The Omicron variant
Covid isn't going away, and the future for capitalism is one of low growth, high costs, and bigger governments.
Photo by De an Sun on Unsplash
The naming of variant B.1.1.529 of the SAS-Cov-2 virus as “variant of concern” by the World Health Organisation, as a result of its increased transmissibility, has understandably dominated headlines for the last few days. Government reactions have been similarly swift, the UK government announcing a return to mandatory mask-wearing on public transport and PCR tests for arrivals from abroad. Public dismay, too, has been similarly and understandably swift to take hold.
I don’t blame anyone for a sense of despair, but we may - for now - be able to hold off on the misery. Omicron has a strikingly high number of mutations, with the potential, as a result, of it being more able to creep round the side of the vaccines we currently have available. There is a “reasonable chance” that the variant will have some degree of vaccine escape, as Chief Medical Officer Chris Whitty has said. But we don’t know this with any certainty as yet. And we might get lucky, for now.
For now. Given the extremely poor distribution of vaccines, and with a partially-immune global population being the ideal environment to encourage mutations, SARS-Cov-2 was always likely to produce more variants of concern for a long time before it reached endemicity. Having created a global economy almost primed to produce new variants, we are unlikely to remain lucky forever. (Imagine spinning a tombola repeatedly, and drawing numbers from it. The more spins you make, the more likely your numbers are to eventually come up.) If it isn’t Omicron, it remains likely that some other future VOC has significant vaccine escape.
What I’ve argued for a long time, and forming the core argument in the book – and therefore of this newsletter – is that covid-19 is not some trivial incident in the history of capitalism, but likely to be a decisive moment in its own mutation to a low growth, high cost, big state setting. There are two main reasons for thinking this:
1. The biological features of the virus itself – its long incubation period, its high number of asymptomatic but infectious cases, and its (mostly) respiratory transmission – all make it extremely hard, if not outright impossible, to eliminate with our current technologies. Under conditions of competitive global capitalism, it becomes a near-impossibility, for the reasons I went through here back in March: every country has a strong incentive to deviate away from a very costly “Zero Covid” norm, and so Zero Covid will not be where global capitalism ends up. (And, as a corollary of this, Zero Covd is not something the political left should be arguing for as an aim.)
2. The secret of capitalism’s long-run success is not its accumulation of capital but its command of labour. In the long run, capital can only grow as a result of it being able to mobilise a combination of labour power and natural resources: capital does not accumulate simply by virtue of its existence; wealth does not, in the long run, magically produce more wealth. Some production has to occur. And so disruptions to capital’s command of labour therefore represent a barrier to its long run growth – and, above all else, in terms of economics covid-19 is a disruption to capital’s ability to command labour: either it risks those who work becoming unable to work through illness, or them choosing not to work, or it necessitates public health measures being imposed on how and under what conditions work can take place. In all cases, control slips away from capital organised as competing firms and towards some other agency.
I want to differentiate this point about control of labour from claims around the ability of capitalism to cut costs and therefore generate the productivity gains that allow accumulation to take place – the kind of claim presented by Jason Moore and Raj Patel in The History of the World in Seven Cheap Things. I have a great deal of sympathy with this argument because it places the environmental impact of capitalism over time at the centre of its analysis. But reducing work to just one of seven “cheap things” that capitalism relies upon loses an analysis of the real power relations that structure capital. This relationship – that of domination by capital over labour power – is, in turn, what opens up the prospect of capital also being able to exploit cheap material resources.
There is hierarchy of its domination: first control labour, then use the control of labour make use of cheap raw materials. And as Michal Kalecki perceptively argued, way back in 1942, “business interests” will prefer greater control over labour to a situation of less control, even where the situation of less control actually produces more profits. Business interests, as a result, later lobbied hard against full employment, even when full employment conditions actually meant higher profits. This insight – control matters more than either cost-saving, or pure profitability - also informs Andreas Malm’s Fossil Capital, in describing the peculiar choice by capitalists of relatively more expensive steam power over relatively cheaper water power in the early Industrial Revolution. Steam power gave them control over the labour process in a way that erratic water power did not.
This suggests a likely future dynamic, as we move into a world with endemic covid: that capital will sacrifice profitability for a higher degree of control; but whilst some of those costs of control will be borne by individual capitals, the need to still save costs will push it into a reliance on the state, which is a lower-cost option of managing surveillance and control. Covid gives an extreme version of this dynamic, since it hits the labour process directly, but it’s certainly possible to envisage a future in which more generic environmental shocks, like extreme weather events, or rising costs of production in general also provoke a retreat by private capital to state support. This isn’t a greatly novel argument for political economists, incidentally: Rudolf Hilferding offered a version of this capital and state fusion long enough ago. Similarly, the costs of this process of retreat are likely to be pushed, as far as possible, away from capital and back onto labour – whether in the form of generally rising prices, or through an increase burden of taxation.
