Reparations [2]: Slavery, Human Capital, Le Déluge, and Paying the Piper

Après moi, le déluge.
(After me, the deluge.)
— King Louis XV of France

Proposed reparations for the USA’s racial history raise complex legal, economic, and other issues. We’re familiar with these – they’ve been well-rehearsed in op-eds and speeches by politicians and pundits, activists and the media.

Less familiar are issues more subjective than objective, reflective than combative, instinctual than intellectual. These are the province of shared human experience and sensibility, particularly of virtue — a nearly obsolete concept these days. Virtue prompts change not from the outside, not institutionally, but from a transformation in shared human consciousness, a cultural change of heart, We learn its lessons not from economic models and legal briefs, but principally from truth expressed in fiction –myths and legends, fables and feature films — Aesop’s Fables for adults. As one of Aesop’s contemporaries said about him:

“… like those who dine well off the plainest dishes, he made use of humble incidents to teach great truths, and after serving up a story he adds to it the advice to do a thing or not to do it. Then, too, he was really more attached to truth than the poets are; for the latter do violence to their own stories in order to make them probable; but he by announcing a story which everyone knows not to be true, told the truth by the very fact that he did not claim to be relating real events.”.[1]

As we’ll see below, virtue asks more than legal compliance, it demands that we pay the piper.

In this series, we will look at both kinds of issues in detail.

History Lesson: The French Revolution

“After me, the deluge” is sometimes attributed to the King’s mistress, Madame de Pompadour, as “After us, the deluge.” Either way – King or mistress, me or us – the quote is usually taken as a prophesy of the French Revolution, delivered with an attitude of elite indifference that ranks right in there with Marie Antoinette’s “Let them eat cake.” (Which she probably never said.[2]) “We’re getting away with it now, but all hell is going to break loose once we’re gone.” And indeed it did, when King Louis XVI was guillotined a generation later, under the name Citizen Louis Capet. [3]

From that historical context, après moi, le déluge has come to represent an awareness of coming doom, a feeling that we can’t get away with this forever. Things are good now, but watch out, they won’t last. People thought life was good back in Noah’s time, but look what happened to them. We keep this up, we might get our own version of the Flood.

Contemporary Lesson: Economic Inequality

Plutocrat Nick Hanauer offers a modern version of the saying in his TED talk. According to his TED bio, Hanauer is a “proud and unapologetic capitalist” and founder of 30+ companies across a range of industries, including aQuantive, which Microsoft bought for $6.4 billion. He unabashedly loves his yacht and private jet, but fears for his own future, and the futures of his fellow plutocrats, if economic inequality is left unaddressed:

“What do I see in our future today, you ask? I see pitchforks, as in angry mobs with pitchforks, because while people like us plutocrats are living beyond the dreams of avarice, the other 99 percent of our fellow citizens are falling farther and farther behind.

“You see, the problem isn’t that we have some inequality. Some inequality is necessary for a high-functioning capitalist democracy. The problem is that inequality is at historic highs today and it’s getting worse every day. And if wealth, power, and income continue to concentrate at the very tippy top, our society will change from a capitalist democracy to a neo-feudalist rentier society like 18th-century France. That was France before the revolution and the mobs with the pitchforks.”

Whether French Revolution or today, the issue is “paying the piper.”

The Moral of the Story: The Pied Piper of Hamelin

Pied Piper

Illustration by Kate Greenaway for Robert Browning’s “The Pied Piper of Hamelin”

Victorian poet Robert Browning brought us the “paying the piper” idiom in The Pied Piper of Hamelin. [4] Here’s a synopsis to refresh our memories:

“‘Pay the piper’ comes from the famous 1842 poem by Robert Browning, The Pied Piper of Hamelin. The story is about a German town called Hamelin which, after years of contentment, was suddenly plagued by a huge increase in the rat population, probably due to some plague or poison which had killed all the cats. The rats swarmed all over, causing much damage. Try as they might, the townspeople could not get rid of the rats.

“Then appeared a mysterious stranger bearing a gold pipe. He announced that he had freed many towns from beetles and bats, and for a cost, he would get rid of the rats for the town.

“Although he only wanted a thousand florins, the people were so desperate that the Mayor promised him 50,000 for his trouble, if he could succeed.

“At dawn, the piper began playing his flute in the town and all the rats came out of hiding and followed behind him. In this way, he led them out of the town. All the rats were gone.

“When the piper came back to collect his pay, the town refused to pay even his original fee of one thousand florins. The mayor, thinking the rats were dead, told the piper he should be happy if he received any pay at all, even fifty florins.

“The pied piper warned the town angrily that they would regret cheating him out of his pay.

“Despite his dire warning, the rats were gone so the townspeople went about their business, at last enjoying a peaceful night’s sleep without the scurrying and gnawing of rats.

