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[Sticky] The Political Economy of Pandemic: If Capitalism has failed, Is Socialism the Answer?

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Submitted by: Hafsa Zafar

(Author is a student of MS - Development Studies in the School of Social Sciences and Humanities (S3H), NUST)

After the Spanish Flu in 1918, Covid-19 is the probably the most hazardous and serious health crisis to riddle the humanity in the last century. The fact that it coincided, triggered or exaggerated the already evidenced major economic recession has made it even worse. Professor Stavros Mavroudeas while exploring the causality of this twin-crisis has analyzed the two contending views that are of the orthodox and heterodox economics. As the orthodox economics categorizes the health crisis presented by Covid-19 as the exogenous shock which has caused the economic slump, the Marxist political economic view proposes that the health crisis has only exaggerated the already simmering economic crisis and hence indicating the endogeneity of the health crisis. The strong circumstantial evidence from the deteriorating and faltering tendency of the industry’s capacity and economic growth rates only prove the view hence put forth by the Marxist political economy. The reason can be traced back to the capitalistic and Keynesian expansionary solutions and accommodative monetary and fiscal policies instated in the aftermath of the Economic Profitability Crisis of 2008.

Additionally, the Marxist argument also lays bare the horrendous truth behind Capitalistic Metabolism which tends to emphasize and catalyze the exploitation of natural resources with little or no regard of the natural limitations and consequences on the humans, as the major contributor to the emerging epidemics categorized as “zoonoses”. As dealing with the health crisis or the new epidemic before any tangible and sustainable health policy and solution is in place followed by the development of a vaccine, the new normal is characterized by restricted social and economic activity. These restrictions aggravate the already exasperated economies which in turn has an impact on the fund and capital allocation to health sector. Hence the classical “Columbus’ Egg” dilemma; which curve to flatten and which crisis to tend to on the priority basis?

Capitalism is characterized by the primacy of private sector and the supplementary and supporting role of the public sector. As the private sector is guided by the principles of maximizing profitability, the role of the public sector hence becomes that of a facilitator for the private businesses, firms and organizations sidelining the dominant role of public sector in putting forth an effective health policy. Hence the economic crisis takes precedence over the health crisis and the health policy measures stipulated are delayed and vague.

On the contrary, socialism prescribes to the basis of economic planning with dominant role of public sector. This can lead to the social policy dictating the economic activities which can be non-surplus or even loss making as compared to the profit maximization strategies undertaken by the private sector. Additionally, given the structural reliability, a socialist enterprise can mobilize resources urgently, diligently and consistently.

For the aforementioned reasons a socialist economy can withstand and keep in effect complete, partial or selective lockdowns for extended durations as compared to the capitalist economies which are not designed to “shut down”. This argument is supported by the evidence derived from the comparative analysis of the policy measures and outcomes as undertaken by the US vis-à-vis to that of China.

Undertaking this debate, it can be inferred that the capitalistic world is facing a huge crisis but socialism being a viable alternative is still a far-flung ideal. While socialism has not recovered from the shock of dismantlement of the Eastern bloc, the contemporary problems of cultural wars fueled by political correctness and neglected class politics accompanied by bourgeoisie reformism have only discredited socialism as an antidote to the capitalism induced catastrophe. The only possible solution in sight is recommitting to the socialistic ideals. This can be done by reassertion of the comparative advantage of socialism over capitalism at the strategic level by highlighting socialism’s potential of minimization of the hazardous repercussions of the capitalistic metabolism and the primacy of planning authorities run democratically or meritocratically tending to the labor class constituting the majority of the modern society. Additionally, the tactics of provision of universal healthcare and paying the cost of the crisis by capital instead of the labor can also be a gamechanger.


Works Cited

Mavroudeas, Stavros, interview by Michael Robert. 2020. The Political Economy of the Covid-19 Pandemic (June)