What, in fact, happened? Well, of course, in all countries that imposed them, the lock downs and lockouts were largely a sham for public consumption, and public relations purposes, having created the ridiculous narrative that such a lock down/lockout was necessary, or even possible. For the reason Marx describes, any such lockout is impossible, because it would destroy society in short order – which is one reason that some catastrophists were eager to have them, and now to continue them. The catastrophists proposing that are largely middle-class people. Someone has commented that what the lockouts really were was middle class people sitting at home, whilst working-class people continued to go to work, and produce the things they required, and deliver them to their door. Given that it was known that only 20% of the population, almost exclusively those over 60, and particularly those over 80, were at serious risk from the virus, such a strategy, but geared to enabling the 20%, rather than the middle-class to do so, would have been a far more rational, and achievable strategy than has been that of lockouts and lock downs. As Sweden, which had no lock downs, showed, the lockouts and lock downs, even in their own terms of preventing or reducing deaths and serious illness, were a complete failure.
So, in fact, rather than their being the 100% lock down and lockout that was the rational conclusion from the catastrophist narrative, the large majority of labour continued as before; workers continued to turn up to their factories to produce side by side with their fellow workers; they continued to go to work to drive buses, trains, and so on, and to travel to work on these things, side by side with others. In all of this continued social labour and social activity, required for production to continue, the vast majority of those involved - workers under 65 – suffered no serious ill effects. Many of them would have contracted the virus without even knowing it, because, for 80% of the population as a whole, and an even larger proportion of those under 60, the virus produces no symptoms, or only mild cold like symptoms. The vast majority of deaths (95%) and serious illness, was amongst not these workers, but amongst that 20% of the population actually at risk from it, and specifically the over 80's (60%+). The vast majority of deaths and serious illness came not from people exposed to general social interaction, but amongst the elderly in hospitals and care homes, in other words, the sections of the population who actually should have been locked down, isolated, and so protected from the risk of infection! Indeed, a large proportion of them only caught the virus as a result of going into hospital, or else as a result of being in a care home, where they were then exposed to it from people returning from hospital, as the NHS recklessly sent people back to care homes knowing they had the virus!!!
Something similar to this can be seen in every country across the globe, as they all followed the same flawed narrative.
All of those workers who continued to go to work as normal, and who the state required to continue to go to work, so as not to collapse society, were simultaneously told that they could not have social interaction, because of the danger of them contracting the virus. So, we were now to believe that the same people were not at risk from the virus when they travelled to work, or sat in the workplace with their colleagues, but were somehow at risk from it, if they went to the pub, the gym, a football match and so on, as all of these activities were then locked down. All of the workers employed in those particular activities, who generally tend to be lower paid, younger workers, many of whom are also migrant workers, were then laid off. The government established the furlough schemes to enable employers to continue to pay these workers. In fact, however, many of those workers it seems have actually left, either to find other employment in Britain, or else to go back to the EU. It will be interesting to find out how much of the money paid to employers via the furlough scheme was actually passed on to workers, and how much remained in employers' pockets, because the actual workers had gone, but the employers just forgot to pass on that information. There is currently a shortage of 180,000 workers in the hospitality sector, as a result of such workers having left.
Some of that lock down had other repercussions. Suppliers to those sectors, obviously saw the demand for their output collapse, and so that meant many of them had to cut back or close down. Car showrooms closed, and so orders for new cars collapsed, leading to car makers shutting down operations. In Britain, the fortunate consequence of this, for the Tories, was that the collapse in economic activity caused by Brexit, as exports to Europe fell by up to 90%, was hidden by blaming it all on the virus and the lockouts.
Overall, however, the amount of labour undertaken, and so of new value created fell by only 20%. In economies that have increasingly shifted online, the effect of the lockouts, and lock down was simply to accelerate this trend. The volume and proportion of online retail sales expanded at a fast rate, leading to a significant increase for the more far-sighted companies, like Tesco, in employment in online delivery capacity, the number of staff employed in providing its internet services and so on. And, of course, in an economy dominated by service industry rather than material production, the ability for workers to continue to work from home came into its own, although it highlighted the need for developed economies to invest far more intensively in upgrading their own broadband infrastructure to cope with it, and provide the speeds required.