“At dawn, while they slept, the sound of the piper’s pipe could be heard again, except this time only by the children. All the children got out of bed and followed behind the piper, just as the rats had before. The piper led the children out of town and into a mountainous cave. After all the children had walked into the cave, a great landslide sealed up the entrance. One little boy managed to escape and tell the town what had happened to the children. Although they tried, they could never rescue them, and they were lost forever.”

After me, the deluge + Pay the piper = Pay the piper or risk the deluge

Virtue says don’t get greedy. Don’t be tempted. Don’t be a fraud. Keep your end of the bargain. Don’t be too smart for your own good. Don’t try to get away with it. You’re better than that. Fess up, take responsibility. Don’t invite the deluge – the sudden and terrible twist of fate, the movement of greater mysteries, the imposition of higher justice.

The rats you get rid of won’t be worth the children you lose.

The mayor and citizens of Hamelin defrauded the Piper at the cost of their own children. Justice was absolute — the mountain vault was sealed. The Piper was fully, awfully paid.

Reparations for American slavery are a proposed remedy – a way to pay the piper — for the lost humanity of slaves, stolen from them by a legal and economic framework that assigned slaves economic but not human value. Slaves were dehumanized, and virtue will not tolerate it.

Exploitation of Human Capital

Exploitation of capital assets is expected in a capitalist economy. Human labor is a capital asset, and will also be exploited — everyone who’s ever worked for someone else figures that out the first day on the job. But slavery took exploitation too far: slaves were not people, they were capital assets and nothing more. They were no longer human.

“Exploitation can also be harmful or mutually beneficial. Harmful exploitation involves an interaction that leaves the victim worse off than she was, and than she was entitled to be. The sort of exploitation involved in coercive sex trafficking, for instance, is harmful in this sense. But as we will see below, not all exploitation is harmful. Exploitation can also be mutually beneficial, where both parties walk away better off than they were ex ante. What makes such mutually beneficial interactions nevertheless exploitative is that they are, in some way, unfair.

“It is relatively easy to come up with intuitively compelling cases of unfair, exploitative behavior. Providing a philosophical analysis to support and develop those intuitions, however, has proven more difficult. The most obvious difficulty is specifying the conditions under which a transaction or institution may be said to be unfair.

“Does the unfairness involved in exploitation necessarily involve some kind of harm to its victim? Or a violation of her moral rights? Is the unfairness involved in exploitation a matter of procedure, substance, or both? And how, if at all, are facts about the history of the agents involved or the background conditions against which they operate relevant to assessing charges of exploitation?”[5]

Slavery harmed its victims, exploited them both procedurally and substantively. And “the facts about the history” of slavery’s purveyors and “the background conditions against which they operate[d]” are most definitely “relevant to assessing charges of exploitation.” Today, 165 years after the nominal end of slavery, those charges remain unanswered, and unpaid.

Slavery and Human Capital

19th Century economist John Elliot Cairnes was “an ardent disciple and friend of John Stuart Mill” and “was often regarded as ‘the last of the Classical economists.’”[6] Writing during the American Civil War, Cairnes analyzed the impact of slavery on both human and other forms of capital in his book The Slave Power: Its Character, Career, and Probable Designs: Being an Attempt to Explain the Real Issues Involved in the American Contest.[7]

“Cairnes’s shining hour was his widely-discussed 1862 treatise Slave Power.  Cairnes analyzed the consequences of slavery for economic development, in particular how it speeded up soil erosion, discouraged the introduction of technical innovations and stifled commerce and enterprise more generally. Written during the American Civil War, Cairnes warned British policymakers to think twice about backing the economically-unviable Confederacy.  Cairnes book was instrumental in turning the tide of popular English opinion against the rebels.”

Writing about slaves as human capital, Cairnes said this:

“The rice-grounds of Georgia, or the swamps of the Mississippi may be fatally injurious to the human constitution; but the waste of human life which the cultivation of these districts necessitates, is not so great that it cannot be repaired from the teeming preserves of Virginia and Kentucky.

“Considerations of economy, moreover, which, under a natural system, afford some security for humane treatment by identifying the master’s interest with the slave’s preservation, when once trading in slaves is practiced, become reasons for racking to the uttermost the toil of the slave; for, when his place can at once be supplied from foreign preserves, the duration of his life becomes a matter of less moment than its productiveness while it lasts.

