« While we’re all watching, open mouthed at the daily BBC news footage of coffins arriving at Italian care homes, the make-shift mortuaries in New York and the pictures of nurses wearing bin-liners to try and protect themselves, the markets are having a field day.
What explains this radical discrepancy between the actual state of the world economy, which has effectively crashed, and this rather obscene and unseemly growth in profit-making from the markets?
« The economy is collapsing », Commune Magazine starkly noted last week. « Goldman Sachs economists have predicted an annualized 34% decline in GDP in the second quarter of 2020—an implosion with no historical precedent. By comparison, the worst annual decline on record is 13%, which happened in 1932 during the Great Depression. »
Yet at the same time, « The Dow Jones Industrial Average ended the holiday-shortened week on Thursday with a 12.67% weekly gain, while the S&P 500 index rose for its best week since 1974, and the Nasdaq Composite COMP climbed for its best weekly rise since March of 2009, as investors ignored an ugly report on jobless claims for the week ».
CNBC put this contradiction rather nicely: « The market rose sharply after a historic surge in initial jobless claims. Nearly 3.3 million Americans filed initial jobless claims for the week ended March 21, marking the worst week ever, by far. The second-worst number came during the 1982 recession, and the report released Thursday more than quadrupled that total. Yet the market rose, violently so, at one point hitting 20% off the recent lows, which would define a bull market. »
One reason for this schizophrenic disjunct seems to be temporal: “The markets and the economy don’t run in parallel », noted Randy Frederick, vice president of trading and derivatives at Charles Schwab. « The market’s running way ahead of the economy. The markets don’t care about what’s happening today, the market cares about what’s happening six months from now.”
In a way, perhaps that might be considered a cause for optimism: that the financial elites think things will stabilise, exactly as they did after the last global economic crash in 2008. And that comparison perhaps provides the clue to this: the catastrophe of the economic collapse and recession following 2008 was followed by a huge boost for the top elites: « CEO Pay Up Almost 50% Since 2008 Recession », noted the Economic Policy Institute in 2016, with the number of billionaires doubling since the 2008 crash, according to Oxfam’s 2014 report.
Meanwhile austerity was forced on the rest of us with increasing numbers of people eating from foodbanks and dustbins, and health services, salaries, and welfare budgets slashed. As the Dow Jones bounced back, the Oxfam report pointedly observed « that since 2009 one million women have died in childcare due to lack of basic health care, and that 57m children are currently missing out on any form of education. »
A major factor for the current optimism amongst the financial and corporate elites seems to be the unprecedented size of the bail-outs and funding now being offered to them. « On Friday Congress passed the largest financial relief bill in its history, the Coronavirus Aid, Relief and Economic Security (CARES) Act, a $2 trillion dollar stimulus designed to bolster businesses and provide aid to Americans facing economic hardship amid the coronavirus pandemic.
The largest allocation—approximately $500 billion—is going to Treasury Secretary Steven Mnuchin to bail out corporate America. The US Federal Reserve also said it would use emergency powers to purchase up to $1tn in short-term corporate debt directly from companies, reinstating a funding facility that was created during the 2008 financial crisis » (‘Meet the Bailout’s New Slush Fund’, Boston Review).
This seems to suggest that the public is effectively underwriting and funding, through future taxation to government, this « bail out’ of the whole corporate economy, while simultaneously paying for it in terms of mass unemployment, collapsing living standards, and physical and mental health. No wonder the markets are so chirpy.
As Jonathan Cook, journalist noted, « Under cover of the public’s fear, and of justified concerns about the state of the economy and future employment, countries like the US are transferring huge sums of public money to the biggest corporations. »
« As details of the Senate’s coronavirus stimulus plan slowly trickled in Wednesday, progressive critics characterized the sprawling legislative package as a brazen attempt by both political parties to use trillions of dollars in taxpayer money to bail out and further enrich large corporations while tossing mere crumbs to the most vulnerable. The Washington Post reported Wednesday that the stimulus package also includes a little-noticed $17 billion federal loan program that was inserted largely for the benefit of aerospace giant Boeing » (Citizen Truth).
