WILL THE POOR BE POORER AFTER CONFINEMENT?
3 APRIL, 2020 · NEWS> GLOBAL SITUATION> WEEKLY REPORT
The world bourgeoisie is becoming nervous. In Spain, where confinement for non-essential activities has been in place for only four days, Botín (the head of one of the main Spanish banks) is already calling on the government to reinstate young and immunized people. In Italy, more than 40,000 companies are already asking to be allowed to reopen. In France, the CEO of Michelin says that “the world cannot live in isolation” and the steelworks will reopen no matter what. Capital needs its pound of flesh. It craves the same labor that until now it only recognized as “one more factor of production”. But are or will the effects of confinement be so terrible? How will the economy be after Covid?
Capital becomes more centralized and concentrated…
VON DER LEYEN IN THE SPANISH TV.
The European Commission has attempted to whitewash the voracity of the German bourgeoisie with a program of guarantees of up to 100 billion that does not even cover the guarantees already promised by the Spanish government. The Spanish government, in turn, is putting the burden of the shutdown on the weaker -autonomous- petty bourgeoisie and on the workers who suffered from precarization in the form of dependent self-employed and false self-employed people, urging them to run up debts to pay the fees for the period of inactivity in which they are not earning any income.
The roars of protest reach the confidential press, a terrain generally undermined by its dependence on institutional communication and advertising agencies. Just today we saw headlines like ” why don’t they want to save the self-employed and the small and medium enterprises ” telling us that the government policy, dictated by the big companies, will serve to devour the market share of the small ones and concentrate economic power. Yesterday, in another confidential article, we could read :
There is no excuse for a limit on public spending that can justify the lack of financial resources to deal with this crisis. On the contrary, what prevails is the state’s eagerness to collect taxes as a means of financing an exceptional critical situation. The Spanish tax pyramid is built on the weakest, i.e. the lowest income taxpayers, who make up the majority of the population. This is equivalent to saying that the pyramid is supported by the workers.
They are right. The crisis will concentrate and centralize capital within each country. If we take a look, the aid they have promoted for workers – the ease of making temporary redundancies – is actually aid from which medium and large companies will benefit. The aim of the Spanish government, like that of the German government , is to put the employment contracts of the most capital-intensive companies into “pause mode”, because the cost both to the companies and to the state of laying off today and re-hiring tomorrow would be much greater.
In fact, large companies will not only obtain the bulk of state aid – even that which is allegedly dedicated to SMEs through subsidiaries and partnerships -, they will gain market space at the expense of the financial difficulties of smaller competitors – by buying or letting electricity traders go bankrupt, for example. In very monopolistic environments, such as those of practically all the main vehicles of national capital, those of the IBEX and some others, this means that a horizon of rising prices for basic services is opening up. Something like an indirect tax directly set on the accounts of the main companies.
In France, the government could not wait. In the midst of the epidemic, the Macron government continues with the privatization of French public health . It wants to expand the consortiums with the private sector to ensure its “sustainable development” and to restructure the debt of the hospitals. In other words, the health crisis is going to be used to convert hospitals and opportunities for capital placement while further developing a health system that was already saturated before the Covid. Another sign of things to come. The fact that Sánchez stressed today that “the national industry must be strengthened”, without mentioning this time the public health system, gives food for thought.
…with stagnant regions and “light” sectors dismantled…
IMPACT OF UNEMPLOYMENT DURING THE MONTH OF MARCH BY MUNICIPALITY. DARK RED REPRESENTS MORE THAN A 30% INCREASE, GREEN BETWEEN 3 AND 10%.
In the US, 10 million people registered for unemployment in the last two weeks . The vast majority, having lost their jobs, have also lost their health insurance. And more will come in the coming days and weeks . To give you an idea of the scale: the 2008 recession caused nine million unemployed.
The Spanish data give us some more information to interpret the incidence on unemployment and how the epidemic and confinement are going to modify the labor market. Yesterday the Minister of Social Security presented the unemployment data for March . There is a predictable and clear correlation between the organic composition of capital and the impact of unemployment. Where it is greater, that is, where investment in equipment and machines is greater for the same amount of hired labor, the impact of unemployment is lower. The historically less capitalized areas, such as southern Spain, are more affected.
Something similar will happen in the United States, with the aggravating circumstance that many of these less capitalized states are also the ones that are suffering the epidemic the most , with particularly high rates of death among those under 70 as well.
And what is true for territories is also true for the productive sectors . The sectors that historically have shown less capacity to absorb capital, such as most services – tourism, hotels, etc. – are today those that send more people into unemployment. The large industrial company opts for temporary layoffs because the cost of not laying off workers is less than the cost of reorganizing the workforce, the retail chain lays off workers directly because it does not want to commit to maintaining contracts for six months when everything is over, given that the cost of finding and training personnel is very low.
…with lower salaries, even more precarity and groups permanently excluded from work
EVOLUTION OF SALARIES IN SPAIN BY DECILES (GROUPS REPRESENTING 10% OF THE TOTAL) BETWEEN 2008 AND 2014. THE LOWEST DECILES, THOSE WHO EARNED THE LEAST, ARE THOSE WHO LOST THE MOST IN THE CRISIS.
