically the last two major crises, that is, the sub-prime mortgage and the coronavirus, have demonstrated loudly, the unprecedented failure of the capitalist system as a whole.
The sub-prime mortgage crisis begun in the United States and spread globally, hitting developed economies. It was spread like a disease in Europe and brought many countries to their knees. Greece bankrupted with the unemployment and the national debt reaching unimaginable levels, while other countries of the eurozone still struggling to deal with similar problems.
Before even start seeing some signs of recovery, countries like Greece, Italy and Spain, were severely hit by another crisis, which, this time came from China. We are in the midst of this crisis and no one has even an idea of the impact on the economies. However, everyone speaks about another economic Armageddon of unknown dimensions.
And think about it. This new crisis is not even financial, it's a health crisis. And all the data show that it's not even close to the major health crises of the past, like the Spanish flu. Yet, the impact on the economies is already quite evident. Just check out the millions who lost their jobs, only in the United States, so far.
What more do you need to know in order to understand that the current capitalist system is completely broken?
As we mentioned almost two years ago, in our days, the financial system is so interconnected globally that it's almost impossible to predict the 'when', 'where' and 'how' of the next financial meltdown. Will it start from the student debt bubble in the US? Will it start from the zombie-bank Deutsche Bank in Europe? Will it start from another real estate bubble, this time in China? Will it come from something else, elsewhere? No one can tell.
So, in his analysis, Wolff referred to the American economy. Yet, specifically the last two major crises, that is, the sub-prime mortgage and the coronavirus, have demonstrated loudly, the unprecedented failure of the capitalist system as a whole.
The sub-prime mortgage crisis begun in the United States and spread globally, hitting developed economies. It was spread like a disease in Europe and brought many countries to their knees. Greece bankrupted with the unemployment and the national debt reaching unimaginable levels, while other countries of the eurozone still struggling to deal with similar problems.
Before even start seeing some signs of recovery, countries like Greece, Italy and Spain, were severely hit by another crisis, which, this time came from China. We are in the midst of this crisis and no one has even an idea of the impact on the economies. However, everyone speaks about another economic Armageddon of unknown dimensions.
And think about it. This new crisis is not even financial, it's a health crisis. And all the data show that it's not even close to the major health crises of the past, like the Spanish flu. Yet, the impact on the economies is already quite evident. Just check out the millions who lost their jobs, only in the United States, so far.
What more do you need to know in order to understand that the current capitalist system is completely broken?
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