It was the virus that did it - Michael Robert’s Blog

• source
• [[covid-19]] [[political economy]] [[capitalism]] [[capitalist crisis]]

Notes

• like in 2008, Roberts expects mainstream economists to blame the crisis on exogenous factors

• stock markets have plunged as much as 30% in the span of weeks

• economic activity was already slowing leading up to the pandemic

  COVID-19 was the tipping point. One analogy is to imagine a sandpile building up to a peak; then grains of sand start to slip off; and then comes a certain point with one more sand particle added, the whole sandpile falls over. If you are a post-Keynesian you might prefer calling this a ‘Minsky moment’, after Hyman Minsky, who argued that capitalism appears to be stable until it isn’t, because stability breeds instability. A Marxist would say, yes there is instability but that instability turns into an avalanche periodically because of the underlying contradictions in the capitalist mode of production for profit.

• back in 2018, the WHO coined the term “Disease X”

  • they predicted this disease would arise from animals
  • they predicted it would come from a place where economic development drives people and wildlife together

• Rob Wallace (author of Big Farms Make Big Flu) argues that pandemics are caused by our culture

  • a whole host of diseases can be linked to animal cultivation: SARS, Ebola, MERS, the Black Death, and now, COVID

• the COVID recession isn’t a supply-side or demand-side shock: it’s a consequence of capitalism’s drive for profit

• it starts with supply, not demand

  • demand is downstream of supply
  • “if people cannot work and businesses cannot sell, then incomes drop and spending collapses and that produces a ‘demand shock’”

• mainstream economists think the recovery will bounce back like it did in 1987

• global profitability is low

• [[Malthus]] argued that surplus populations could be eradicated by plagues. This, he argued (incorrectly) would make the economy more productive

• for a brief period of time unemployment in the US was 50%. This isn’t comparable to 2008

• Much like the pandemic curve, economists must also “flatten the curve”

  • their approach so far has been to have central banks provide emergency liquidity

• Financial crisis is still high risk

  • Looming debt bomb: corporate debt is higher than ever

• The worst is yet to come

Commentary

Note that this article was written in March, and much of it is still relevant as of 6/23.

Many of the things referenced in this article are also mentioned in [[Mask Off]].

The point of this article is to show that crises of capitalism are not exogenous to the system, but endogenous (this point is also made in [[Capital]]).

Backlinks

• [[Michael Roberts Blog]]