It is striking that even liberal think tanks are calling for “insertion incomes” for young people, the long-term unemployed and the unemployed over the age of fifty. The prospect is that the combination of the effects of greater industrial concentration with those of greater regional inequality will create very large pockets of workers who are less attractive to companies.
These are, in particular, the long-term unemployed without benefits, who will again be relegated to the unemployment queue, as happened in the Great Recession, newcomers, who will find the labor market severely weakened or simply fail to enter, and finally, older workers, who are likely to be separated from the labor market on a permanent basis.
We can imagine what comes next because we have already experienced it on a couple of occasions: a new wave of precarization measures and a greater drop in wages the lower the wages earned so far. As we can see from the data for 2008-2014 in the graph above. The coming offensive, like all the previous ones, seeks to revive big capital at the cost of a new massive transfer of workers’ income since the “Moncloa pacts” that the Spanish government is now taking again as a reference .
The decisive factor
MADRID DURING CONFINEMENT.
So much for the economic look. That is, society seen from the interests of the bourgeoisie and petty bourgeoisie. For them, the situation can be summed up as one in which capital is being devalued and must be revived as soon as possible by reducing the total cost of the labor power – which includes wages, public health systems, social cohesion costs, training and in general the costs of keeping exploitation going. This is the idea we hear every day on the radio and television: recessions automatically “bring abou”‘ unemployment, lower wages and pauperization among the workers. There would be no “other way”.
We have to start asking ourselves why capital is so devalued by a few weeks of confinement. Machines and productive capacity do not disappear, sites do not disappear, and the balance sheet of companies is not brutally damaged. And yet many companies are now worth a quarter of what they were worth on 1 January.
The reason is that capital, in reality, is not a pile of machines or bundles of banknotes, capital is nothing but a right to exploit labor power. This right allows for the use of machines, materials and equipment (dead labor) and the labor power of people (living labor) to produce. If production is successful and can be sold on the market, the result is that capital will grow. The appearance is that the money from which it departed – to buy living and dead labor – has become a greater amount of money, has grown. In practice: success in using the exploitation rights will have produced even greater exploitation rights. That’s all the magic under capital accumulation. What the media calls “economic perspectives” is nothing more than the overall expectation that accumulation will be successful and that capital will “grow”.
What is happening? There are simply far fewer hours of work to be exploited because workers are confined to their homes. The accumulated rights are obviously not worth much. Even less so if the consumption of certain goods is falling because of the confinement and stocks cannot even be sold. So capital is devalued at the rate at which the available labor force is reduced and sales fall.
But when confinement is over, workers will be available again, machines and computers will continue to operate, and demand will recover. Even if the figures show a brutal drop in production in the preceding weeks, there is nothing to prevent production from resuming. However, capital will already have been devalued. If the epidemic had occurred all over the world at the same time and affected all places and sectors equally, the only profit lost by companies, the only real devaluation of capital, would be that corresponding to the days not worked.
However, as we saw earlier this week when we were discussing agriculture , profits are distributed in proportion to the total capital invested. And all capital is deeply intertwined with each other through capital markets. The more relative weight a national capital has lost, the less profit it will have to distribute to its companies, the more weight a sector of national capital has lost to others or a company to others, the smaller its share of profit will be. Both the national capital as a whole and each of its specific applications “need” to recover the positions lost as soon as possible. Hence the fury.
What does this mean? Compensate the profits that were not taken with more profits in the next periods. It is a question, at least, of recovering the relative place they already had… or improving it, because the truth is that the crisis was leading to an agonizing situation even before the epidemic . The way to revive profits is to increase exploitation. The ideal means, by increasing relative exploitation, that is, by producing more with less work. But it requires having capital ready to be invested and having gained access to new markets in order to be able to place the new higher amount produced. That path is, to say the least, unlikely. The path to which everything points is to increase absolute surplus value, that is, to pay less per hour worked. As we have seen, this is what they consider to be “unavoidable”: in a global way, national capital will try to lower the cost of maintaining the conditions of exploitation by reducing, for example, state health and education spending and by reducing the costs for companies of hiring, firing, etc. One by one, the big sectors and companies will try to lower the total wages they pay, laying off people and overburdening those who remain, firing those with higher wages and re-hiring for the same real job at lower wages, etc.
METAL WORKERS STRIKE, TURKEY.
This is what we are sold as “inescapable” in the face of a crisis. But is it? Not really. If it were so, Bolsonaro, Botín, the CEO of Michelin and so many others, would have us already working and with a wage cut in the name of “solidarity”. What is preventing it is all those strikes that occur every day all over the world and that really only represent the tip of the iceberg of the real movement that is taking place. Even if the media is trying to blur them out and only occasionally report them in order to disqualify them, these strikes say something very important about the world that is coming after confinement. As the flyer distributed the other day by our comrades in Argentina said :
Today the demands are marked by the coronavirus, but if we face the pandemic as workers, tomorrow, when the quarantine and the epidemic are over, in the battle against the attacks on our living conditions that will follow, we will become stronger.
http://communia.blog/will-we-be-poorer- ... nfinement/