“It is accordingly a maxim of slave management, in slave-importing countries, that the most effective economy is that which takes out of the human chattel in the shortest space of time the utmost amount of exertion it is capable of putting forth. It is in tropical culture, where annual profits often equal the whole capital of plantations, that negro life is most recklessly sacrificed. It is the agriculture of the West Indies, which has been for centuries prolific of fabulous wealth, that has engulfed millions of the African race. It is in Cuba, at this day, whose revenues are reckoned by millions, and whose planters are princes, that we see in the servile class, the coarsest fare, the most exhausting and unremitting toil, and even the absolute destruction of a portion of its numbers every year.”[8]

Five years after Cairnes wrote that, Karl Marx cited the above passage in Das Kapital[9] in his own analysis of slave labor as capital:

“The slave-owner buys his labourer as he buys his horse. If he loses his slave, he loses capital that can only be restored by new outlay in the slave-mart.

“‘Après moi le déluge!’ is the watchword of every capitalist and of every capitalist nation. Hence Capital is reckless of the health or length of life of the labourer, unless under compulsion from society.

To the out-cry as to the physical and mental degradation, the premature death, the torture of over-work, it answers: Ought these to trouble us since they increase our profits?

Marx believed that the ultimate culprit was not the individual slave owners, but the capitalist economic system which sponsored the exploitation of all capital – including human capital – to achieve its competitive goal of profitability:

“But looking at things as a whole, all this does not, indeed, depend on the good or ill will of the individual capitalist. Free competition brings out the inherent laws of capitalist production, in the shape of external coercive laws having power over every individual capitalist.”

Under the reign of capitalism, Marx argued, workers would be exploited – slaves and free alike — and this would be both an economic and cultural norm. This practice would become so entrenched that it could only be broken by a contrary “compulsion from society.”

The Deluge:  Civil War

“The deluge” is a form of “compulsion from society,” and civil war is a form of both.

The American Civil War was the deluge. The war ended almost exactly four years after it began, at the cost of hundreds of thousands of American lives, uncounted non-fatal casualties, and incalculable damage to the rest of American citizenry, human property, and nature.

“Approximately 620,000 soldiers died from combat, accident, starvation, and disease during the Civil War. This number comes from an 1889 study of the war performed by William F. Fox and Thomas Leonard Livermore. Both men fought for the Union. Their estimate is derived from an exhaustive study of the combat and casualty records generated by the armies over five years of fighting.  A recent study puts the number of dead as high as 850,000. Roughly 1,264,000 American soldiers have died in the nation’s wars–620,000 in the Civil War and 644,000 in all other conflicts.  It was only as recently as the Vietnam War that the number of American deaths in foreign wars eclipsed the number who died in the Civil War.”[10]

Tragically, the course of American racial history would question if all those deaths had been in vain. War – the deluge, the compulsion of society – had its day, but it didn’t change cultural attitudes — the same ones that supported Antebellum slavery only became more belligerently expressed.

In France, Louis XV saw the deluge coming, Louis XVI suffered from it, but eleven years later Napoleon was Emperor.

The piper was never paid.

In the USA, war gorged itself on the American land and population, but the Union’s victory foundered on the failings of the Reconstruction.

The Piper was never paid.

The law concerning slavery was changed, but de facto[11] slavery lived on. Before the Civil War, slavery had been, like war itself, a legal crime against humanity, justified under the law of the land. After the Civil War, slavery was simply a crime, illegal as all other crimes, but propagated by a reign of terror that eventually gained its own legal justification that would once again have to be dismantled by another compulsion from society 100 years later.

After the war, you couldn’t own slaves anymore, couldn’t buy and sell them, but you could treat legally freed former slaves just as you once treated their legally enslaved predecessors. In fact, it was much worse. Before the war, the ownership and treatment of slaves was by legal right. After the war, de facto slavery relied on a reign of terror grounded in cultural indifference and brutality. Cruel and unusual punishment had been banned by the Eighth Amendment to the U.S. Constitution, but de facto slavery relied on it to terrorize society into submission.

The Piper was never paid.

The U.S. Labor Movement and Human Capital

The American labor movement’s 400-year history is a chronicle of shifting economic theories and new labor laws brought about by periodic challenges – compulsions from society – to the capitalist norm of the exploitation of human capital.[12] Changing times generated changing attitudes, and American culture demanded accommodations in often violent ways.

And now, in the middle of another deluge – this time a plague, the Covid-19 virus – we have seen the most recent and striking societal shift in the form of the Supreme Court’s ruling that the Civil Rights Act of 1964 protects LGBTQ workers from workplace discrimination.[13] Few would claim that the 56-year old Civil Rights Act specifically had today’s gender sensibilities in mind, but the law shifts with cultural attitudes when compelled to do so.

The labor movement will continue to change with the times. Issues of sexism remain, and technology – especially robotics, AI, and machine learning – are threatening human labor in ever-accelerating, unprecedented ways. There will be more deluge, more societal compulsion.

The Piper was never paid.

The Racist Roots of Police Brutality

Finally – for today, at least – the Coronavirus deluge has also recharged the force of societal compulsion currently taking on mass incarceration and police brutality, both of which have historical roots in the Reconstruction’s unresolved racism.[14]

The Piper was never paid.