We could, of course, speculate about some future technologies that magically produce sufficient increases in productivity (and therefore profitability) to overcome the steady grind of rising costs and environmental instability. The giant push of investment into pharmaceuticals, for instance, as a result of covid-19 might help unblock the barriers to productivity the industry has run into in the last few years. But to overcome generally rising costs and instability we would need to find a technology capable of generally improving productivity – not just improving it in a single branch of production, but of improvements across the entirety of the economy. The nearest candidate for this sort of fabled “General Purpose Technology” remains computing; but, thirty years after it was first identified, the Solow Paradox still holds. Investment in computer technology does not produce generalised improvements in productivity.
More than this: the presence of instability itself, with covid acting as an amplifier, is encouraging investment into lines of technology that offer not so much an improvement in the productivity of labour as such, as the capacity to regulate and control its use.
Where does this leave us? With two political conclusions. First, the politics to come will increasingly centre on the control and use of labour, which means, in practice, on the ability of those in work to try and set the conditions under which they work. There are good reasons to think that covid might perversely help shift the balance of power back towards labour, and certainly the flurry of strikes and resignations suggests something like that has happened. Supporting union organisation, strikes and industrial action, and forms of workplace democracy – from co-determination to worker ownership – are essentials.
Second, those on the left and progressive forces more generally must not passively accept an expansion of state power. Economic questions themselves are increasingly likely to become politicised, given the growing presence of the state in shaping and managing economies. If the broad dynamic is towards capital and state being drawn closer together, for the purposes of the regulation and control of labour and the natural environment, this is increasingly likely to come in more authoritarian guise. A defence of liberal democratic norms should now be central to what the left does, not an afterthought. Support, then, for the devolution of power to local and regional authorities, for the strengthening of freedoms of speech and protest, and for democratic reforms to the state itself – in the UK, meaning ending first past the post and abolishing the House of Lords – are all important. But so, too, is harder opposition to dubious surveillance technologies, promoted with seemingly the best of public health intentions, like vaccine passports.
Speaking of surveillance and controlling labour, this is a detailed undercover account of work in a new Canadian Amazon facility: “Warehouse work is challenging to automate because it requires much thought, troubleshooting, and carrying varied sizes of boxes and packages. Amazons’ solution has been to merge technology with human labour to essentially turn workers into industrial robots.”
My old colleague, Simon Fletcher, interviews Marvin Rees, the current Labour Mayor of Bristol. Ahead of the government’s long-delayed “levelling up” White Paper, currently sitting with Michael Gove, Neil O’Brien and former Bank of England chief economist Andy Haldane, Rees offers some criticisms of the Tories’ approach to devolution: “every now and again, a different government department will pop up with its own initiative, having not talked to any other government department, and put £5million on the table and tell local authorities all around the country to fight for it. And then we're in a zero sum fight. If you get a good application in you might win. If you don't, irrespective of how good your work is, you won't.” With Rishi Sunak’s Treasury currently throwing its weight around, it’s unlikely the White Paper will offer any serious, financial resolutions to the dog-eat-dog funding situation local authorities and mayors face.
Delighted to discover that some kind souls have provided English subtitles for Kristina Lindström and Maud Nycander’s three-part documentary of the life of former Swedish Prime Minister, Olof Palme: one, two and three.
Just some math of interest, i hope, and to reinforce what u say:
The present value of a constant growth perpetuity = CF_1/( r -- g). [next period's cash flow, divided by "cost" of capital minus growth rate; eg. see here: https://financeformulas.net/Present_Value_of_Growing_Perpetuity.html].
You can see how stagflation, and/or a high cost non-zero covid future which you speak of, doubly HURT present value: higher "r" and lower "g" is a denominator exploder.
Also, re your concern "all make it extremely hard, if not outright impossible, to eliminate with our current technologies..." You might be heartened slightly by imbibing Bette Korber's (Los Alamos HIV researcher) video on RNA mosaic vaccine tech : https://youtu.be/oHvrDiGZVcM
(for a quick absorption watch from 37:40 on, then go back and watch the whole from the beginning). An in-silico mosaic vaccine, mixing a melange of RNA codes is possible.