The strange sea lights of Madang
Racism diminished but not dead

Why neo-liberals can’t handle a crisis


TUMBY BAY - Many businesses all over the world have been caught out by Covid-19 through the disruption of supply lines. Goods are not coming into countries because of the closure of borders.

Australia has been particularly affected because home-grown manufacturing has declined significantly and just about everything except agricultural products come from overseas, and China in particular.

Calls are now being made to re-establish all the local manufacturing gutted by successive governments over the years or moved offshore to cheap labour countries by greedy businesses.

Added to this problem has been the practise of many businesses keeping the bare minimum of products in stock to save on storage costs, so-called just-in-time inventories.

Because of this practise, certain goods disappeared from the shops very quickly when the coronavirus restrictions came into force.

This finely balanced supply and demand situation is a consequence of the neo-liberal philosophy of maximising profit wherever possible and by any means.

This philosophy is also what has informed the lack of funding by many governments for non-profitable aspects of their economies, like public health, transport and education programs.

This is why countries like the USA and the UK were so ill-prepared to deal with the Covid-19 pandemic.

The infrastructures needed to deal with the pandemic had been so run down that they had no hope of dealing with such an emergency.

There had been a hint of these shortcomings in the USA when Hurricane Katrina occurred in 2005. Hurricane Katrina was a Category 5 tropical cyclone that caused US$125 billion in damage, particularly in the city of New Orleans and the surrounding areas, and over 1,200 deaths.

In that case, neo-liberal philosophy ordained that New Orleans, largely populated by poor African Americans and Latinos, was expendable.

There is a sense of this philosophy in the approach of Donald Trump and the Republican state governors to the Covid-19 pandemic but there is also strong evidence that the lack of preparedness for such an event has had a major negative impact too.

To support this argument you only have to look at countries that have handled the crisis well, like Australia and New Zealand, to see what difference strong social services like a good health system can make.

Rabid neo-liberal regimes fail their citizens miserably when it comes to dealing with crisis. Whether they care is another matter. The example from Trump’s America is that they don’t.

Where else could you see wealthy people buying their own ventilators while people were dying because there were too few of these life-saving machines in the hospitals?

There is also an interesting lack of contrast between what is happening in neo-liberal countries and third world countries, especially those with corrupt regimes.

Both are equally unable to deal with a pandemic like Covid-19.

Imagine what would happen in Papua New Guinea, with its rundown hospitals and other services, if a second and third wave of the pandemic strikes.

And that possibility is entirely on the cards. The 1918-19 influenza epidemic that killed 50 million people worldwide did the most damage during the second and third waves.

And, of course, there will be more pandemics after this one. Scientists have been warning us about the increased likelihood of pandemics for some time now.

As climate change fails to be addressed and exploitation of the planet’s resources increases, the conditions for such events exacerbate.

Among other things humans will have to modify how they produce their food and other needs to survive.

At the very least mono-cropping and intensive animal husbandry will need to be reconsidered.

But that doesn’t fit in with a neo-liberal philosophy of profit above all else.

That will have to change if humanity hopes to survive.

Whether it will change is another question.


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Philip Fitzpatrick

I guess it's a handy narrative for Chavez to blame the Americans for everything. The American-led sanctions no doubt provide him with plenty of ammunition.

The Americans and their allies claim the sanctions are because of the anti-democratic nature of the Chavez regime but he reckons they are just after his oil.

I find it hard not to believe the CIA are involved but I'll take your word for it. Same goes for Trump's involvement.

Chris Overland

Phil, you are quite wrong to attribute the current woes of Venezuela to a CIA inspired neo-liberal crisis.

I have friends in Venezuela and my daughter lived there for a year. It was the election of populist and ostensible "socialist" General Hugo Chavez that triggered the economic disaster that is now engulfing the country.

Idiotic economic policies, the seizure and subsequent incompetent management of the country's petroleum assets and vast sums squandered to keep the Venezuelan military on side have bankrupted the country.

The Venezuelan diaspora numbers in the millions, most of them being members of the educated middle class. They now are scattered across the globe, notably in the USA, UK, Spain and even in Australia.

Chavez' successor, Nicolas Maduro, whose supposed re-election is widely recognized as being fraudulent, has merely entrenched the kleptocracy established by Chavez.

As for the CIA, they have had to do little or nothing to provoke a crisis: Chavez and Maduro have done that for them.

Venezuela is in a terrible mess and there is little sign that the situation is going to improve anytime soon.

Perversely, it may well be the USA, spiritual homeland of neo-liberalism, that ultimately suffers most as a consequence of the C19 crisis.

At a bare minimum, its loss of moral standing and influence seems likely to be very serious indeed although its current leadership are incapable of recognising this.

As to the economic impact on the USA, it is too early to tell what the true cost of the crisis and Trump's "management" of the economy will actually be.

Bernard Corden

Creative destruction and long wave theory is discussed extensively by Werner Sombart, Nikolai Kondratiev, Ernest Mandel and Joseph Schumpeter.

The late Eric Hobsbawm proclaimed: "That good predictions have proved possible on the basis of Kondratiev Long Waves—this is not very common in economics—has convinced many historians and even some economists that there is something in them, even if we don't know what".

Covid 19 is merely clearing the decks for a more intense and dystopian version of capitalism, which will include artificial intelligence, big data and supra-surveillance.

Philip Fitzpatrick

The Chicago School of neo-liberalism actually recognises inducing crisis as a useful management tool.

The idea is to provoke a crisis that destroys the leadership and economy of a nation so that it can be rebuilt in the neo-liberal image.

The CIA has used this theory extensively, particularly in South America in countries like Chile. It tried but failed to do the same thing in Cuba.

Currently it is attempting to destroy the leadership and economy of oil rich Venezuela.

The wars it provoked in oil rich Syria and Afghanistan exhibit many of the same elements.

In this sense the crisis provoked by the Covid-19 epidemic in the USA is playing right into their hands.

In this case it is more a case of encouraging the crisis rather than tackling it.

People, especially the poor, are just collateral damage.

Stephanie Alois

It is saddening that the most intelligent creatures on earth (humans) are the most destructive to the planet that sustains them.

The persisting question that remains unanswered is vital: Can we sustain the environment that preserves human life?

Bernard Corden

"A reasonable estimate of economic organisation must allow for the fact that, unless industry is to be paralysed
by recurrent revolts on the part of outraged human nature, it must satisfy criteria which are not purely economic" - R H Tawney - Religion and the Rise of Capitalism (1926)

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