[S2 E06] New
In this episode, Prof. Harvey talks about the factors and conditions that enables COVID-19 to become a pandemic and the ramifications for the economy and for social life.
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This Transcript has been edited for clarity.
This is David Harvey and you're listening to the Anti-Capitalist Chronicles, a podcast that looks at capitalism through a Marxist lens. This podcast is made possible by Democracy at Work.
One of my favorite novels is Love in the Time of Cholera by Marquez and it's rather much in that line that I want to talk today about anti-capitalist politics in the time of COVID-19, which is the Coronavirus travelling around the world. I think it's important maybe also to record the date of this talk because it's on March the 9th, 2020 and when I left home this morning the stock market had declined in very short order by more than 7%. The stock market has a trigger, which stops trading when it seems that there is a panic underway. Today, the trigger was triggered and so there was a pause. Right now, over the last couple of weeks the stock market has probably lost around 15% of its value, which is still nowhere near what it lost in 2007-2008, which was around 40 or 50 percent of its value. But still, it's very significant. So, clearly something is afoot. Something is taking place, which is not good from the standpoint of capital, but maybe provides some opportunities for anti-capitalist politics from another standpoint.
So let's begin, perhaps, by reflecting a little bit on the nature of this virus and where it comes from. There is a tendency to regard these events as due to nature and that therefore something outside of human intervention, even human comprehension. That, however, is fundamentally an erroneous way to look at it. Marx would argue that the metabolic relation to nature is a very complex, interweaving flow of influences and transformations. The result is that there is very little that occurs, which is “natural” that does not have intertwined with it some aspect of human action, some aspect of human utilization. And so it is with these viruses. Many of these viruses arise out of agricultural practices or food consumption practices. The practices, which are most caught up in this are high density, very intense food and animal rearing activities. Now, I don't know and have no privileged understanding of where this particular virus came from, but the whole line of coronaviruses, which has been known from the 1960s onwards and produced events like SARS and so on, this whole line is about mutations, which occur in the viral structures. These mutations in order to grab hold need to have an adequate host environment. In other words, mutations are occurring all of the time. But, it's only under certain circumstances that the mutations grab hold and become viral problems for the whole human system of production and reproduction.
In this instance, what we've seen, for instance in southern China, animal rearing practices and food production practices and marketing practices, which provide host constructions so that particular viral mutations can take place. It is, I think, no accident that this came out of southern China where we know these sorts of practices exist. Once there, then, the structure of human populations becomes very significant. Generally speaking, viral transformations need a certain density of human populations. I recall, for example, in my undergraduate days learning about measles transmission and the fact that measles, by and large, didn't infect small villages and rural areas. It mainly needed fairly large towns in order for measles to become an epidemic. So, human action creates environmental conditions in which mutations can actually then lead into something of the sort that we've seen with the sudden emergence of this COVID-19. And then, of course, the problem is how far does it spread and what are the mechanisms of its transmission? On that, of course, we immediately see that the world is not an isolated place and there are not isolated places within it. There is a lot of trouble going on and that therefore what we find in our own era of “globalization” is the relative ease with which various forms of mutation of this kind can get transmitted. We saw this in HIV/AIDS. We saw it in SARS. We saw it in bird flu. We’ve seen it in all of these areas. The problem is that since there is a lot of travel going on, a lot of motion, a lot of movement in the world it is relatively easy for these viral infections to move from one place to another. It was to be expected when the viral transformation was first identified in China that there would likely be a spill over into the rest of the world.
But on this point, the Chinese clamped down very fast. This was a very different response then there was in the SARS epidemic when it seems that the Chinese engaged in a lot of denial until the SARS epidemic was well underway. In which case, one could be critical of the Chinese for not acting fast enough. There was probably some of that in in the present corona infection. But, the Chinese actually fest up pretty quickly to what was going on and acted pretty quickly. I know that Xi Jingping basically said anybody concealing information or distorting information will be severely dealt with fairly early on. And so, the Chinese actually blocked a lot of the transmission by basically putting a quarantine over a million or more people in Wuhan province. By doing that, the Chinese actually bought time. When the event was first mentioned, it was immediately recognized in certain circles that this could pose a possible threat. So, the day that this information came out and became global there was a decline in the stock market, a sudden drop in the stock market. But then, something peculiar happened in that people looked at the situation and said, “well, maybe this is just a repeat of the SARS event.” And the SARS event was relatively easily contained and had very few deaths and therefore had a very minimal effect. So, I think probably people suddenly said, “oh well this is just like SARS. Don't bother about it.” And, the stock market went up. It went up higher and higher and higher until about ten days ago when it was suddenly realized this was not as a SARS event. This was going way beyond it. There had been an immediate diffusion of the virus.
