Crisis and the case for socialism

The coronavirus crisis is very different, at least in its origins, from the Global Financial Crisis. Both differ in crucial respects from other crises in living memory, notably including the Great Depression and World War II, as well a string of severe but not catastrophic crises that have affected the global economy and society. But thinking about them all together brings home the point that major economic crises are quite common events. The crisis of the past took each took between five and ten years to resolve. Even if the current crisis is shorter, we can draw the conclusion that crisis of one kind or another is not an aberration, but a regular occurrence in a complex modern society.

What they have in common is that the result in a need for urgent government action. The greater the capacity and willingness of governments to act to protect society from the economic damage associated with such crises the better, in general, the outcome has been.

The most immediate requirements for dealing with a crisis are a strong and comprehensive welfare state, and strong protections for workers. In the aftermath, we need a substantial economic role for government, including control over infrastructure and financial enterprises and public provision of services like health and education. In short, we need socialism.

(More to come soon!)

67 thoughts on “Crisis and the case for socialism

  1. Moz of Yarramulla11:49am – “Exponential growth eludes a lot of people, not just SmoKo.”

    Parts of Queensland’s coastline identified as global hotspots for sea level rise
    “Scientists say it is a tomorrow problem that must be tackled today.”

  2. The idea that there are some activities that governments should be involved in and some that it shouldn’t: that makes sense to me.

    Obviously, people can agree on that principle but disagree about which activities the government should be involved in and which it shouldn’t. There are probably lots of cases where there are arguments in favour of government involvement and arguments against it, and where people disagree about how to strike the balance.

    If things could somehow be arranged so that government is doing what it should and not what it shouldn’t, then the government will end up being some size, I suppose, if there’s a way of measuring that. But the idea that a particular size of government, big or small, is the objective, and that you work towards it regardless of any consideration of the arguments for or against government involvement in the particular areas of activity affected: that makes no sense to me.

    I guess some people might use ‘small government’ as a shorthand for ‘the government should cease its involvement in areas A, B, C, and D, where it is currently active, for reasons W, X, Y, and Z’, or ‘big government’ as a shorthand for ‘the government should get involved in areas A, B,C, and D, where it is not currently active, for reasons W, X, Y, and Z’. But it’s a misleading shorthand which confuses what should be the real issues.

  3. There has been one politician In Australia performing worse than “No-action Scomo” in this current crisis. That politician is Annastacia Palaszczuk. She has been a near total no-show with almost no announcements or initiatives in Queensland during this crisis. I don’t know what Annastacia Palaszczuk is doing or where she is. I suspect every other Queenslander is thinking the same thing. Queensland is drifting toward Covid-19 Reef with no-one in the wheelhouse. Heaven better help us because our non-leadership won’t.

    Scomo has been doing nothing about the health crisis itsefl and announcing what I suspect are mainly spurious financial measures. Has anyone seen any of the bushfire money he announced? I doubt it. Will anyone see much of the money he is announcing this time round? I doubt it. How is Centrelink going to administer their part without at least a doubling of staff? Where are the announcements of extra Federal staff to put these changes through? Non-existent.

    Still I suppose Annastacia Palaszczuk is being more honest. She’s announcing nothing and doing nothing. It’s probably more honest than promising the world and then doing nothing like Scomo.

  4. Ikonoclast – “Will anyone see much of the money he is announcing this time round? I doubt it.”

    Palaszczuk was first premier to declare/activate a state emergency some weeks ago although it does seem she has done little to follow that up, except to have a late night parliament sitting to enact more associated laws. She announced earlier this week she wouldn’t be visiting her parents. She later announced she would be staying in at home herself. I have a feeling though that Qld gov is about to finally jump into some way overdue extra necessary action. Better late than never? Tell that later to the late dear departed and those left with their grief? Not likely, like Scummo now, the changed narrative is one where they acted earlier than anyone anywhere upon heeding great and timely advice.