Another reason for the exploding Dow Jones could be that the market revolves around greed and profit – making a fast buck – and since manufacturing, the service economy, and all « non-essential » business has now been wiped out, one of the only places left for those wanting to invest their millions in, is the market: « Then why is it rising? Because people who have more money than they need have to put it somewhere; they prefer to put it where it will generate more money; these days the stock market is about the only place for it to go. »
The logic of all this has been compellingly analysed by Naomi Klein in ‘The Shock Doctrine, essential reading for understanding this moment: « Countries are shocked — by wars, terror attacks, coups d’état and natural disasters”, she notes. Then “they are shocked again — by corporations and politicians who exploit the fear and disorientation of this first shock to push through economic shock therapy.” People who “dare to resist” are shocked for a third time, “by police, soldiers and prison interrogators.” We’ve already had the first two.
“The next phase of the disaster capitalism complex is all too clear: with emergencies on the rise, government no longer be able to fit the bill, and citizens stranded by their can’t-do state, the parallel corporate state will rent back its disaster infrastructure to whoever can afford to, at whatever price the market will bear. For sale will be everything from helicopter rides off rooftops to drinking water to beds in shelters.
Disaster capitalists have no interest in repairing what was. In Iraq, Sri Lanka [following the 2004 tsunami] and New Orleans [after Katrina], the process deceptively called ’reconstruction’ began with finishing the job of the original disaster by erasing what was left of the public sphere and rooted communities, then quickly moving to replace them with a kind of corporate New Jerusalem – all before the victims of war or natural disaster were able to regroup and take their claims to what was theirs” (The Shock Doctrine). »
« Excellent overview of « stakeholder capitalism« , the radical new form of capitalism outlined last year by Davos, The World Economic Forum, the Bill & Melinda Gates Foundation, the Business Roundtable (which included JPMorgan, Mastercard, Deloitte, Salesforce, RBC, Royal Phillips, PayPal, Henry Schein, Dow Chemical, Occidental Petroleum, Novartis, andHP Enterprise), and explored in detail at in the World Economic Forum’s remarkable ‘Event 201’ last October, which modeled a global coronavirus pandemic and discussed how huge multinational corporations and big business could utilise this « opportunity » to restructure the entire world economy itself.
Another name for “stakeholder capitalism” is of course “the corporate state” – i.e., when the huge transnational corporations take over the running, resourcing, function, and cultural status of previously “public sector” and even governmental roles and arenas.
As Naomi Klein acutely notes in ‘The Shock Doctrine’: « Far from freeing the market from the state, these political and corporate elites have simply merged, trading favors to secure the right to appropriate precious resources previously held in the public domain— from Russia’s oil fields, to China’s collective lands, to the no-bid reconstruction contracts for work in Iraq. A more accurate term for a system that erases the boundaries between Big Government and Big Business », she observes, « is not liberal, conservative or capitalist but corporatist. Its main characteristics are huge transfers of public wealth to private hands, often accompanied by exploding debt, and an ever-widening chasm between the dazzling rich and the disposable poor. For those inside the bubble of extreme wealth created by such an arrangement, there can be no more profitable way to organize a society. »
It is this long-term aim and agenda of « corporatism », combined with the growing mass unease with capitalism itself in the last decade, that lies behind this radical new « reformulation » of the economic project in terms of « stakeholder capitalism », strikingly illustrating Klein’s thesis of how big business always takes advantage of crisis such as natural disasters to push forward and radically extend its agenda and interests.
We can see exactly this movement happening at the moment, with the government increasingly simply acting as a conduit or channel for vast multinationals – Mercedes, BAE Systems, Dyson, Babcock International, Airbus, Ford, Rolls-Royce, Siemens, ThermaFisher, Randox, Burberry – to flood into the national health service, under the guise of « stakeholder » capitalism, and « partnering » with previously public sector systems and operations.
« The next stage is to bring in the private sector companies”, confirmed Health Secretary Matt Hancock two weeks ago, “and then to bring in the wider pharmaceutical industry ». It’s not this might happen, or is happening now – it’s already happened, and « stakeholder capitalism » is the formula used to sell it to us.
