The neoliberal footprints of the coronavirus

Jan 24, 2022
Parliament House, NSW
NSW Parliament House. (Image: AAP/Joel Carrett)

This was not a ‘black swan-type event’. The coronavirus has conspicuous neoliberal footprints with respect to its origin, spread and consequences.

The virus is neoliberal in origin because large-scale deforestation, which is linked directly to the activities and profitability of multinational corporations, has forced pathogens out of their traditional domains.

It is neoliberal in terms of spread because the proliferation of the virus has been aided by market-based policies and thinking, and by years of privatisation of healthcare.

And it is neoliberal in terms of consequences because it has attacked primarily the poor, underprivileged and vulnerable, and because (like any neoliberal policy) it has enabled profiteering, aggravated inequality, and pushed out the boundaries of poverty and food insecurity.

While free marketeers believe that Covid-19 pandemic is an exogenous shock to an otherwise functional system and characterise it as a “black swan-type event”, this virus and its first and distant cousins have emerged as a result of intrusion on their habitat by business enterprises.

The land-grab by multinationals, the consequent deforestation, and the push deeper into the remaining primary ecosystems have put previously boxed-in pathogens in human communities. Scientists have been warning us that deforestation can cause novel diseases and even global pandemics.

The spread of the coronavirus was aided by unpreparedness, inability of the private sector to deal with a pandemic, neoliberal policymakers who could not care less about ordinary people, and years of dismantling public health systems through privatisation.

Since the 1980s, belief in the power of the market has led to a status quo where governments take a back seat, allowing the private sector to steer the economy for the benefit of the oligarchy.

As a result, the governments of countries run by free marketeers have been put in a position where they are not always properly prepared and equipped to deal with crises such as Covid-19. Free markets cannot deal with a crisis of this magnitude, let alone any crisis of any magnitude.

Neoliberal political leaders are always ready to defend the nation and protect citizens against potential aggression by Russia, China, Iraq, Syria, Libya, Venezuela, Iran, North Korea, rogue states and terrorists. It is always the case that more should be spent on “defence” and be prepared for a military attack by a ghost enemy, but it is never preparing to fight a virus, which is more real and deadlier.

Morality dictates that lives must be saved, no matter who or what the enemy is. This virus has already killed more people than what terrorists and rogue states could kill. It has already killed more people in the US than those who lost their lives in two world wars.

Yet, preparation for war always supersedes preparation for a health emergency, and when a health emergency strikes, resources are not diverted from “defence” to healthcare, and people are allowed to die because they cannot afford treatment (at least in some “democratic” countries).

It may sound crazy, but it is real: military expenditure went up during the pandemic when financial resources are needed to finance the war against the virus.

In late December, the Australian government changed its advice on when people should get a free PCR test and called for greater use of rapid antigen tests, in part to relieve pressure on testing capacity. A single test kit costs some $20, which means that repeated testing for several members of a household may be unaffordable at a time when tens of thousands of people have lost their jobs.

One would expect that when the government calls for people to test themselves, these tests are made available free of charge (in other words, paid for by taxpayers). The neoliberal Prime Minister, Scott Morrison, responded to calls for making the test kits available at no charge by saying the following: “We’re at another stage of this pandemic now, where we just can’t go round and make
everything free”.

This is the same prime minister who, in the midst of the pandemic, committed billions of taxpayers’ dollars to acquire Anglo-American nuclear submarines, and the same prime minister who would have paid an undisclosed amount of taxpayers’ money to France for a breach of contract to buy French diesel submarines.

Preparation for a pandemic requires the production and storage of goods that are needed to fight the virus, just like the production and storage of military equipment are required to “defend the nation and save lives”. The private sector, which is motivated by the desire to earn a “quick buck”, is not interested in producing and storing goods that may or may not be sold for profit some years down the road.

Only a strong public sector could have ordered those goods and stored them for use when the need would arise. It is even better if the public sector produces those goods by considering social costs and benefits rather than private costs and revenues.

The spread of the virus was aided by “epidemiological neoliberalism”, which calls for allowing the market to work its magic, even if it means leaving people to get sick and die from “just another flu”.

Epidemiological neoliberalism is symbolised by herd immunity, which relies on the assumption that a contagious disease is best overcome by leaving it unregulated. After all, an unregulated market and an unregulated contagious disease are similar in that they both kill, primarily the weak, the poor, the homeless and people with low socio-economic status. Effectively, herd immunity is biological warfare and a laissez-faire form of social Darwinism.

The spread of the virus has been aided by the neoliberal drive to privatise everything under the sun, including healthcare. Forty years of the privatisation of public health institutions (in the name of efficiency and for the benefit of consumers) has resulted in a disastrous situation as private healthcare providers have no commercial interest in preparing for or preventing emergencies.

The spread has been reinforced by the lack of staff and material capacities in underfunded public hospitals, and the complete inability of the private, profit-motivated healthcare industry to provide even the most basic medical equipment and treatment when they are needed.

It is a myth that the coronavirus does not discriminate — it does. It discriminates against the underprivileged and the poor. Billionaires can easily practise social distancing and self-isolation by spending time in their yachts or holiday homes, or by using their private jets to fly to remote, Covid-free parts of the world. They can even isolate themselves by going to outer space in their private spaceships.

Compare that with the fate of hundreds of thousands of homeless people  who live on the streets of big American cities, the residents of the overcrowded Brazilian “favelas”, or slums, (which lack running water, sanitation and access to healthcare),  and those who live in the townships of South Africa where inequality has reached record levels.

Free marketers are proud of the market because it has no morals — it behaves according to the “law” of supply and demand. It follows that profiteering during extraordinary circumstances is acceptable in an environment where behaviour is governed by the forces of supply and demand, which the government should not obstruct.

Neoliberalism has been aggravating inequality, poverty and food insecurity. By its neoliberal nature, the coronavirus has already done its “duties” in this endeavour. As bad as inequality was without Covid-19, the pandemic has made it worse. It has aggravated poverty worldwide, thereby contributing to the neoliberal cause.

A related issue is that of hunger and food insecurity, a problem that has been worsened by the neoliberal virus all over the world.

The silver lining is that the Covid-19 pandemic has forced a rethink of neoliberal principles and policies as the neoliberal virus has highlighted the hazard of neoliberalism and exposed its shortcomings. The neoliberal virus has demonstrated that collective problems require collective solutions and a government that provides for the essential needs of its citizens.

The pandemic is forcing a reconsideration of the free market doctrine by exposing the toxic effects of a system that has for far too long dominated every aspect of our lives.

The way forward should be a fundamental change in the economic system rather than the tweaking of markets to achieve optimal performance, whatever that means.

The way forward is to move from neoclassical economics to moral economics.

Imad Moosa is a retired professor of economics and finance. He is the author of “The Economics of COVID-19: Implications of the Pandemic for Economic Thought and Public Policy” (Edward Elgar, 2021).

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