Burning the Recipe Book
We are now watching the neoliberal recipe book burn before our very eyes. But rather than simply asking why it’s on fire, another question seems more salient: what will happen after this exceptional situation passes? And here there is little room for error: there can be no “return to normality” in the immediate future, and very likely there will be no return to neoliberal normality, full stop. Regarding the first point, even if a rapid epidemiological solution can be developed (in six months?), the size of both the recession (estimated at falls in global GDP of between 1 and 25%) and of public debt suggest a crisis lasting for quite a while. It should also be remembered that the situation of systemic vulnerability of the world economy was a recognized fact by the end of 2019: profitability in decline, sovereign debt on the rise, and signs of contraction in manufacturing production from China to Germany. For example, what can be expected of Italy’s economic performance after the Covid-19 crisis, when its debt was 140% of GDP back in June 2019?
The almost total suspension of productive activity—essential services and online work constitutes a negligible fraction—in most economies of the world is not a minor event. The virtual collapse of global production chains (due to the sudden suspension of demand for goods such as clothing, or because of supply bottlenecks due to sudden restructuring or even export restrictions of some products of critical value in this crisis) is expressed in brutal increases in unemployment4The US estimates 20 million unemployed. 16 million have already filed for unemployment benefits, a figure that is 15 times higher than the highest ever recorded in the postwar period. and in the critical state of international credit and payment chains.
These elements speak of the economic crisis both as a legacy of the pandemic and also of the hibernation of production and the alleviation packages. But it is necessary to understand the crisis in yet another dimension: the inability to respond effectively to the health crisis as such. And as the saying goes: the devil is not only in the crisis but in the details of how it is presented.
Contradiction between Value and Use Value
What can we infer from the fact that Ferrari is producing respirators, Gucci is making masks, and Christian Dior is bottling hand sanitizer? Or that the economy with the world’s highest GDP is unable to provide a sufficient number of 75-cent masks to its doctors?
On the one hand, both processes reveal the geopolitical risks of the internationalization of production. In a context of crisis and in the face of unusually high global demand, the main mask-producing countries suspended their exports (China, Taiwan, South Korea). China produces 80% of the world’s masks.
And while the contradiction between the commodification and the strategic use of products is not new (oil, for example, has been navigating this tension for a long time), there is no rare natural resource or particularly complex commodity at stake here. Furthermore, unlike with oil, there was no contingency plan—nothing prevented the stocking of masks or respirators in recent years—not even unpredictability. To cite one example, after the SARS crisis, the United States created a commission to prepare for a future pandemic. This commission suggested accumulating 3.5 billion masks and 70,000 ventilators. Of the masks, only 104 million were purchased, and these were used almost entirely during the swine flu (H1N1) crisis in 2009. A cut in spending blocked the replacement of the initial stockpile. For their part, the stocking of ventilators followed a more tortuous path to failure: a commission tendered the design of a new and cheaper model and awarded it to Newport, a small Japanese company based in California. When Newport came up with a model costing $3000 per unit ventilator, Covidien (one of the large ventilator producers, whose products sell for $10,000 a unit) bought Newport and canceled the contract. In July 2019, a new contract was signed with Phillips, but the delivery of 10,000 units was only planned for mid-2020.
A look at infrastructure returns the same perverse image. Mike Davis reveals that the United States has 39% fewer hospital beds than in 1981: the managerial logic of not having idle beds led to a systematic minimization of beds on the principle that 90% of them should be occupied at all times. A look at the beds per inhabitant published by the WHO is revealing: South Korea has four times more beds per inhabitant than does the United States, China and Cuba have almost double that number, and Lebanon and Albania have the same amount.5There are of course limitations to what we can infer from these figures. Infrastructure, complexity of equipment, and personnel associated with a bed are different in each case.