We have much more to talk about. We’ll continue next time.

[1] Philostratus, Life of Apollonius of Tyana, Book V:14. From Wikipedia.

[2] See Solosophie.com and Phrases.org.

[3] For more about what the saying might mean, see this is from Wikipedia: “The most famous remark attributed to Louis XV (or sometimes to Madame de Pompadour) is Après nous, le déluge (“After us, the deluge”). It is commonly explained as his indifference to financial excesses, and a prediction of the French Revolution to come. The remark is usually taken out of its original context. It was made in 1757, a year which saw the crushing defeat of the French army by the Prussians at the Battle of Rossbach and the assassination attempt on the King. The “Deluge” the King referred to was not a revolution, but the arrival of Halley’s Comet, which was predicted to pass by the earth in 1757, and which was commonly blamed for having caused the flood described in the Bible, with predictions of a new deluge when it returned. The King was a proficient amateur astronomer, who collaborated with the best French astronomers. Biographer Michel Antoine wrote that the King’s remark “was a manner of evoking, with his scientific culture and a good dose of black humor, this sinister year beginning with the assassination attempt by Damiens and ending with the Prussian victory”. Halley’s Comet finally passed the earth in April 1759, and caused enormous public attention and anxiety, but no floods.

[4]   Idioms.online.

[5] Exploitation, Stanford Encyclopedia of Philosophy (first published Thu Dec 20, 2001; substantive revision Tue Aug 16, 2016).

[6] The History of Economic Thought.

[7] Cairnes, John Eliot, The Slave Power: Its Character, Career, and Probable Designs: Being an Attempt to Explain the Real Issues Involved in the American Contest (1862).

[8] Cairnes, Slave Power, op cit.

[9] Marx, Karl, Das Kapital (Vol. 1, Part III, Chapter Ten, Section 5).

[10] American Battlefield Trust.

[11] “In law and government, de facto describes practices that exist in reality, even though they are not officially recognized by laws. It is commonly used to refer to what happens in practice, in contrast with de jure, which refers to things that happen according to law.” Wikipedia

[12] See this timeline, which runs from 1607-1999, beginning with complaints about labor shortages in Jamestown in 1607, addressed by the arrival in 1619 of the first slaves stolen from Africa.

[13] Civil Rights Law Protects Gay and Transgender Workers, Supreme Court Rules, New York Times (June 16, 2020).

[14] See, for example, The Racist Roots Of American Policing: From Slave Patrols To Traffic Stops, The Conversation (June 4, 2019) and George Floyd’s Death Reflects The Racist Roots Of American Policing, The Conversation (June 2, 2020).

Is COVID-19 Capitalism’s Berlin Wall?

Salus rei publicae suprema lex
(the safety of the republic is the supreme law)

Cicero‘s De Legibus (book III, part III, sub. VIII)[1]

Mikhail Gorbachev had been pressing his perestroika (reform) agenda through a policy of glasnost (openness) and the Soviet fist was releasing its grip on Eastern Europe, setting the stage for Berliners to bring down their wall – which they did not because the Kremlin planned it, but because a flustered bureaucrat made up an answer to a question he wasn’t prepared for and a middle manager adlibbed a policy decision after senior management left him hanging.

“On the evening of Nov. 9, 1989, Gunter Schabowski, an East German government official, made a surprising announcement at a press conference.

“‘Permanent relocations,’ he said, ‘can be done through all border checkpoints between the GDR [East Germany] into the FRG [West Germany] or West Berlin.’ This news was set out as an incremental change in policy. But, after reporter Riccardo Ehrman asked when the regulations would take effect, Schabowski replied, ‘As far as I know, it takes effect immediately, without delay.’

“Schabowski’s press conference was the lead story on West Germany’s two main news programs that night, at 7:00 pm and 8:00 pm, with the takeaway being that the Wall, while it still stood, was no longer the firm dividing line it had long been. Since the late 1950s, the two stations broadcast to nearly all of East Germany, and the programs appeared there as well. That night, anchorman Hanns Joachim Friedrichs proclaimed, ‘This 9 November is a historic day. The GDR has announced that, starting immediately, its borders are open to everyone. The gates in the Wall stand open wide.’

“This was all the East German populace needed to hear. Citizens flocked to the border en masse sometime around 9:00 pm and found that, after initial confusion, the border guards were indeed letting people cross. This was a crucial flashpoint in the history between the two sides, as the guards could have easily fired on the crowd. However, according to historian Mary Elise Sarotte in her book The Collapse: The Accidental Opening of the Berlin Wall, no one among the East German authorities wanted to take the personal authority of issuing orders leading to the use of lethal force.

