Book calls for rethinking capitalism amid COVID-19 ravages

Instead of being the large leveler, as pandemics have been throughout history, the coronavirus pandemic exposed and exacerbated pre-existing inequalities of wealth, race, gender, age, education, and geographic location.

It is the paradox with which Ian goldin – the former CEO of the Development Bank of Southern Africa and now a professor at the University of Oxford – begins his recently published book, “Rescue: from the global crisis to a better world”.

Past studies driving forces for reducing inequalities have put forward “evil forces” – such as wars, natural disasters and epidemics – and “benign forces” – more widely accessible education, increased social transfers and taxation progressive.

Sociologist Goran Therborn, in his classic 2013 study on inequalities, brings together these two forces. He recognized the importance of the “malignant” forces of violent revolution and war. But it also emphasizes the “benign” forces of peaceful reform that led to the “egalitarian moment” after. World War II. It was then that welfare states were built around the notion of full employment, universal health care, education and social security.

In certain circumstances, far-reaching peaceful reform has been possible.

Why then has the coronavirus pandemic worsened inequalities rather than reduced them?

Goldin attributes this paradoxical result to four decades of neoliberal thought.

I agree with his criticism of neoliberalism. But it does not pay enough attention to power, especially the concentration of economic power. This book nevertheless offers important opportunities for the world’s elites and ordinary citizens to explore ways to reduce inequalities.

The case to rethink

According to Goldin, inequalities have been increasing in Europe and the United States since the 1980s. He argues that it is:

mainly because of the wave of liberalization that was ushered in when Margaret Thatcher in Britain and Ronald Reagan in the United States launched a race to the bottom of taxation, attacks on unions and weakened competition policy , which enabled the strength and strength of employers.

What is needed, Goldin believes, is a fundamental overhaul of capitalism. The big government and the activist state are back, he says. The pandemic has brought about a counter-revolution. Conservative governments are now going beyond even the economist’s arguments Maynard Keynes in the 1930s that governments had to spend to get out of the Great Depression.

Unless inequalities are reduced, he warns, populism and protectionism will become dominant.

The tragedy is that the policies implemented by these populist leaders benefit a few and not most, thus deepening and entrenching inequalities.

For Goldin, this global trajectory of populism is not inevitable. He believes that it is human actions and rulers that shape societies, not just events.

The chapter Reduce inequalities is full of sensible proposals to reduce inequalities. Among these are:

  • the closure of tax havens and tax loopholes,

  • the introduction of wealth taxes on the assets of the richest 1%,

  • higher inheritance taxes on the transfer of wealth from the richest 1%, and

  • progressive income taxes which exempt the lowest incomes and then increase sharply for the highest incomes.

Goldin explains how five of America’s biggest tech companies – Facebook, Amazon, Apple, Netflix, and Google – dominate the stock markets. He cites the fact that the $ 28 trillion allocated to these companies is five times more than all the physical assets held by the other 500 companies in the Standard and Poor’s stock index.

Jeff Bezos, the founder of Amazon, has seen his wealth almost double. This makes him the first person in history to be worth over $ 200 billion. Meanwhile, the wealth of Elon Musk, the founder of Tesla, increased by more than $ 160 billion during the pandemic, to reach $ 184 billion.

What needs to be done

Goldin relies on the Nobel Prize winner, Amartya Sen, for whom inequality is a function of the distribution of capacities. From this perspective, inequality concerns above all the inequality of opportunities available to people to lead a fulfilling life. Education, gender and human rights are at the heart of this.

Sen is far from orthodox neoliberalism. It adopts human well-being, rather than mere growth, as its development objective. But its approach to development is based on pragmatic neoliberalism. Its message is clear: people in developing countries should embrace free markets, strictly delineate the role of the state, promote liberal democratic institutions, ensure the provision of basic education and health care, and host a discussion. open to problems.

I disagree with Goldin when it comes to relying on Sen. This is because I am skeptical of Sen’s faith in free markets, free speech, and reasoned social progress. It ignores the freedom of power relations and focuses on individual actors.

But inequality is above all a power relationship. Sen makes a false promise to the poor and the excluded. It does not question the concentration of economic power, centered on global and national markets. Instead, he takes them for granted.

A ‘rethinking capitalism’ requires that our primary objective be the distribution of economic power (rather than the unequal distribution of capabilities) as main potential causal factor at the origin of inequalities.

This perspective demands that the distribution of economic power be tackled head-on and requires a bolder and more integrated approach.

One of the strengths of this book is its historical perspective. At the height of World War II, the deadliest conflict in human history with an estimated 70 to 80 million dead, British officials were urged to collaborate with economists like John Maynard Keynes and British Liberal economist and politician William Beveridge to plan a better life for all.

the Beveridge Report, published in the UK in November 1942 at the height of the war, laid the foundation for the welfare state. He set out to defeat the “five giants” of “misery, disease, ignorance, misery and idleness”.

It is questionable whether this optimistic and inspiring scenario of post-war Europe is achievable in many countries, including South Africa.

But by identifying some of the ways in which we can rush change to reduce inequalities, this book is a valuable contribution to the debate on the future of any country.


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