A saying goes like: “When the structure of a core myth begins to change, everything else about society changes around it, and fresh new possibilities open up that were not even thinkable before. When myths fall apart, revolutions happen.” Socialists have long fantasized about a possible revolution that will replace the capitalist system with communism. The financial crisis of 2008 has given them more reasons to fight for the revolution. Even though the Great Recession, as it came to be known, was not able to overthrow the existing capitalist system of productive and reproductive relationships, it did, however, generate a debate about the core issues of social democracy such as equality, freedom and solidarity. It was argued that capitalism has failed on all these fronts and a change is needed to bring into action these long-cherished goals.
The second decade of the 21st century saw the re-emergence of old ideas of Keynes, Kalecki and Minsky. The era of Great Moderation of Reagan and Thatcher which strengthened the reign of capital was over. The current pandemic which has brought the ‘capitalist hub’ to its knees once again, has highlighted the fragility of the prevailing economic order. It has demonstrated to us how unsustainable and unsettling profit-led growth can be. The deeper we sink into the pit created by the pandemic, the more we realize the importance of the sectors which we have been neglecting so far due to the shyness of market capital to move in these areas.
The interplay of market forces will not always generate an outcome which is socially, politically and even economically justifiable. Now, there are voices from within the orthodox economic circles about the possible readjustments in the post-pandemic world. At the same time, the socialists are all more euphoric about a possible transition towards their end goal. However, David Harvey, a noted Marxist geographer, believes that it is impossible to replace the ‘hegemony of capital’ as it is so deep-rooted that if we try to overthrow it, millions will starve. It is not an appropriate time to predict what will happen in the post-pandemic era but it is upon us to judge the current economic and political arrangements which have led us to this impasse.
Although the pandemic has influenced almost everyone, it will be grossly unfair to conclude that it has affected everyone equally. America has been the worst-hit country in terms of death toll. The country is seen as one of the world’s most developed nations and has more resources at its disposal to deal with the economic fallout of COVID-19. The US House passed $3 trillion coronavirus relief package to revive the sinking economy which other countries can’t do.
The novel coronavirus pandemic will have more dangerous effects on those nations which have minimal healthcare infrastructure and are ill-prepared to deal with such contingencies. The World Health Organization (WHO) has issued multiple warnings about the worsening situation in Africa and Asia, resulting in mounting pressure on the governments of these nations to offset the effects of lockdown. Even before the pandemic, the economic situation of these nations was fragile. Most of these countries were struggling to pay off their debt taken from Wall Street banks.
WHO and various other humanitarian NGOs are calling for international help to these nations and a collective response to deal with the pandemic. There seems to be a consensus among the economists across the spectrum about the debt moratorium which, as they argue, is more in the interest of the creditor. If the immediate debt relief is not provided to these nations, we will see more and more countries joining the league of defaulters just like Algeria. The need for more cooperative and comprehensive action to fight the virus is all more pervasive. However, the populist leaders have once again disappointed us. USA under Donald Trump has stopped its funding to WHO amid the pandemic when it was needed the most. It is not only wrong but a serious crime against humanity. It is an old tactic of ‘methodological nationalism’ utilized by rich nations to flee from responsibility. The rich nations owe the poor nations not only in terms of shared humanity but also in terms of the colonial legacy. If the poor countries are poor, the responsibility does not lie on them alone but the rich ones too.
Beginning with Christopher Columbus (1492) and Vasco da Gama (1498), the Europeans started exploiting and colonizing the rich African and Asian nations. The free trade doctrine, slave trade and civilizational burden played an important role in creating the divide we see today between Global North and South. When Europeans left their colonies, they left them poor and impoverished. In the second half of the 20th century, as these nations began the process of nation-building and followed policies without foreign intervention, it drew the ire of rich nations. These nations wanted the poor South to be eternally subdued. Now that it was not possible through direct conquest, the rich nations began to set the terms of international trade.
Samir Amin, noted dependency theorist, while describing the unequal exchange theory, argues that there is an “exchange of manufactured products, sold very expensively in the colonies by commercial monopolies supported by the State, for the purchase of products or primary products at very low prices, since they were based on labor that was almost without cost – provided by the peasants and workers located at the periphery.” Jason Hickel, in his book The Divide, shows that “in the mid-1990s, at the height of the structural adjustment era, the South was losing as much as $2.66 trillion in unequal exchange each year.
The rich nations provide aid to the poor nations (around $128 billion per year) and claim moral high ground. However, it is not the end of story. In 2016, US-based Global Financial Integrity (GFI) and Centre for Applied Research at the Norwegian School of Economics published data in which they found that in 2012, developing countries received a little over $2 trillion, including all aid, investment and income from abroad. But more than twice that amount, some $5 trillion, flowed out of them in the same year (J. Hickel in The Divide). Thus, it is not the rich countries but poor ones which are net creditors to the rich world even today. Thus, what rich nations pretend to fix with one hand, they destroy that with the other and help keep the poor countries always in a state of poverty. The disastrous effects unequal exchange, interest payments, structural adjustment programs and capital flow have on the development prospects of poor countries manifest themselves in terms of their low social investment. Today, if these nations face the existential crisis due to COVID19, its responsibility lies on the rich nations. They cannot escape and hide behind ‘methodological nationalism’ and leave these countries at the mercy of some invisible force.
The pandemic is a global public bad and needs a collective response. Hiding behind the garb of nationalism will not save us. The world will be different but there will not be a revolution. There will be an evolution of new ideas and the world will be more just. Today we need to strengthen and reform the global institutions like WHO, IMF, World Bank and others to save the poor countries from collapse and protect the lives of millions of people living in these nations. The rule of the game which governed the pre-pandemic era needs to be changed and made more pro-poor in the post-pandemic era.
The writer is Junior Research Fellow at the Institute of Development Studies, Kolkata.