Global Economy diagnosed with Coronavirus.
“We need it all!” exclaims the man with 7 rolls of toilet paper. His exhausted, yet visibly rational wife responds “ So do other people”. With the kids in tow, dressed in quintessentially Danish toddler onesies. She has had enough of this. Frankly, here’s her mate. It’s a Netto (grocery chain) just off Norrebro in central Copenhagen. Judging by their accents, the couple is English, West Country to be precise. Going by their trenchcoats and immaculately dressed children, they are Danish residents. However, irrationality and paranoia hold no passport and recognise no borders. Coronavirus has served as a canvas upon which all our human psychological flaws and the inherent political and economic contractions of our society are laid bare.
Tonight, after a decidedly unpanicked grocery shop I plan to return to Thomas Mann’s classic novel Death in Venice (1912). The plot centres around a Venetian outbreak of cholera, in many respects the Coronavirus of its time. Mann’s novel was rooted in the orientalist fear of Eastern contamination — the “horror of diversity” that the main character Ashenbach mentions when he learns that the pathogen originated in India and spread throughout Asia before reaching the Mediterranean and Venice.
In the early 15th century, Venice was one of the world’s first cities to perfect a system of maritime quarantine. Italy has a long history of quarantines: first used in Modena in 1374 to cordon off potentially infected people, they soon prevented strangers, minority groups, Jews and Arabs from entering the cities. What started as a fear of disease became a means of stigmatising and segregating certain peoples. By 1836 Naples had stopped the free movement of prostitutes and beggars, who were automatically assumed to be carriers of infection.
Today, as coronavirus takes hold, the brunt of xenophobic suspicion is being borne by Chinese people. On 26 January, a local newspaper in France published the headlines “Alerte Jaune” (Yellow alert) and “Le péril Jaune?” (The yellow peril?), alongside an image of a Chinese woman wearing a protective mask. The paper apologised, but the “horrors of diversity” evoked by Mann in Death in Venice had it seemed, already occupied the European imagination. French citizens of Asian descent have since posted photos of themselves on social media holding signs reading, “I am not a virus.”
On the 30th of January Mattero, Salvani- leader of the far-right Lega Norda tweeted the following “And they said we were spectators and alarmists. Open borders, useless people in government. We pray to God that there are no disasters, but whoever has done wrong must pay.”( Find the link yourself, I don’t platform fascists).
Meanwhile, in the United States, President Trump is combining his standard call for taller walls with a fresh instruction to moneymen to “buy the dip” in Wall Street, rather than to follow their instinct to seek refuge in the boring but safe bond markets. A great deal will depend on whether financiers believe Mr Trump or not, and not just because this is an election year.
If speculators do believe the American president, Wall Street will recover swiftly even before the epidemic subsides. The forces of xenophobic financialisation will then have triumphed and America’s progressives will face an uphill struggle on every political front. As for the European Union, ruling elites will breathe a sigh of relief that a new depression was avoided and return to managing as best as they can the economic stagnation of recent times, tinged this time with a large dose of additional, coronavirus-reinforced, xenophobia.
The federal reserve has undertaken the decision to cut interests rates by 0.5 per cent. I’m no immunologist but one can hazard a guess that viruses pay no heed to the motions of the Dow Jones. The underlying logic is to boost asset prices, make borrowing cheaper and keep consumer capitalism on the road. However, in our global economic ecosystem, two elephants roam: Will other economies follow suit? And if they do, will it be enough?
Firstly the Eurozone remains bonded in the fiscal straightjacket. Therefore whether they like it or not the ECB and adjacent national banks will be forced to boogie to the American tune, albeit with a more awkward stride. We have already witnessed the announcement of reduced interest rates, even Japanese style semi-direct purchases of government and private debt by monetary authorities.
Will it be enough? The short answer is no. When a border is closed it does not necessarily reopen when the conditions that forced its closure are reversed. Take, for example, Austria, which closed its border with Italy following the rise of refugee arrivals in the summer of 2015. For a couple of years after that refugee wave had died out, the borders remained shut. Why is this relevant? History shows us the answer.
There were two responses to the 2008 crisis that saved capitalism from total collapse: the gigantic injection of liquidity into the economy by central banks, the Fed above all else; and China, whose government took it upon itself intentionally to build up the greatest private credit bubble in history to replace the lost export demand by a stupendous investment boost. The Fed’s and China’s intervention succeeded in re-floating global finance and putting stock markets onto the path of their longest growth spurt. However, the world did not go back to its pre-2008 ways.
In precisely the same way that the increased liquidity after 2008 failed to rebalance savings and investment globally, so will any renewed monetary “easing” to counter the ill effects of Covid-19 fail to return the global economy to its pre-February state. Of course, as happened after 2008, speculators will make a mint and nationalist forces will milk the ensuing discontent for all its worth.
Our current reality differs from 08 in one crucial area. The collapse of 2008 started in the banking system, the heart and lungs of the global economy, The blood supply of the global economic system inflicted with one of capitalism’s regular bouts of illness. Coronavirus represents a simultaneous shock to both supply and demand. What this means is that the world supply chain is broken. Companies will not be producing, whether staff are working from home or simply laid off companies simply will not be able to produce at the rate they are accustomed to. On the demand side, consumers will reduce spending in retail hospitality and tourism. If the banking system supplies blood then consumer spending supplies oxygen. With a shortage of both, it is inconceivable that our economic system can resume “normal” bodily functions.
Surely to mitigate the fallout from the pandemic governments must undertake economic regulation that defines capitalism? Wrong. China paints a more vivid dystopia than Black Mirror ever could. To control the virus, Chinese authorities had to put the economy to sleep. In the US, the reaction to the threat of the same virus has been to encourage people to wake up, go out and spend. Going out, socialising and spending money involves congregating and chatting to strangers; in other words, creating precisely the most fertile ground for viral contagion. Here we see two different visions of capitalism. The former is nakedly authoritarian. The latter merely taking a plutocratic detour to the same destination. Each offers a response to the virus and one is decisively more effective.
At present, the rising pandemic of fear is more dangerous than the virus itself. The apocalyptic imagery in the media hides the deepening relationship between the far-right and the capitalist economy. And in the same way that a virus needs a living cell to replicate, so too will capitalism adapt for the new biopolitics of the 21st century.
Like the panicked gentleman in Netto, our desire for self-preservation overwhelms the senses and overrides our capacity to remember our interlinked existence with other beings. Walls, whether they are made of brick or toilet paper will not protect us from the most dangerous impact of the virus. It’s potential to mutate capitalism into something darker, more vicious, more authoritarian. Our sanitised hands may soon be raised in surrender if we don’t change course.