It got into South Korea and there was an epicenter of development there. And then, surprise surprise, suddenly it was in northern Italy. Now, when it got into northern Italy—and you can say well either this changes the consciousness of what this is all about because it's northern Italy and not some Asiatic country—but when he got into northern Italy, suddenly everybody ran a mile and within a few weeks, of course, what we've seen in in northern Italy is the closure of the whole of the economy in northern Italy and that clearly is very significant not only for Italy but for Europe but also for global capitalism. So, the spread and the diffusion of this epidemic is something, which you need to look at and there is an attempt to engage in containment practices. Like I say, the Chinese bought us about maybe a month where we could have prepared, but nothing very much was done and everybody assumed it would just go away. Plainly, it's not going away. And now we have a serious collapse going on in global stock markets, which have also been affected by an argument between Saudi Arabia and Russia over oil. The crash of oil prices on top of this epidemic is actually creating mayhem in the global economy.
But, over there and what to think about this and say well to what degree is COVID-19 an anti-capitalist agent and to what degree does this epidemic create the opportunity for radical transformation of how capital is working and in what ways will it cause that? So, in what sense and why will an epidemic of this kind actually affect the global economy? Well, I tend to work in my own mind with this sort of map of the flow of capital and there are various points where things can happen, which actually threaten the continuity of capital accumulation and the continuity of capital accumulation circulation. In this case, the main threat arises at the point of what we call realization of value. It's not immediately affecting the production of value. Though, of course, as the realizations go sticky so the production starts to go to sticky. But, the problem is the realization of value and this means that there's a consumption problem. There are two forms of consumptions, as Marx constantly reminded us. One is productive consumption, which is the consumption of capitalist producers of goods and services in the creation so that an automobile in order to be made somebody has to make the tires and somebody makes the component parts and so on and then they're assembled in the automobile. So, productive consumption is about the consumption of partially finished products within the production process. That's the first place where we might find a blockage. The other point of blockage might be in final consumption.
Let's look first at productive consumption. What we're dealing with here is the value chains, which are involved in contemporary productive activity. An Apple computer is drawing upon complex value chains of different companies in different parts of the world producing parts, which are then assembled into the Apple computer before it is sold. Those places where this can happen can be affected by the virus in the sense that the workforce may find itself unable to function because suddenly a large proportion of the workforce is struck down by the fever. Because of the contaminant effects, many of the firms, which are involved will need to shut down, to furlough their workers, to get them off site because of the intensity of the epidemic effect. So, what this does is to create a blockage so that the key parts that are needed for, say, an Apple computer or an automobile or whatever suddenly are lacking because mostly under contemporary conditions of globalization and just-in-time production systems and all the rest of it there are not large inventories around of the parts. The tendency is to say well each week a certain flow of parts comes in, but suddenly that flow doesn't materialize because the factories had to shut down because of the epidemic and so that means that the Apple computer cannot be assembled because the key part is missing. This is one area where there can be a serious blockage to the dynamics of capital accumulation and capital circulation.
Where that blockage occurs depends very much. If there are a variety of epicenters right now, where the COVID-19 is most troublesome is, of course, in the central area of China not even the whole of China of the central area of China in Wuhan province. So, if you if you have a supplier of key parts that is operating in Wuhan province you're not going to find very much coming out of there. The other area is South Korea. There's quite a concentration of cases in South Korea, and of course now in northern Italy where the whole of Lombardy has been in effect put under [isolation] and quarantine. There may be other areas where there are problems of this kind. But, if you're drawing your raw materials from, say, Brazil or Mexico or something like that maybe it's not much of a problem right now because the parts will be fully working. What this would mean is that there are certain sectors of the economy, which may be affected in this way. There are certain firms within those sectors, which may be affected in this way and those firms will find themselves in economic difficulty because, for a period of time, they will not be able to produce because of shortages of key parts [and] because they're drawing those parts from these key areas.