« Capitalism, as we know it, is dead », noted billionaire Marc Benioff, Chairman and co-CEO of Salesforce at the prestigious Business Roundtable event last August. « We’re going to see a new kind of capitalism—and it won’t be the Milton Friedman capitalism. The new capitalism is that businesses are here to serve their shareholders, but also their stakeholders —customers, public schools, homeless and the planet. »
Davos’s remarkable new Manifesto, launched in January this year, similarly outlined a radical reframing of what the entire nature and purpose of capitalism is, following the dramatic challenge to it from the likes of Sanders and Corbyn, and a sense that globalisation and capitalism itself are under attack and that its days – and therefore its huge profits and control of the system – might be numbered. “People are really dissatisfied with capitalism,” observed Andy Green, managing director for economic policy at the Center for American Progress, a liberal-leaning think-tank.
« I believe we are on the edge of a fundamental reshaping of finance”, noted Larry Fink of BlackRock somewhat prophetically in late 2019, the world’s largest investor with $7 trillion in assets.
Amongst those signing up to this brave new corporatist state world were the « CEOs of Microsoft, UPS, Workday, Mastercard, Deloitte, Salesforce, RBC, Royal Phillips, Genpact, PayPal, Henry Schein, Dassault, Dow Chemical, Occidental Petroleum, Novartis, HP, HP Enterprise, Sanofi, A.P. Moller-Maersk, and extra. »
In particular, they saw that although popular trust in huge transnationals was low, popular trust in their own governments was even lower, and could therefore be exploited. People might despise the hypocrisy and vacuity of politicians, but they still like their Apple iPhones and MacBooks. « Recent surveys from Edelman, the public relations group, show that there is now more trust in business as a source of social solutions than government. ‘People are not asking necessarily any more for politicians [to lead on these projects],’ says Mr Schwab, founder of the WEF. ‘That is interesting.’ ‘So what we are doing now is to put much more emphasis on this, creating platforms where a business can co-operate with governments and civil society’. »
In August 2019, ‘Business Roundtable’ released a new « Statement on the Purpose of a Corporation » which said all its member companies share a fundamental commitment to all their stakeholders. “The American dream is alive, but fraying,” said Jamie Dimon, chairman and CEO of JPMorgan Chase & Co. and chairman of Business Roundtable, in a statement. “Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.”
For anyone who’s read Naomi Klein’s The Shock Doctrine and seen what JPMorgan have done in Argentina and Asia (« Argentine’s entire early-nineties shock therapy program was written in secret by JPMorgan and Citibank, two of Argentina’s largest private credits ») will be surprised by this concern for the world’s « workers and communities ».
« This approach is neither status quo nor abandoning capitalism altogether », noted Paul Tudor Jones, founder of Tudor Investment Corporation and The Robin Hood Foundation, Co-Founder and Chairman of JUST Capital, earlier this year at Davos. « It’s simply recalibrating the system to take a deeper view of business, and ensure an economy that works for all. »
As even the Harvard Business Review observed, « Naysayers will call stakeholder capitalism a PR stunt. Window dressing designed to placate protesters and pretty-up corporate images » (January 2020), before observing that in the same month, Larry Fink of BlackRock, the world’s largest investor with $7 trillion in assets under management, sent his annual letter to CEOs. “Awareness is rapidly changing,” Fink writes, “and I believe we are on the edge of a fundamental reshaping of finance…It’s time we get serious about writing a new chapter on capitalism, before it’s too late. »
“It’s not a ‘versus’,” agreed James Quincey, CEO of Coca-Cola. “The Coca-Cola business has been set up under a simple idea for a long time: it can’t be a viable business without a viable community.” (! Coca-Cola!).
The Davos manifesto included its 7 key new principles or « pillars »: “Governance mechanisms” , “Governing disruption” (!!!!); “Long-term vision, short-term needs”; and “Regulation and corporate adaptation”. »
« We’re all talking about the World Health Organisation these days, but what exactly is it? The Guardian provides a useful overview of its history, its politics, and its key players.
It’s a lengthy review of the organisation but, remarkably in over five thousand words it fails to mention even once the role of it’s second biggest donor, major sponsor, and key influencer, Bill Gates, whose Foundation has pumped more than $2.4 billion into the WHO since 2000.
