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The fault is in the system


May 6, 2020

The writer works as professor in thedepartment of management sciences at SZABIST, Karachi.

The Covid-19 pandemic is relentless. It does not recognise cast, colour, class, age and region. It is everywhere – exposing the vulnerabilities of the global capitalist system driven by the neoliberal order that emerged in the post-cold war era as a panacea to all the social economic and health problems.

But the bubble of neoliberal order has been burst by the Covid-19 pandemic which has so far killed more than 0.2 million people around the world and the figure of infected people has crossed three million. The US, UK, Germany, Italy, and Spain are the epicentre, with the US topping the pyramid.

Most analysts attribute this situation to the delayed response to the pandemic due to lack of medical resources such as corona test kits, N95 masks, personal protective equipment for doctors and hospitals short of ventilators and space to accommodate infected people. We cannot erase from our minds the scenes of infected people lying in the corridors of hospitals, caskets piling up in churches, and morgues with no space for dead bodies to be buried, as well as cemeteries were full and the dead buried without funerals in mass grave sites.

Amid this chaos and rising human toll, the public health system of these countries is reaching the point of exhaustion and experts are fearing that if the speed of pandemic is not curtailed with a combination of lockdowns and social distancing, the public health system in these countries might completely collapse which will result in unprecedented human catastrophe of which no parallel will be found in the history.

This catastrophic human situation is widely being attributed to the negligence of the public health sector in the West and in the US under a neoliberal economic ideology based on liberalization, privatisation and fiscal austerity. Pursuit of self-interest replaced pursuit of people’s welfare. Production in search of profit was shifted to regions of cheap labour. Vital sectors of society such as health and education were privatized and public health was either underfunded or defunded. The UK’s NHS under the Tories is a glaring example.

In the blind pursuit of profit, the capitalist system has made the poor more vulnerable to pandemics like Covid-19. According to the Census Bureau, US, the number of uninsured persons rose from 27.3 million in 2016 to 28.0 million in 2017 and 28.6 million in 2018. According to media reports, low income jobs such as delivery, store clerks, nannies cannot be done remotely and majority of low-income jobs don’t offer paid sick leaves.

Low-income people are disproportionately more likely to be uninsured or underinsured for medical care. Therefore, due to lack of resources to prepare and protect themselves against Covid-19, many of these individuals faced higher risk of contracting and subsequently spreading the virus, for they could not afford to get tested from private clinics because of fear of exorbitant fees, and public hospitals did not have vaccines.

We have seen over the years that capitalist market economies have frequently been suffering from financial contagion which we saw in the 1930s, 1998, 2008 and now that contagion has spread to the health sector. Most analysts attribute the causes of financial and health contagion to the vulnerabilities in the existing structure of neoliberal globalization which prioritized profit over people.

It may be recalled that the structural changes in the architecture of neoliberal globalization took place during the 1980s’ financial crisis, after which the focus shifted from state-centric to market-centric globalization under the Washington Consensus. The power of the state was weakened to regulate the market and ideals of privatization, deregulation and liberalization were introduced. Hence the market was freed from the clutches of state control and the destiny of the people again was subjected to the infinite greed of market forces.

Fiscal austerity was used as the main response to the economic crisis caused by fiscal deficits in both developing and developing countries. The IMF adopted models that recommended reducing public expenses and social investments, retracting public service and substituting the private sector in lieu of the state to provide certain services under social policies.

The fiscal austerity that was applied in both developing and developed capitalist countries has damaged the health sector colossally. This is evident from the study by Romulo Paes de Sousa, an epidemiologist, public policy evaluation expert and director of the UNDP World Centre for Sustainable Development.

According to him, the health sector was affected in countries with a national health system, such as the United Kingdom and Sweden; social insurance, such as Germany and Japan; and private insurance, such as the United States and Australia.

A Cambridge University study led by David Stuckler, professor of health sociology, reveals a closer link between IMF-dictated fiscal austerity and sharp rise in incidences of tuberculosis, a disease related to severe poverty conditions and lack of public health infrastructure.

Data was collected from 21 countries in central and Eastern European countries that applied for loan from the IMF after breaking bond with the former Soviet Union after 1989. "We found TB rates were falling or steady before the IMF programmes began, and rose during the IMF programmes," says Stuckler.

The reason the Cambridge scientists found was that IMF loans uniquely demand less government spending, fewer doctors per person, and a cut of nearly half in the number of people with TB that received Directly Observed Therapy, or DOTS.

The Covid-19 pandemic has punctured the very hollow nature of the neoliberal globalized world that was built on the basis of some shoddy claims of the ‘End of History’. It was meant to build an equal, peaceful, prosperous and just world but today the reality is that even in the developed world people are dying because they don’t have masks, respirators, ventilators and necessary protective gear for doctors and nurses; so the developing world is far away from all this.

The reason is that neoliberalism undermined the public health system by focusing more on militarisation and profit throughout the world, and waged unnecessary wars costing more than $14 billion. These wars did nothing, except killing poor men, women and children, whether in Syria, Iraq, and Afghanistan.

My personal opinion is that globalization per se is not bad. It has produced enormous benefits such as creating new jobs, opening new avenues of investment, transferring technology, worldwide interconnectedness of goods, services, capital, people, data that all have transformed the world. But at the same time, unhindered and unconstrained neoliberal globalization has produced more financial and health contagions. The issue at hand is how we are going to manage globalization; it definitely requires democratic governance and fair distribution of resources.

The world that will emerge in the aftermath of Covid-19 will surely be marked by uncertainty and anxiety and nobody is sure what the solution will be to the grave health and economic problems the world is going through.

However, one thing is sure: the world won’t be the same as it used to be. It will move away from a market-centric to a state-centric model as we have seen socialist countries have done better comparatively than conservative capitalist countries in dealing with the Covid-19 pandemic.

Just a few years ago, right-wing politicians used to mock left-wing rivals and warned voters not to believe promises of governments distributing "free stuff" but today the same elements are looking towards state bailouts to prevent Covid-19 from causing another Great Depression.

One hopes saner and progressive forces will play a role to save the world from the infinite greed of capitalists, and build a just and fair economic system offering everyone equal opportunities.

Email: [email protected]