One of the things that will likely happen, and we're beginning to see this happening in Wuhan province, once the virus has gone through the population and we now know that about 80% of the population, which gets it is going to be okay probably within two three weeks, maybe a month and the population as a whole will likely find that the severity of the epidemic will gradually sort of erode away so that after, say, four months or something of this kind then there will be no new cases, the epidemic would have gone through the population. People will have survived the epidemic. The 80% will have survived okay. Another 15 or so percent will be more troubled but will be back to work within a month. Then, of course, we know that right now that the death rate from the virus is something like maybe somewhere between two and three percent. By and large, that is targeting elderly population and populations with underlying conditions, which often means that they are people who are not actively participating in the workforce anyway. So, you would expect that in Wuhan itself things would get back to normal probably in three or four months or something of that kind. Since it started in February or January, we would expect that maybe by mid-summer at the latest Wuhan will come back online and will be able to produce the goods, and in some instances will be able to do it earlier, which get back into the value chain, and so everything will recover.
What we're talking about here is an interruption of capital accumulation. A loss of productive capacity over a period of maybe three, four months. Clearly, this is going to affect profitability. In some instances, if the company was on the edge of economic difficulty the company may go under because it cannot withstand the shock. In these instances, governments may step in make sure the company can recover. Banks may step in to roll over the debt and so on. So, we would see a hit on the growth syndrome and that hit on the growth syndrome will probably knock maybe one percentage point off a GDP. It's a serious hit. But, in the long run, it will be a blip on the long run accumulation process. This would be one way to think about this.
Now, as the virus spreads, if it gets into other productive economies, say, it gets into Germany, let's suppose it really gets into Japan in a big way and there's some hints of it developing in Japan, let’s suppose it gets into Brazil. We may have a rolling kind of problem that the Wuhan problem will be repeated elsewhere. As we’re beginning to see it being repeated in northern Italy, we may see it be repeated in different parts of the world. We don't know whether that will happen or not. There may be successful containment of the problem in various places and so places may insulate themselves from this in certain ways. So, we don't know what the total effect is likely to be. But, the main point, I think, we would make is that whatever the main effect is we wouldn't expect it to actually be a serious problem in the global economy for more than a year or at most 18 months depending upon the containment and the diffusion of the thing. But in fact, there may be, as it was with the SARS epidemic, a fairly quick containment from this point on. If there are strict containment of it from this point on, then the effect in the long run will be relatively short because what will happen is that the companies that have been deprived of inputs will be able to resume work and probably will find that depending upon what it is being produced that there's a pent up demand, which has not been satisfied because Apple has closed down, all the computer companies have closed down. But then they will recover very rapidly and there will be a sort of a surge of activity.
This is how the thing looks from the standpoint of productive consumption. We see that there's a problem of consumption. That consumption problem carries over to actually restrain production. So, the consumption problem gets parlayed into a production problem so that something like Apple computers, for example, or Apple iPhones and so on cannot be produced. During that period, people may be laid off. Workers may be furloughed. They may or may not receive any remuneration. In fact, probably they won't receive remuneration. So, there will be an effect of all of this on final consumption. So, that brings us to the question of how do we start to think about the final consumption side of things? And this is, it seems to me, the place where the big impact’s likely to be and could be long lasting impacts. This is, therefore, something that is far more serious in my view then the productive consumption aspect.
The final consumption aspect is simply that consumption is going to be affected by the reaction of populations to the threat, which the virus poses to human well-being and to human life. This threat is quite substantial by one measure, which is even though the death rate of this virus is only maybe two, two and a half percent—we're not sure of that by the way—there have been some figures coming out recently that suggest it's as high as 4% in which case it is far higher than an ordinary flu epidemic where there is a death rate associated with that, but I think it's of the order of 0.1 or 0.2 percent. But, we're now talking about 2 percent or 3 percent. When you're taking 2 or 3 percent of millions and billions of people that's a very large a number of premature deaths. The fear of the virus is going to lead to certain adjustments immediately of trying to prevent the spread of the virus. What we've seen in Wuhan is a complete shutdown and containment quarantine of the whole population. We're now seeing a repeat performance of that in northern Italy. But, there are certain forms of consumption, which are heavily affected by the virus.