“By 11:00 pm, Harald Jager, the commander of the Bornholmer Strasse border crossing, let the guards open the checkpoints, allowing people to pass without their identities checked.

“To Jager, it was obvious that the five dozen men guarding the border were grossly outnumbered. He repeatedly attempted to contact his superior, Rudi Ziegenhorn, in order to ascertain how to handle the increasingly chaotic situation, as more and more people gathered at the gates. He was unable to get any clear guidance on how to proceed, but a superior in the background called Jager a coward for being unable to handle the situation. After 25 years of loyal service to the regime, according to Sarotte, Jager felt insulted and pushed to his limit.

“Jager was instructed by his superiors to let the biggest troublemakers through on a one-way ticket. But many of these so-called troublemakers were students and other young individuals who briefly entered West Berlin and then returned to the checkpoint for re-entry into East Berlin. However, the GDR was serious in its warnings that this was a one-way ticket. Their angry parents began to plead with officials not to keep them separated from their children, and by that point Jager was unwilling to argue on behalf of his superiors. After Jager made an exception for the parents, others demanded the same treatment as well. Having gone that far, it was simply too late. Thousands of people were demanding that the gates be opened. He was facing a momentous decision — open fire on the civilians, or let them through.

“At 11:30 pm, Jager phoned his superior and reported his decision: he would open all the remaining gates and allow the crowds to stream across the border.

“West Berliners greeted their counterparts with music and champagne. Some citizens began to chip away at the physical barrier with sledgehammers and chisels. The crowd began to chant “Tor auf!”—Open the gate! By midnight, the checkpoints were completely overrun.”[2]

Schabowski and Jager made history: Berlin reunited, Germany reunited, the Soviet Union finished, Russia re-established as a sovereign nation, a whole raft of new independent Balkan states created, Soviet-style Communism struck down, the Cold War ended, and capitalism crowned the winner of the economic ideology derby.

Not a bad night for a couple middle managers.

Capitalism’s Berlin Wall?

These days, history is being made just as suddenly, accidentally, randomly, unpredictably, and overwhelmingly, thanks to a microscopic mutant that preys on the body’s natural metabolic processes, turning nucleic acid into poison. Its impact is not on a divided city but on a divided world, bringing a sudden halt to life and business as usual.

The agent of change, of course, is COVID-19 –officially “severe acute respiratory syndrome coronavirus 2, or SARS-CoV-2” – the common cold gone bad, very bad.

“Coronaviruses are a large family of viruses that usually cause mild to moderate upper-respiratory tract illnesses, like the common cold, in people. However, three times in the 21st century coronavirus outbreaks have emerged from animal reservoirs to cause severe disease and global transmission concerns.

“There are hundreds of coronaviruses, most of which circulate among animals including pigs, camels, bats and cats. Sometimes those viruses jump to humans—called a spillover event—and can cause disease. Seven coronaviruses are known to cause human disease, four of which are mild: viruses 229E, OC43, NL63 and HKU1. Three of the coronaviruses can have more serious outcomes in people, and those diseases are SARS (severe acute respiratory syndrome) which emerged in late 2002 and disappeared by 2004; MERS (Middle East respiratory syndrome), which emerged in 2012 and remains in circulation in camels; and COVID-19, which emerged in December 2019 from China and a global effort is under way to contain its spread. COVID-19 is caused by the coronavirus known as SARS-CoV-2.”[3]

Yes, this is a defining moment in human history. And no, things will never be the same. Some people think one of those things is capitalism;

“The wheels are rapidly coming off of capitalism’s runaway train, and we’re in a collective, televised race to repair it.

“A highly contagious virus is rapidly debilitating and killing some of the most vulnerable people in communities across the world.

“The problem is, stopping the spread means hitting the pause button on global capitalism while we repair its machinery. Unfortunately, the system was built without one. And that means that bringing it to an unceremonious, grinding halt now has catastrophic human and economic consequences.”[4]

The capitalism that’s been infected by COVID-19 is the free market strain, as practiced for the past four decades principally in the USA and UK. There are and have been other versions of capitalism – for example the Keynesian economics that bailed us out of the Great Depression.

Soviet Communism was an economic ideology that didn’t deliver what it promised, instead enslaving citizens to a callous and brutal elite. Free market capitalism has similarly failed the people who go to work every day, who were supposed to prosper along with the capitalists, but haven’t.

Moments like tearing down the Berlin Wall, storming of the Bastille, or breaching the Winter Palace involved mobs overrunning cultural icons – physical structures. But how do you overrun a virus? And who would do the overrunning? Amazingly, the people most damaged by free market capitalism – the working middle class and the poor – continue to staunchly support the politicians who perpetuate it. The mob is simply unwilling to form. How do you make a revolution out of inexplicable indifference?

