Coronavirus and the crisis of capitalism

 

Coronavirus and the crisis of capitalism

 

 

Noah Millman

The Week

July 15, 2020

 

Illustrated | Getty Images, iStock

 

 

 

Over a recent weekend in upstate New York, my wife and I went out for dinner at a restaurant — still a novel experience for us. The place only had outdoor dining and was assiduous about masking and other coronavirus-related rules, all of which we found reassuring.

 

In the course of the evening, we learned that our server was actually the proprietress of the establishment. Why was she waiting tables? Well, she explained, with unemployment insurance paying so much, it's very hard to get anyone to work — particularly when it's so easy to catch the virus doing restaurant work, and when there are so few tables, and hence so few tips. So now she's serving as well as running the restaurant, though she didn't know how long she could take working so many hours.

 

Back in New York City where we live, we went out again, to a place that was also doing outdoor dining (there's no indoor dining yet in the city). There was a temperature check before we could enter and make our way to the patio, where we were again served by the proprietor. I asked him how they were faring, and he said, well, we're actually very lucky. Unlike many of their competitors, they always paid their entire staff on the books, and paid them well. So when they took out a Paycheck Protection Program loan, it covered a very high proportion of their costs, and made it possible for them to keep going. But they don't know what they're going to do when that support ends.

 

Meanwhile, an old friend who only recently recovered from COVID-19 himself tells me that his eldest daughter, who works in the New York restaurant industry, just came down with the virus. She presumes she contracted it at work, even though her establishment operates according to the strictest guidelines. Regular contact with customers is enough to make it a risky job.

 

This is the reality of one industry in one state — a state that is on the upswing, that went through the worst and, since then, has done a better job than most of containing the virus and bringing infection levels down. It’s worse nationwide; the Independent Restaurant Coalition estimates that 85 percent of independent restaurants could go out of business by year-end, and infections are rampant in states that have opened indoor dining. Stories about businesses of all kinds finding hiring difficult, meanwhile, have been common for months. Even in New York, though, workers have very legitimate reasons to fear infection on the job, while employers have legitimate concerns about whether they can find willing workers, as well as whether they can possibly do enough business to stay afloat without government backing.

 

 

So we can hope that the federal government gets its act together and provides the necessary economic support for individuals, whether it's through a renewal of super unemployment insurance or new checks to everyone or a combination of both. And we can hope that it figures out a new way to support small businesses, which are closing at terrifying rates, that works better than the deeply flawed PPP.

 

But I still can't help wondering: what then?

 

The original purpose of the emergency assistance was not to support the economy but to freeze it in place while the country focused on combating the virus. Businesses were encouraged to keep their employees so that, once the virus was defeated, they could resume business where they left off. And the huge numbers of suddenly unemployed were given generous assistance so that they would remain in place as well, in their current homes, ready to get new jobs when the economy snapped quickly back.

 

We failed in our effort to defeat the virus, though; in many ways, we barely tried to win. And while it is still completely possible for us to take the necessary steps to bring infections under control and open safely, it's hard to imagine that actually happening in the America that exists. Regardless, we're no longer trying to freeze the economy in place. We're trying to get it functioning again. But it's pretty much impossible to imagine that happening without pervasive government support for a long period of time — and that has deep political implications.

 

For one thing, if the federal government can print money in seemingly unlimited amounts to sustain the economic structure that exists, why can't it print even more money to tackle, oh, any problem you choose to name? This was already a question many people asked in the wake of the bailouts of the financial industry over a decade ago, but it's glaringly obvious with the government paying millions of people's bills and tens of thousands of businesses' payrolls. It’s really untenable to say: We can print money to bail out cruise lines, but not to provide housing for the homeless.

 

Then there's workplace safety. Workers have always had to decide what kinds of risks they're willing to take to earn a living, and the history of unions as well as progressive labor legislation has been about putting limits around what workers may legitimately be asked: limits on hours, regulations on working conditions, etc. Now, though, it's transparently the government deciding whether to put workers in the position to have to make those tough choices. On what basis can the government ever legitimately say: wait tables or you won't eat?

 

Capitalism depends for its legitimacy on the shared illusion that when scarcity occurs it is natural. There really are only so many resources to go around, and capitalism's claim is that a free market allocates those resources most efficiently to produce the greatest wealth for the society as a whole. The system isn't actually natural, of course, and informed people understand both that there are jobs the market won't adequately do and that the rules of the game are human creations that can be tweaked to favor capital or labor to a greater degree. But you can understand those qualifications while still appreciating the wealth-generating capabilities of the system as a whole.

I'm not sure that's true, though, in the world we're inaugurating. When the government is paying the bills, the decision to stop paying is a political one, not just an economic one. Take a look at the politics of agricultural subsidies — which evolved from Depression-era programs to stabilize prices in an automatic fashion to the point today where farmers are paid billions to offset the impact of the government’s poor political decisions — and imagine that playing out across the entire economy.

 

It's tempting to think that the political end-game could be something like Andrew Yang's universal basic income, which would cut the Gordian knot of deciding who deserves support by simply paying everyone some minimum amount. We may well wind up with UBI, and that might well be a good thing, but I'm skeptical that such a program could relieve the political strain on capitalism's legitimacy. Someone has to set the level of income provided, after all — and that's a political decision. How will they justify setting it at one level and not another — particularly if people are still making difficult, painful choices? It strikes me as very unlikely that people will simply trust the government to calibrate these matters fairly or optimally any time soon. We’ve seen the man behind the curtain, and we know he’s not a wizard.

 

 

I'm not arguing for any alternative, because I'm not sure there is one. Cutting off government aid now would amount to shooting a limping economy in its one good leg and then stabbing it in the guts to finish it off.

But the business-owners who were the strongest advocates for getting the economy moving again quickly, virus be damned, should be aware of what they may reap in return: not only the deepest depression since the 1930s, but the greatest crisis to the legitimacy of our economic system since that era to boot.