    Thousands of announcements though…

    — media&num_ranks=10&tiers=10&collection=qld-gov&profile=qld&start_rank=31

  5. The WHO has indeed acted like it is captured by China. WHO advice has been dreadful. It has consistently praised China, despite China permitting wet markets which generate such zoonotic pathogens, hiding the virus outbreak early, suppressing early alerts and then containing its own outbreak while pressuring Australia (for example) to take its students. This amounted to pressure to get the virus outbreak and nothing less; pressure to which we weakly capitulated out of greed for Chinese money.

    The WHO refused to call a pandemic when it should have. It waited until Europe had surpassed China for cases and deaths to call a pandemic and then trumpeted that Europe was the “epicenter” of the virus. The WHO’s spin on events for the whole episode has been tantamount to propaganda for China. China was the ORIGIN of the virus and the source of the contagion to the world. The term “epicenter” has no meaning outside the study of earthquakes to my knowledge. The events that have occurred have by accident or design amounted to a kind of weaponisation of COVID-19 against the world. Perhaps it is a weaponisation by incompetence or perhaps there are more sinister dimensions to this.

    Mind you there has been egregious stupidity by the West. We fell into this trap whether it a constructed trap or a natural trap.

    Prime minister asks the nation to pray
    Scott Morrison:
    I will say this: while you may not be able to go to church, the synagogue, the temple or the mosque, I most certainly call on all people of faith in our nation to pray. I can assure you, my prayer knees are getting a good work out.

    Mr Speaker, as Australia works to flatten the curve and slow this virus, we also face an immense economic challenge. Across Australia today many thousands of Australians will lose their jobs.

    They are lining up at Centrelink offices as we speak – something unimaginable at this scale only weeks ago. They have lost their jobs, many, and we know, many more will.”

    Something unimaginable months ago! … more bs from #scottyfrommassmurder

    And Roberts giving a presser just now saying Services Australia and myGov systems etc are offline due to an overwhelming distributed denial of service attack by hackers! Liars!

  7. Hi John,

    Thanks for writing The ‘People’s Bank’: the privatisation of the Commonwealth Bank and the case for a new publicly-owned bank.

    I’ve been trawling through many pages trying to map out how Keating’s recession was the recession we had to have. I’m a bit perplexed how it was the momentum grew to the point privatising a public asset that now generates +$2B a quarter could ever be a good idea.

    Very few people in the friendship or work circles I move in care to consider what the past 2 decades could have been like if the CBA was still the bank of the people.

    The neoliberal capitalist onslaught of recent history is about to unravel the delicate fabric of society as we know it yet Scotty from marketing and his merry men are concentrating wealth to the top once again via QE and bailing out businesses whilst neglecting the worker.

    If there was ever a time Australia needed a peoples bank that is for the people not profit the time is now.

    A friend and I are planning on starting a podcast to try and get a few alternative perhaps progressive ideas out there. I’m trying to get as much information together to explain the privatisation of the CBA and the effects it’s had on the Australian society.

    I’m writing to you as you seem to be one of the few I’ve come across able to succinctly describe the story. I was wondering if you might able help me fill in a few information gaps I have? Open to anyone who has some insight on the topic.

    Of particular interest
    1. How and who sowed the seed? What is their back ground and what did they have to gain/loose?
    2. Is there any direct or indirect evidence Keating benefited from the privatisation?
    3. Forgive my ignorance however, “the recession we had to have” how and why? was it the deregulation of the financial markets? the floating of the dollar? What lead to Keating developing enough support to propose idea?

  8. David Walsh of Mona says ” I initially thought COVID-19 had turned Australia into a socialist country, but it has simply turned Australia into a family.”…

    “The Prime Minister, the leader of a right-wing government that defeated Mona’s $50-million expansion by defeating Labor, just made an announcement, and it brought a tear to my eye (and a tear in the nation’s hip pocket). He doubled the dole. That’s more evidence that left and right are alike except for in-group boundaries (you’ll have to read my forthcoming book to understand that one). This disaster is ring fencing Australia, so the Prime Minister and his crew are now using the Australian border as their in-group boundary. “…