This omission is remarkable. As POLITICO notes of Gates’s huge impact on the organisation: « This largesse gives him outsized influence over its agenda – academics have coined a term for his sway in global health: the ‘Bill Chill’ – and few people in the organisation dare to openly criticize what he does. ‘He is treated liked a head of state, not only at the WHO, but also at the G20’. » Odd that his name is therefore omitted entirely in this Guardian ‘Long Read’ – as indeed is that of his Foundation. It’s still quite an interesting read, suggesting how the organisation’s political evolution responds in relation to pandemics:
« Although the WHO had no formal powers to monitor and censure its members, Gro Harlem Brundtland (who was elected director general in 1998) wasn’t shy about doing so anyway. In response to the Sars outbreak in 2003, for example, ‘Brundtland did things the WHO had no authority doing. She just did them,’ said David Fidler, a fellow in global health at the Council on Foreign Relations and a regular consultant to the WHO. ‘She sort of used Sars as a way to test drive some very radical changes.’
‘After Sars, the WHO’s position was essentially: that was great, let’s formalise it,’ said Clare Wenham, a professor of global health policy at LSE.
In 2005, the WHO drew up a new version of the International Health Regulations (IHR), the central legal document that all member states are bound by. According to Fidler, the updated IHR, which is in force to this day, is a radical document. It asks its members to prepare for public health threats according to standards set by the WHO, and to report any outbreaks and all subsequent developments.
It also allows the WHO to declare a public health emergency of international concern (or PHEIC, pronounced, incredibly, ‘fake’), using its own information, over the objection of any single country.
During an emergency, countries are expected to take the lead from the WHO’s guidelines and report any deviations to the organisation. All of these requirements, bar the reporting of outbreaks, were new.
From 2009 onwards, the WHO faced condemnation from the press and the international community for its handling of successive crises, all during a decade when the financial and diplomatic order that sustained it began to break down.
First, there was the outbreak of H1N1, or ‘swine flu’. The novel influenza virus was discovered in Mexico in March 2009, and by June, when the WHO declared a pandemic, there were more than 28,000 cases in 74 countries. Over the next year, the WHO coordinated the global response – less aggressively than during Sars – and on 10 August 2010, it declared the pandemic over.
Almost immediately, the WHO’s approach came under scrutiny. The death toll – 18,500 confirmed deaths worldwide – was far lower than initially expected, particularly given the disease reached more than 200 countries. ‘Suddenly you have people saying: « Wait a minute, you really cried wolf on this »,’ says Wenham. The media and several prominent European politicians demanded inquiries as to whether the WHO had mistakenly rung the alarm, and ‘cost huge amounts of money and frightened people unnecessarily’, as Paul Flynn, the former Labour MP who chaired one of the inquiries, told the Times in 2010.
To this day, opinions are split as to whether H1N1 was a crisis headed off, or a false alarm.
Today, under Tedros, the WHO finds itself in uncharted territory. Not only is it facing by far the biggest pandemic in its history, it is also having to defend itself from the nations on which it most depends. The decision to declare a pandemic on 13 March was a largely rhetorical distinction, since calling a Pheic already requires WHO members to respond. ‘It was calculated to wake its member states up’, one commentator observed. » – The Guardian
The Guardian’s airbrushing of Gates’s role and influence in all this (his intense ideological dislike of highlighting the social contexts for disease, for example, and his obsessive preference and promotion instead of – very lucrative – « vaccines »), seems tied into the implicit ideological message of the piece: we need more global new world order organisations like WHO.
After a decade when the reputation of the whole project of neoliberalism and globalisation has been severely dented and exposed, we can expect to hear a lot more calls like this. As Guardian journalist Stephen Buranyi dutifully concludes, “it is most needed now, at a time when faith in the other administrators and overseers of the global order are in decline. It is possible to imagine a world in which every nation respects the WHO’s authority, follows its advice and lets it coordinate the flow of information”.
Expect the liberal/establishment press to really go for this. Only yesterday, BBC’s Katya Adler ruefully declared in her lunchtime bulletin – correctly noting the lack of a more coordinated EU response to the virus – “a United States of Europe this certainly is not”, and decrying that “each country puts itself first – its population, its national politics ». The assumption is: democratic politics don’t work; people increasingly distrust their own governments; we should hand over governance to vast, unelected, global organisations, who are largely privately funded by billionaires.
The idea that we can somehow have democracy (« national politics’) and a coordinated international response seems distasteful to many of these commentators – indeed they seem intent on discrediting the one in order to promote the other. »