Here we get back into some of the aspects of contemporary capitalism and what contemporary capitalism is about. I've argued in a former discussion that the form of consumption these days is very much around instantaneous consumer activities and instantaneous consume consumption forms, which are built around the idea that mass consumption has to be so accelerated to accommodate the exponential growth of capital accumulation and capital circulation. That is, the acceleration and growth of capital and its exponential growth requires rapid increase in consumer markets. These consumer markets are set up in such a way that they do not last very long. The sorts of examples I would use would be, well, think of a Netflix series where a lot of value is created in the making of the series and it can be simultaneously marketed to millions of people just for one hour and then it's gone. Unless people want to watch it again in which case it has a sort of long tail of being marketed. So, this is a certainly economy where once you've had the experience, it's gone. One of the areas where we find this form of economy has increased dramatically has been not only in things like Netflix with their particular mode of monetization, which means that you don't actually necessarily have to buy things you just subscribe to the channel and it's through subscriptions that the thing gets monetized.
But, another way of doing this has been through the rise of what might be called spectacular events and cultural events and experiential forms of consumption. One of the leading forms of which is tourism. Since the 1970s, what we've seen as an immense growth in what might be called spectacular kinds of consumerism. I remember, for example, when I first went to Baltimore in 1969, there were about three museums around. As the blue-collar economy, the steelworks and auto works and all the rest of it collapsed, the city started to look for new ways of economic development. One of the new ways was cultural industries. So, cultural industries suddenly came along. You start to build new museums and all this kind of stuff and you start to kind of say come to Baltimore for the tourist industry because we have all of these museums around and the same in New York and Paris and all the rest of it start to kind of market themselves. So, cultural industries offer an experience and cultural industries became a big form of urban development and people go there for the experience. Once you have the experience, the experience is over and it's gone and you go on to the next experience. So, the experiential kind of form of economic activity starts to become significant.
As I've suggested, there's been a huge increase in those forms of consumerism and along with that a huge increase in tourism. Now, tourism is interesting in this way too that people actually consume the experience. Of course, they're attracted by the experience and you look at all of the ads to go and sit on the beaches in the Caribbean or the Mediterranean or were ever. So, tourism is very much that. But, one of the things that's happened is that capital has flown into not only cultural industries and the production of the sort of Netflix economy type stuff, but it's also flowed into international tourism. Just to give you a measure of this, over the last ten years the number of foreign tourist visits, according to the International Tourist Association, has risen globally from eight hundred million to 1.4 billion. That is, over ten years it's increased by six hundred million journeys. This is a real mass increase in the tourist industry. This has implications for the kinds of consumerism upon which contemporary capitalism rests. I can't tell you exactly what proportion of the GDP of countries is taken up by tourist activities. But, I know that it's big and I know it's been growing bigger by the minute, over the last twenty years in particular. Because, like I say, that is the form of consumerism that it can instantaneously be overcome. It can also be collectively enjoyed so that we start to look at the way in which sports events, cultural events, everything coming together.
The big question is, to what degree are those events impeded by the existence and the threat of contamination by COVID-19? In other words, if this form of consumption and consumerism is going to be viable, it's very difficult to see it being viable when everybody is fearful of contact with other human beings because they may get this disease. This may lead to long-standing and large-scale reconfigurations of daily life. Insofar as that happens, this is going to, I think, have a very big impact upon how global capitalism is working. Just to give you one very important example, tourism nearly always involves package tours. Those package tours are not only about the place you go to, but they nearly always contain one element, which is the flying, the airfare. Now, if the north of Italy is closed down and you can't go in and you can't go to Milan and you can't go to Venice, then there's no flights going to go there either. Right now, a lot of the flights from Europe to northern Italy have been cancelled. That has a huge impact upon the airlines. In fact, airlines are getting into real difficulty right now because nobody wants to fly. Being cooped up in an airplane is not a very safe environment from the standpoint of the transmission of something like COVID-19. So, the airlines are beginning to have a lot of difficulty. And on top of that, by the way, there is one fantastic positive thing, which is to the degree that airline flights are being curbed, and we've seen them being curved all over Europe and increasingly in inside the United States, so actually greenhouse gas emissions are declining. We may actually do far more for climate change politics, and so and in this sense, we can say the COVID-19 is a good anti-capitalist antidote to the way in which the environment and climate change is being provoked via the new forms of consumerism. So, this is one of the kind of sidebars. This area of impact and what that might mean is something that we need to look at very closely. What I want to do in the next session is to talk very much about the transformation of daily life, and here we may find some very long-term consequences for the dynamics of capital accumulation and that will also help to explain why it is that the stock market took such a plunge right now and seems destined to plunge even further in the weeks to come.
Thank you for joining me today. You've been listening to David Harvey's Anti-Capitalist Chronicles, a Democracy at Work production. A special thank you to the wonderful Patreon community for supporting this project.
Transcript by Jake Keyel
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