  9. In appealing to values, culture and tradition, Smocorona, liblab, (it’s “left and right alike” alright) and the whole game of mates crew, think their Big Australia creation can fondly recall Australia. Ring fence it? Ha, what rubbish! That is never what they’re about. For a timely example of that, there’s currently a critical shortage in Australia of vital medical equipment necessary to treat and contain CV19, yet just this week alone the game of mates misgovernment system allowed several hundred tons of covid-19 related crucial medical and ppe supplies to be flown out of the country to China. The lost stockpile has been purchased from Australian wholesalers and amassed here over the past several months by Chinese business entities and identities. Poor fella, my country..

    A short while ago China loudly condemned Australia for even thinking about halting inbound travel from China when the wuflu epidemic was at its peak there. Now that the disease is under control in China but is exploding in its spread in Australia and elsewhere China has ring fenced itself and closed it’s borders to entry and at the same time pulled in thousands of tons of medical supplies they’ve quietly amassed from around the world, particularly Australia! China has looked after her best interests and her people, so unlike the suckered in Big Australia.

  10. Iconoclast

    You opinion that Australia capitulated to China/se money makes no sense. In Victoria at least, most cases of COVID-19 seem to have been imported from the USA. There were 4 cases at a major university recently, plus two confirmed non-Chinese students. At least 5 of whom were infected in UK or someone who travelled from UK. Australian government disregarded WHO’s advice and did not let Chinese students return (Art some High School students and some that travelled through thired countries. And I am not aware that any of these have tested positive or infected anyone else).

    It is not banning travellers from the USA that got us into this situation, if we need to blame something or someone.

    Wet markets are an issue but Chinese government has been trying to ban them and likely most Chinese are against them.

    From memory, swine flue came from the USA which was never blamed.

  11. AleD,

    I don’t doubt that a considerable number of COVID-19 cases came from the USA, proximally. Following the chain back, the USA got it from China originally. I can’t find statistics for proximal origin of imported cases. Original origin is Wuhan, of course, for all cases. Australia should have banned all visitors to Australia from overseas from 1st February 2020 and from China from 15th January at least. Australian citizens should have been permitted to come home but put in formal quarantine.

    China bears its share of responsibility for unleashing this scourge on the world. Other nations bear as much responsibility for not closing down routes of transmission to their nations. There has been a lot of excusing of China’s responsibility in all this. By China, I mean the Chinese Government which was and is in charge. Why people want to excuse an absolutist, oppressive and secretive regime I do not know.

    All Capitalists and Capitalist nations (including State Capitalism in China) bear responsibility for the current global food system which plays a major role in unleashing zoonotic disease on the world. There is plenty of blame to go around. as I said. The Chinese government should be called out for its role too. Not have excuses made for it.

  12. Command economies work best. This is certainly a contentious statement. It begs the following question. Command economies work best for what? Clearly they work best for crises. This is evidenced by the adoption of command economies, even by capitalist democracies, for total war as in WW2 for example. It is also evidenced by the adoption of more and more command economy measures during the current pandemic crisis and even during the previous financial crisis. The running of the economy and society’s resource allocation decisions can no longer be left to the operations of the free market so-called and its most powerful players who control most of the game.

    Once a crisis occurs, a relatively free market and relatively constrained and limited commands from the government are no longer a viable pairing with which to confront that crisis. We are already seeing what happens when a crisis impacts on a relatively free market system where private money and property confer the most control to those with the most private wealth. In essence we see anarchic outcomes. We see hoarding, profiteering, unacceptable people movements and rioting, or at least sporadic “crisis rage”. This is misbehavior of individual persons, poor and rich, relative to the standards of personal self-control, mass consensus and coordination needed to confront the crisis. We see corporate profiteering and “fortressing” with mass sackings, withdrawal of workers rights and entitlements (QANTAS), wealth hoarding or wealth strikes (unwillingness to share wealth) and commercial rent strikes which in Australia have so far have broken out as brawls between commercial tenant billionaires and landlord billionaires rather than between ordinary residential tenants and petty bourgeois landlords.