States paid for the transfers made by borrowing. Marx explains the difference of this from a direct export of capital, in Capital Volume III. If capital itself is exported it does not act to produce surplus value in the exporting country, but now acts to produce surplus value in the recipient country. On the other hand, if the capital remains in the debtor country, and its debts are covered by borrowing, it only has to pay interest on the debt. The interest is less than the profit that the capital itself produces. Given that yields on government bonds are at 300 year lows, the attraction of such an option is obvious. But, those low yields are an illusion created by the action of central banks over the last 30 years, to print money tokens, and use them to buy up such bonds, as well as encouraging financial institutions, and owners of fictitious-capital to do so, in the expectation of more or less guaranteed capital gains from their speculation.
The problem that economies face, then, is not that huge amounts of capital was physically destroyed as a result of the government imposed lockouts and lock downs, which would have made it impossible to continue production on the same scale, would have required, as a result a large reduction in employment, small volumes of surplus value production, and so lower rates of capital accumulation and potential growth. Some capital was physically destroyed. Some small businesses went bust, and their premises and equipment becomes scrapped; some brewers had to pour away beer, and some other perishable commodity-capital has been destroyed. But, mostly, productive-capital remains physically intact, and available for resumed production. Some very large businesses have suffered severe damage to their balance sheets, as cash was drained from them. For large strategic industries, like aerospace, airlines, airports and so on, the state is likely to have to bail them out to one extent or another.
And, it is in this that the problems facing economies really reside. During the lockouts and lock downs, the amount of new value created by labour was reduced by 20%, yet workers were paid, more or less as though they were working as normally. Looked at from the perspective of the total social capital, this is the equivalent of reducing the amount of surplus value produced by society. And, given what was described, at the beginning, about workers actually producing their own wages each week, via their production, which the capitalist then simply hands back to them, the consequence of 20% of workers not doing so for a year, can be seen to be far greater than first appearance would suggest. The difference has been made up with borrowing, but this same situation has been repeated across the globe. Across the globe, a similar reduction in physical production can then be seen, and yet borrowing and the printing of excess money tokens, has created the conditions for monetary demand for this reduced output to be maintained. At company levels, cash drained from balance sheets, makes them less able to self-finance even restarting their operations, when restrictions are lifted, let alone expanding, as economies across the globe, now re-open, and economic activity expands by 10% plus. The vast levels of borrowing over the last year, and now compounded by the need for even greater levels of borrowing to finance re-opening, and expansion, as rapidly growing demand forces businesses to respond rather than lose market share, and potential profits. And states also have to borrow more, on top of their phenomenal borrowing over the last year, because they need to bail-out large strategic industries, and repair the creaking and crumbling infrastructure that those economies depend upon.
As rising inflation causes the costs to rise, so the borrowing by businesses and states rises in monetary terms alongside it. As rising borrowing relative to the supply of money-capital from realised profits and saving, and causes interest rates to rise, the fiction of the historically low yields on fictitious-capital is exposed. The borrowing costs of states not only rise, but that also means that they must either tax or borrow even more, or else print even more money tokens, in order to finance those debt costs. Tax is simply a deduction from surplus value, but surplus value has been destroyed as a result of the lockouts, and it would simply reduce the potential for future growth from productive investment to cover current costs of unproductive consumption. Printing even more money tokens, which is what central banks are currently doing, will simply stoke even larger levels of inflation, and a more severe response later. So, higher interest rates are the only viable option, especially given the current absolute low levels.
If a company faces a doubling of interest on any new borrowing, say from 2% to 4%, or from £2,000 to £4,000 on a £100,000 loan, it is unlikely to deter it, in conditions where strong economic growth means it expects its profits to rise from say £1 million to £1.1 million. But, as I set out recently, what it will do is to crater the asset prices which are a function of these interest rates. It is that, which is the main concern of states and central banks that continue to be primarily concerned with the private wealth of the top 0.01%, whose wealth now entirely consists of such fictitious-capital.
The lockouts and lock downs, much as with Trump's Trade War and Brexit, and as with the measures of austerity, after 2010, acted to drastically slow economic growth, and with it the demand for money-capital, which helped to hold down interest rates. Slower economic growth held back the demand for labour, and consequent rise in wages, which would have increased demand for wage goods, whilst squeezing profits, required to finance any capital accumulation. At the same time, the printing of money tokens, and their use for QE, alongside the measures of governments to encourage speculation in property and assets, drained money out of the real economy, and into the realm of fictitious-capital. No wonder in the last year that financial markets soared to ever new astronomical levels, and property prices also rose fuelled by easy money, and Stamp Duty and other incentives.
But, that short-term fix for those asset markets, by encouraging even more reckless gambling on those prices, will now force those financial markets to go cold turkey.
No comments:
Post a Comment