A pandemic may be represented as a ‘natural disaster’. A global depression is however the product of ideology and powerful political actors.
By James K Galbraith and Albena Azmanova – An unprecedented economic crisis is descending on Europe. It is, the president of the European Central Bank, Christine Lagarde, declared recently to the European Parliament, the worst in peacetime.
In the United States, the Federal Reserve Bank reports the worst decline in output and employment in 90 years. The World Bank warns that the world is on the precipice of the deepest slump since 1945—with up to 60 million people pauperized, many in countries already poor.
Lagarde hurried to clarify that this vast human tragedy was, in her view, ‘of no one’s fault or making’—as if a medical crisis could metamorphose into a social crisis all by itself. The catastrophe is however the work of ideas, of politics and of policies.
In the US, testing was botched, delayed and is still not available on demand. In France, vast stocks of personal protective equipment, accumulated for the H1N1 epidemic, had been sold off, stored badly and ruined. In the United Kingdom and Sweden, the authorities thought first to let the virus run free, seeking ‘herd immunity’ at the implicit price of many thousands dead.
These were not mere mistakes or simple accidents: they were political decisions. They were consequences of an ideology built over decades. There were sins of commission and sins of omission—to invoke a pair of concepts developed by Hannah Arendt—their result a fragile economic structure, marked by precarity and primed for collapse.
The sins of commission came first. From the late 1970s, political leaders throughout the west embarked on the formidable project which came to be known as neoliberal capitalism. Deregulation, decentralization, privatization, balanced budgets and tight money were key elements of the ‘Washington consensus’ advanced by national elites and the international financial institutions, especially the International Monetary Fund. Public services and welfare programs were slashed, including critical expenditures on public health.
The initial goals were to break trade unions and curtail inflation, albeit at the expense of core manufacturing capability. more>