“…having discussed already how Coronavirus exposes and reveals the need for global systems, a radically reimagined world economy, the response from the average Westerner has been…a kind of deafening silence…mixed with a baffled pause, combined…sometimes, with an outraged ‘What?!!’”[5]

The Public Welfare Goes Missing

Free market capitalism is vulnerable because it eliminated what is most needed in a pandemic: a commitment to public welfare – which, as we’ve seen previously,[6] has been systematically eliminated from economic policy-making.

“The pandemic was not unexpected. But reality always differs from expectations. This is not just a threat to health. It may also be a bigger economic threat than the financial crisis of 2008-09.

“Dealing with it will require strong and intelligent leadership. Central banks have made a good start. The onus now falls on governments. No event better demonstrates why a quality administrative state, led by people able to differentiate experts from charlatans, is so vital to the public.

“The pandemic risks creating a depression. Salus rei publicae suprema lex (the safety of the republic is the supreme law). In war, governments spend freely. Now, too, they must mobilise their resources to prevent a disaster. Think big. Act now. Together.”[7]

Looking Out For The Common Good

In contrast to the USA and the UK, there are countries whose economic systems are built on “the safety of the republic is the supreme law.” Norway, for example.

“Norway’s readiness for health emergencies comes from its choice, all along, to prioritize the well-being of the people as a whole.

“As someone who has lived and worked in Norway, I see several ways in which the Norwegians’ prompt and efficient response draws on the advantages of what economists call “the Nordic model”—a design much different from that of the U.S.

“Meanwhile in the U.S., a recent survey by the First National Bank of Omaha found that 49% of Americans live paycheck to paycheck. What is to be done if those people can’t get to the jobs that keep them barely afloat? What does “self-quarantine” mean in that context? Or if employees receive no paid sick leave and can’t afford to stop working when they get sick? And what about the many who haven’t even had a job lately and find each day a struggle for food, including food-insecure college students whose colleges are closing?

“Such conditions are nearly inconceivable in Norway, where the social safety net is intact. A century ago, poverty was widespread but mass movements waged a successful nonviolent revolution in the 1920s and ’30s. By the time I got there, 1959, poverty had already been nearly eradicated, with everyone’s basic needs being met.”[8]

The missing public in the USA and UK is principally composed of capitalism’s key source of fuel: the people who go to work every day. Those workers both produce and consume, which makes them indispensable to both supply and demand.

Supply Side: Production

On the supply side,

“The primary issue is that late capitalism is not designed to be stopped, ever. In fact, the spectacular success of capitalist economics has only ever traditionally been measured by one north-star metric — growth —which is essentially just another term for infinite ‘value’ extraction— and in a general sense, it’s designed to self-organise, resource and innovate at a pace that requires machine-like commitment from a biologically volatile primary resource — human beings.

“In late capitalism’s fundamental design flaw, it is absolutely critical that the relative poor — the workers that create the value and deliver the results — remain healthy and active in order to hold the pieces together, because there is so little built-in redundancy for widespread personal crisis. This form of capitalism assumes that there will never be an unravelling serious enough to threaten it, which is why it’s got no proper killswitch….

“And at the back-end of 40 years of neoliberal, free-market economics, some of the world’s most ‘advanced’ political environments have either removed, privatised or hollowed out the basement machinery needed to stabilise capital markets by providing comprehensive, not-for-profit health, welfare and social services that step in to take the weight when crisis strikes.

“The loss of the working class is capitalism’s great nightmare. Alongside a terrible human cost, we’re watching entire industries that previously seemed indestructible falter – food service, hospitality, aviation and retail expecting massive state support in order to keep afloat — let alone make a profit. But the people are sick, and all dominos fall together, eventually.”[9]

Demand Side: Consumption

And on the demand side.

“Consumer sentiment, as measured by the University of Michigan’s monthly survey, saw its sharpest drop since October 2008 during the Great Recession.

“And even then, analysts said, the current decline significantly understated the coronavirus toll as two-thirds of the survey interviews were conducted before lock-down and physical distancing orders in mid-March shut down hundreds of thousands of shops, restaurants, offices and other large parts of the American economy.

“‘The economics of fear are now in plain sight,’ said Oxford Economics, a British economic research firm, noting that the pandemic ‘is dealing a major blow to confidence that will lead to a sharp retrenchment in consumer spending ‘

“That is especially worrisome because high levels of consumer confidence have consistently buoyed the U.S. economy in recent years, despite scant growth in spending power for most Americans.

“Some 70% of total U.S. economic output, or gross domestic product, is tied directly to consumer spending.”[10]

The Rentier Economy Takes The Hit

Particularly squeezed by the loss of a healthy and economically robust working class is the newly dominant “rentier economy” (a topic we’ve looked at before[11]), which drives prosperity to corporations and wealthy individuals through the extraction of rents from assets made artificially scarce by economic policy – affordable housing, for example.[12].