    From our PM and Treasurer we have proposals for “hibernating” businesses which are closed by the force majeure of the COVID-19 virus (the force majeure is at one remove as the command to close comes from the government to prevent worse human and economic damage from the virus in future). This essentially equates to a suspension of bills for debtors (renters, mortgagors etc.) and a suspension of income for creditors. This is well and good and it may work or there may be a better way yet to be found and explored. However, the crucial theoretical point it proves is that the money and finance circuits of the standard relatively free market operations (currently neoliberalism) have limited operability and have to be abandoned as soon as there is any kind of significant crisis. The financial crisis demonstrated the same thing with a different set of problems.

    Might not these considerations already begin to induce us to suspect that neoliberalism is an improperly functioning system? As soon as it is put to a stern test it fails. It has manifestly failed in many other ways also, even in benign times. It has led to rising inequality. This is first an ethical failure and second an economic efficiency failure. It is clear from empirical studies that high inequality economic systems are inefficient overall. IIRC correctly, Joseph Stiglitz among others has published empirical research on this issue. Neoliberalism has to lead to the weakening of government in general and government instrumentalities, operations and departments. Our public health, research, welfare, care and even education systems have been degraded and now fail to meet this stern test. Emergency corrective measures are now in train but these systems were better kept a little gold-plated if anything for the next inevitable exogenous shock (they always come sooner or later) rather than run them own and then frantically re-constitute them when a crisis is already upon us. The latter course is much more costly in resources and human lives in the long run.

    We also see that unfettered capitalism (neoliberalism) has failed to deal with the climate and ecological crisis, let alone the accelerating emergence of zoonotic diseases which are mainly due to the industrial food system and endless encroachment on the wilds. Again, the precautionary principle, the opportunity cost principle and the option value principle all indicate that we need better command and control over our political economy to prevent these kind of disasters progressing and even accelerating further.

    This all gets back to the contention that more of a command economy and one of a particular kind will work best in the long run and to help save us all; humans, other animals and plants. This is not to suggest a total command economy. Absolute command economies would be as unworkable as absolute free market economies. It is a matter of degree AND legitimacy. China is more of a command economy than those of the West albeit it is a state capitalist command economy with an absolutist government. Clearly, there are egregious aspects of the Chinese system which we do not want to emulate. The West rather than being a true free market or American libertarian style economy (which would also be disastrous conformations) is actually a kind plutocratic-corporate command economy with semi-anarchic players. They are semi-anarchic in the sense that the government does not properly regulate them and they struggle destructively with each other and the government to the detriment of coordinated national action. Relatively little of this struggle is creative in the Schumpeterian sense. Often it is sabotage in the Veblenian sense. I leave people to research those concepts if they are not familiar with them.

    What this boils down to is the answer that we need a mixed economy, public and private, with a large, vigorous public sector and strong controls and checks on corporations and plutocrats. It needs to be genuinely democratic rather than mere representative democracy. It might appear as Democratic Socialism compared to the current system but it would not be pure socialism by any stretch. Certainly we need an MMT or classical Keynesian style monetary and fiscal policy, a UBI (Universal Basic Income) and a JG (Job Guarantee). We need higher taxes on wealth, strong curbs on tax avoidance and tax havens, strong laws to protect workers and the poor, strong laws to regulate finance and lending and strong laws, regulations and costs to mandate action on climate change, pollution, food safety, zoonotic disease genesis and other systemic problems.

    The government and its instrumentalities need to be conferred a strong level of command to do this. Neoliberalism has manifestly failed all empirical tests. Legitimacy, with a partial move to a more command driven economy must come with a compact where the democratic system is made genuinely democratic and it provides the people with final and complete control over the government system. Checks and balances against tyrannical government including an independent judiciary and a free press would be paramount for this objective and must be enhanced. It is not good enough that the only permitted check against tyranny is great wealth. There is no justice for the middle class or the poor in that. And soon there will be no survival for humankind and civilization if the plutocracy is permitted to continue running the political and economic system.

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