III. Pandemic sets in motion the latent economic collapse

April 30, 2020

From the May-June 2020 issue of News & Letters

Draft for Marxist-Humanist Perspectives, 2020-2021: Shattered by pandemic, world needs new beginnings in revolutionary activity, thought

Introduction: Deep crises demand a path to liberation
I. The failed pandemic response and the fetishism of the economy
II. The true pandemic war
III. Pandemic sets in motion the latent economic collapse
IV. What to do in the face of compounding crises—medical, economic, political, and the philosophic void

…Continued from II. The true pandemic war

The economy’s fragility, inequality and illusions are not caused by the virus but are highlighted and heightened or exposed by it. The Federal Reserve Bank of St. Louis projected a possible 52 million unemployed in the U.S. for an unemployment rate of 32% for April to June, higher than in the Great Depression of the 1930s. They neglected to mention that the Black unemployment rate is still nearly twice that of whites, and the Latinx rate is somewhere in between. For the same quarter, JP Morgan projects an immense drop of 40% in the Gross Domestic Product. Hunger stalks the land, food banks are besieged and running out of food, while the irrationality of capitalism leads farmers to dump milk and leave food to rot. Hunger was already advancing; on a world scale, another world food crisis was brewing and is now virtually certain to appear soon. All this is a great intensification of a catastrophe already underway. Last year’s low unemployment statistics barely hid the growing number of people working sporadic or long hours in precarious jobs, piling up consumer debt even higher than the record set in 2008 on the eve of the crash.

Overloaded healthcare systems are turning away patients, whether with COVID-19 or unrelated illnesses, and at the same time laying off doctors and nurses. Layoffs at family practices are expected to balloon to 800,000 by June. Pay has been cut for thousands more medical workers. Rural hospitals were already failing before this. Ethicists are debating how to ration healthcare, but it was already rationed, by high charges. The increasingly consolidated healthcare system was already shot through with planned shortages. Profits—even at non-profits where executives and cronies rake in the loot—were shored up by keeping staff, empty rooms, basic equipment and supplies at a minimum, except those used in more profitable elective procedures like plastic surgery. Now that house of cards is crashing down in the drastically changed environment of a long-predicted pandemic.


All this is characteristic not only of capitalism but of this stage of it. The pre-existing weakness of the “recovery” is linked to the rate of profit remaining low since 2007. In fact, state-capitalism as a world stage hit a wall with the mid-1970s global economic crisis, the deepest recession since the 1930s Depression. A revolutionary response meant more than pointing out Marx’s analysis of the falling rate of profit as cause. We can learn from Raya Dunayevskaya’s philosophic comprehension of Marx’s law, which was never narrowly economistic.1See “Today’s Epigones Who Try to Truncate Marx’s Capital,” chapter 6 of Marx’s Philosophy of Revolution in Permanence for Our Day: Selected Writings by Raya Dunayevskaya (Haymarket Books, … Continue reading

What Marx showed to be capitalism’s law of motion, or the absolute general law of capitalist accumulation, centers on the basic relationship of capital and labor. The preponderance of constant capital over variable capital, that is, dead labor (past labor, materialized in things) over living labor, is seen starkly in workplaces as domination of machines over human workers. It is seen one way in the accumulation of wealth at one pole of society and misery, unemployment and revolt at the other. The growth of capital over labor is seen another way in the falling rate of profit, since profit comes only from surplus value and the only source of value is living labor.

Political crises and ideological offensives give expression to the absolute general law. Dunayevskaya had to remind Marxist economists of the 1970s and 1980s that the law of motion, with its army of unemployed, has to be seen in strict relationship to workers’ revolt—it is capitalism’s own internal contradictions that will bring it down. Its dialectical inversion does not end with the object (dead labor) dominating the Subject (living labor), but impels the “live, concrete, revolutionary subject—the proletariat” to reach “to uproot the old society and create totally new, truly human relations as freely associated” people.2Today’s Epigones,” p. 74. This is necessary to stress, in opposition to Marxists like Ernest Mandel who tied Marx’s Capital to acceptance of Russian state-capitalism and separated Marx’s theory from workers as Subjects and the goal of freely associated labor.

The crisis in profitability in the 1970s led to the restructuring called neoliberalism. It is political, ideological, and economic, deeply rooted in the objective crisis of capitalism. Part of it is expanding trade and expanding capital mobility and flow to the whole world. Globalization is also about shoring up profit by pursuing the lowest short-term costs for capital: outsourcing production to low-wage countries like China (which, with strikes against owners and the regime, is not as low-wage as it used to be) and Bangladesh, and creating global supply chains and using just-in-time production methods, whose fragility is manifested in the current crisis.

The intensified exploitation did shore up the rate of profit for a while, but by 2007 that subsided, and an even deeper economic crisis set in. The weak recovery since 2009 has been sustained by extremely low interest rates. The combination of low rate of profit and low interest rates led to low productive investment and high diversion of profits into dividends, stock buybacks, and purchases of fictitious capital like stocks and bonds, inflating their prices.

In the past few years, consumer, corporate, and government debt have all reached record levels. Top monopoly companies have built up huge cash hoards but thousands of companies are in danger of bankruptcy. Many are “zombie” companies, that is, their income barely covers expenses, or doesn’t, so they keep borrowing to get by, putting them in mortal danger under the sudden economic standstill.


Liberals see a vast rise in inequality, with eight billionaires owning as much as half of humanity, and stop there. It is really Marx’s absolute general law working overtime. Key to the new gilded age is the centralization of capital Marx wrote about—in other words, growth of monopolies and sweeping consolidation of many sectors of the economy: hospitals, pharmaceutical companies, agribusiness, retail, media, Facebook, Google, and Apple. Their monopoly power helps them raise prices, keep down wages and bust unions. The tidal wave of business failures to come will step up that consolidation.

The new colossus is Amazon, whose revenues exceed the national economies of three quarters of the world’s countries. The current situation is helping Amazon decimate retail businesses. That does nothing for the warehouse workers who are striking for safer working conditions.

The aftermath of the 2007-09 Great Recession intensified the above-mentioned trends but also the revolt and, because of that, the counter-revolutionary trends that led to the Tea Party, Trumpism, and their analogues internationally. That this is more than a flirtation is seen in the new crop of leaders, from Trump to Bolsonaro, Modi to Orban, steeped in the totalitarian elevation of ideology over truth and science. The media and social media help propagate the deception and manipulation in which these demagogues thrive, and are helping turn societies toward fascism.

Swelling nationalism intensifies the pulling apart of the world that is fueled by the low rate of profit and the consequent zero-sum scramble for profits, from the European Union’s internal tensions to the oil price war to the Trumpian trade war of all against all, now seen in countries restricting exports of medical supplies needed to handle the pandemic. With several actual shooting wars already underway, the global capitalist crisis raises the threat of war turning global.

Continued in IV. What to do in the face of compounding crises—medical, economic, political, and the philosophic void


1 See “Today’s Epigones Who Try to Truncate Marx’s Capital,” chapter 6 of Marx’s Philosophy of Revolution in Permanence for Our Day: Selected Writings by Raya Dunayevskaya (Haymarket Books, 2019), as well as chapter 9, “Capitalist Production/Alienated Labor.”
2 Today’s Epigones,” p. 74.

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