“It’s the end of the month, the rent is due, and a government-issued ban on going to work means a chunk of Britain is already broke, and another chunk is on borrowed time. If thousands aren’t running on fumes by the end of this month, they will be within weeks, and as the layoffs accelerate (which has its very own curve), it’ll be even worse by May.

“This is problematic for reasons commonly known as ‘maths’ — particularly given how the lower/middle access their income. The vast proportion of people’s access to money is through the kaleidoscope of an economy whose leadership won’t stop talking about how ‘wealth is zero sum’ but don’t address that wealth is not income, wages of which are a subtraction on a business’s finite cash reserve.

“This does not favour the working poor in an economy designed, incentivised and explicitly rewarded for its ability to maximise the return on everything. Personal wealth is a pipe dream in a world where the cost of living is always slightly too high, and personal income is slightly too low, and in the gig, self-employment or services economy, unstable, too.

“The profound explosion in UK housing prices in the last 15 years has created a rental market that now props up ownership as an exclusive club, and one that is often (but not always) only accessible via certain personal circumstance or privilege. It’s not uncommon for renters, particularly young, city-based renters (where the majority of the work is) to have to pay out more than half of their income in rent — before factoring in other arbitrary fees or securities. This significant, artificial increase in major, fixed costs against wages, means breaking out of the rental cycle is either a very long, very slow grind — or impossible.”

Although written specifically about the U.K., this analysis is applicable in the U.S. as well.

What’s next for capitalism?

About a year ago, economics Nobel laureate Joseph E. Stiglitz, offered a “progressive capitalism” alternative based on “the power of the market to serve society.”[13]

“The United States has the highest level of inequality among the advanced countries and one of the lowest levels of opportunity — with the fortunes of young Americans more dependent on the income and education of their parents than elsewhere.

“There is a broader social compact that allows a society to work and prosper together, and that, too, has been fraying. America created the first truly middle-class society; now, a middle-class life is increasingly out of reach for its citizens.

“We confused the hard work of wealth creation with wealth-grabbing (or, as economists call it, rent-seeking).

“The prescription follows from the diagnosis: It begins by recognizing the vital role that the state plays in making markets serve society.

“Progressive capitalism is based on a new social contract between voters and elected officials, between workers and corporations, between rich and poor, and between those with jobs and those who are un- or underemployed.

“Part of this new social contract is an expanded public option for many programs now provided by private entities or not at all

“This new social contract will enable most Americans to once again have a middle-class life.

“The neoliberal fantasy that unfettered markets will deliver prosperity to everyone should be put to rest.

“America arrived at this sorry state of affairs because we forgot that the true source of the wealth of a nation is the creativity and innovation of its people.”

A year after Stiglitz’s article, we have the COVID-19 lockdown. Will politicians act to restore the missing public welfare to economic policy-making, as Stiglitz urges? And, if they don’t, is the electorate willing to storm and overthrow the economic status quo ? Paradigms only shift when culture does, and a new economic paradigm requires more of a global perspective than we had before worldwide populist movements retrenched to aggressive nationalism. This trend leads one commentator to doubt voters will respond to the global pandemic with a newly expanded globalism.[14]

Changing the world means…changing the world. That might sound like a cliche. I assure you it’s not. The average white American liberal is concerned with a thing, maybe, if they’re really caring and intelligent, like healthcare for some of their society. But even that’s not nearly big enough. Without actually changing the world, the world doesn’t change. Westerners attempt to change their broken societies, without really grasping the fact that they need to put the world first.

“That means: without building global systems, nothing much will change. Every single existential threat of now, from pandemic to climate change to inequality to fascism, will simply rage on and continue. But you yourself probably think building global systems is either foolish, idealistic, unnecessary, or dangerous. You yourself are the thing stopping the world from changing — as much as you imagine you want to change the world. That’s true of almost every Western intellectual I can think of, and it’s true of most people, too.

“Our first task this century is therefore building a global consciousness. Teaching the world, especially the rich West, to care about the world. Why does that hedge funder live a better life than that poor Chinese dude, by sheer privilege of birth, because of a long history of violence and exploitation by one’s side against the other? Equality, freedom, justice, truth, selfhood — these notions have no meaning whatsoever at the global level yet in human history.”

“Surveillance Capitalism”

If we’re not willing to “think globally, act locally,” then what will fill the void? Some thinkers have suggested a much more chilling outcome: “surveillance capitalism” or the “surveillance economy.”[15] As bestselling author Uval Hoah Harari (Sapiens, Homo Deus, 21 Lessons for the 21st Century) explained in an article last week, the same technology that supports capitalism has been supercharged to fight the Plague. [16]

“In order to stop the epidemic, entire populations need to comply with certain guidelines. There are two main ways of achieving this. One method is for the government to monitor people, and punish those who break the rules. Today, for the first time in human history, technology makes it possible to monitor everyone all the time. Fifty years ago, the KGB couldn’t follow 240m Soviet citizens 24 hours a day, nor could the KGB hope to effectively process all the information gathered. The KGB relied on human agents and analysts, and it just couldn’t place a human agent to follow every citizen. But now governments can rely on ubiquitous sensors and powerful algorithms instead of flesh-and-blood spooks.

“In their battle against the coronavirus epidemic several governments have already deployed the new surveillance tools. The most notable case is China. By closely monitoring people’s smartphones, making use of hundreds of millions of face-recognising cameras, and obliging people to check and report their body temperature and medical condition, the Chinese authorities can not only quickly identify suspected coronavirus carriers, but also track their movements and identify anyone they came into contact with. A range of mobile apps warn citizens about their proximity to infected patients.

“You might argue that there is nothing new about all this. In recent years both governments and corporations have been using ever more sophisticated technologies to track, monitor and manipulate people. Yet if we are not careful, the epidemic might nevertheless mark an important watershed in the history of surveillance. Not only because it might normalise the deployment of mass surveillance tools in countries that have so far rejected them, but even more so because it signifies a dramatic transition from ‘over the skin’ to ‘under the skin’ surveillance.

“Hitherto, when your finger touched the screen of your smartphone and clicked on a link, the government wanted to know what exactly your finger was clicking on. But with coronavirus, the focus of interest shifts. Now the government wants to know the temperature of your finger and the blood-pressure under its skin.”

Few would argue that using state-of-the-art technology to slow an international pandemic is a bad thing, but the implications for expanded future use on consumers are deeply disturbing.

But it’s too easy to assume the worst.

It’s possible that the pandemic will catalyze economic reform, demanded by the neglected working class.[17]

“As my colleague Annie Lowrey wrote, the economy is experiencing a shock ‘more sudden and severe than anyone alive has ever experienced.’ About one in five people in the United States have lost working hours or jobs. Hotels are empty. Airlines are grounding flights. Restaurants and other small businesses are closing. Inequalities will widen: People with low incomes will be hardest-hit by social-distancing measures, and most likely to have the chronic health conditions that increase their risk of severe infections.

“Pandemics can also catalyze social change. People, businesses, and institutions have been remarkably quick to adopt or call for practices that they might once have dragged their heels on, including working from home, conference-calling to accommodate people with disabilities, proper sick leave, and flexible child-care arrangements. ‘This is the first time in my lifetime that I’ve heard someone say, Oh, if you’re sick, stay home,’ says Adia Benton, an anthropologist at Northwestern University.

“Perhaps the nation will learn that preparedness isn’t just about masks, vaccines, and tests, but also about fair labor policies and a stable and equal health-care system. Perhaps it will appreciate that health-care workers and public-health specialists compose America’s social immune system, and that this system has been suppressed.”

As the lead to Prof. Harari’s article says, “This storm will pass. But the choices we make now could change our lives for years to come.”

And some of us, at least, will live to see it.

[1] Wikipedia.

[2] The Gates in the Wall Stand Open Wide.’ What Happened the Day the Berlin Wall Fell. Time, November 9 2019. See also this article from the History Channel.:

[3] Coronaviruses, National Institutes of Health/ National Institute of Allergy and Infectious Diseases.

[4] Thomas K R, Coronavirus : How a global pandemic is single-handedly unravelling capitalist economics, Medium (Mar. 19, 2020).

[5] Hague, Umair, Will Coronavirus (Really) Change the World? Medium (Mar. 31, 2020)

[6] We previously explored this topic in this blog — see Free Market Capitalism’s Assault on the Public Good.

[7] The Virus Is An Economic Emergency Too, Financial Times (Mar. 17, 2020)

[8] The Nordic Secret to Battling Coronavirus: Trust, Yes! Magazine (March 17, 2020)

[9] Thomas, Coronavirus, op cit.

[10] American Consumers, Once Bulwark Of Economy, Are Rapidly Losing Confidence, MSN Monery (Mar. 27, 2020)

[11] For an introduction, see here and here.

[12] Thomas, K R, The Rent’s Due, but Britain’s Broke, Medium (Mar. 22, 2020)

[13] Progressive Capitalism Is Not an Oxymoron: We can save our broken economic system from itself, New York Times (April 19, 2019).

[14] Hague, Umair, op. cit.

[15] For an introduction to this topic, see The Age of Surveillance Capitalism by Shoshana Zuboff Review, The Guardian (Feb. 2, 2019).

[16] Harari, Yuval Noah: The World After Coronavirus, Financial Times (Mar. 20, 2020)

[17] How the Pandemic Will End, The Atlantic (Mar. 25, 2020)