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Europe and the pandemic:

Inside or out, no escaping capitalism's inability to resolve the crises

9 April 2020

At first sight the Covid-19 pandemic and the conjoined economic crisis seem to support the picture from classical economics of an external shock upsetting an otherwise stable system.

The evidence does not support that theory. The global economy did not recover from the 2008 credit crunch.  Despite a decade of austerity, the overall European economy remained anaemic (relatively high Irish growth was based on its role as a tax haven and working class penury).  Many essential elements of public medicine,  such as routine pandemic emergency preparation and fully functioning health services decayed. If the pandemic was an external shock,it was striking a framework already rotted.

The Trump chaos in the US underlines the basic contradiction for capitalism. Keep the economy running or respond to future threats of revolt by the workers following the mass carnage that would ensue from a failure to respond.

Like Trump, European states began with denial, waiting until the virus was in the room and then rushing to close borders rather than offer mass testing and social isolation for carriers and contacts. Delay led to lockdown orders while testing and the provision of medical supplies and resources continued to lag far behind need.

The European project fragmented as each state retreated into nationalism. Later the European commission scrambled to coordinate a response, but by that time the worst hit states were receiving aid from China, Cuba and Russia. Eventually the chief science officer resigned, citing the impossibility of building a coordinated response to the virus.

Nowhere was the nationalist impulse stronger than in Britain.  The immediate political threat was that the virus would halt Brexit in its tracks. Britain could not afford to take two hits to its economy and did not want to be seen coordinating with Europe immediately following withdrawal. Like the Trump administration, economic interests predominated over public health. The result was a dodgy dossier that suggested that letting the pandemic proceed would lead to "herd immunity" and quickly solve the issue.  It was only when the government was told that deaths would be over one million that they changed course. However they retained a "British is best" mentality, lagging behind in advice and in the provision of supplies. They decided to develop their own test, despite lacking both the diagnostic and manufacturing capability, presenting the ludicrous argument that an inaccurate test would be worse than no test.

Nowhere did the schism between Britain and Europe have greater effect than in Ireland. The Southern state largely followed the directions of the World Health Organisation and the European health advisors.  They had competent disease prevention advice and access to testing, so they were able to join policy to health data. On the other hand the authorities delayed on shutting down tourism and had to conjure an overall health service from nowhere by renting the large private sector.

However the posing of the Taoiseach, Leo Varadkar, despite his government having fallen largely around the issue of health, shone like gold in contrast to British indifference to the fate of their population and the sheer incapacity of the Northern executive.  The burning issue is that on one island there are two Covid-19 strategies and an open border. Sinn Fein correctly say that there should be a single strategy and local critics call for a border at Belfast harbour.  The Unionists proclaim their loyalty to the crown and their strategy is to await orders from Westminster.

The crucial thing is that this disagreement goes nowhere. The Good Friday Agreement is based on identity politics. If unionism claims the British health response as part of their identity all discussion stops and Sinn Fein concentrate on painting themselves whiter than white.

However the virus is no respecter of identity.  The lack of coherence could easily lead to waves of infection and reinfection, with political action paralysed by a dysfunctional political system.

European disarray in the face of the pandemic is reflected in the economic response.  Much national policy initially focused on supporting capital, with relative disregard for workers. Where support was offered it was to maintain key elements of the workforce to aid recovery. In many cases low levels of welfare payments had to be augmented as the various states realised the extent of the crisis and began to consider the possibility of retribution by the workers in the aftermath. In all cases there was fragmentation,  as each state tackled the most immediate cause of discontent in their area.

The overall plan is to borrow to cover the costs of the shutdown. In many ways this is an even graver rerun of the 2008 crisis. The hidden assumption is that the workers will yet again foot the bill for the borrowing and that they will accept another decade or so of austerity to meet it, not forgetting accepting the rapid rundown of health and welfare services that had to be ramped up during the crisis. As in the 2008 crisis, the EU has shown itself incapable of going beyond an alliance of nations.  A bond will be issued, but Germany and the northern powers will insulate themselves from the relatively poor south. In the aftermath the strategic crisis of the European project will loom even larger.  Italy, already groaning under debt and the pandemic,  has already linked to the Chinese "Belt and Road" initiative and the Italian premier has warned of European collapse. "Ever closer union" seems a distant dream.

The situation is even worse in Britain. The Tories claimed that they would save millions through Brexit, eventually accepting that the economy would decline. They claimed in the election that they were ending austerity and then continued with welfare cuts. They now have to put into overdrive a health service they have been running down for years, and borrowing on the strength of their own economy without any European backup. The chances of completing Brexit are extremely slim and a favourable trade deal with Trump's America have receded over the horizon.

The North of Ireland remains the runt of the UK economy.  The local politicians were forced back into the Assembly knowing that they would have to institute the Fresh Start austerity package already agreed. The imposed programme for the new Assembly, New Decade, New Approach, involved a doubling of the levels of austerity and privatisation. Almost £1 Billion has been allocated to meet the local coronavirus crisis, but the aftermath will require a further squeeze on workers by a fractured and incompetent administration facing the risk of further isolation if Britain keeps to its word regarding an Irish sea border with Europe.

The 26 county Irish state, in the same way that it benefited from scientific advice from Europe,  also benefited from the cheap money from the European central bank.  That has allowed the state to at a stroke resolve the crisis of hopelessness and to create a temporary National Health Service. However that money needs repayment and the ballooning debt will show up the gaping chasms beneath the Irish economy. At heart Ireland is  a tax haven and the collapse in international trade and investment will lead to crisis. Only a few months ago the government claimed to have led Ireland out of the 2008 crisis, only to be crushed at the polls in a burst of popular anger about the failures of housing and health policy,  attacks on pensions and a failure to restore public sector pay.

Like a glowing search light the pandemic illuminates the faults and cracks in society. The European project is in disarray. British workers are trapped in a little Englander society unable to prepare for or to meet the challenges of the pandemic.  The Irish colony is designed for sectarian horse trading and has no capacity to deal with the challenges to public health or to future prosperity. The Irish government are leading a PR exercise based on borrowing, but have no idea what they will do when they present the bill to the workers.

Ireland,  Britain and Europe will blame future woes on the Covid 19 virus. Workers will resist when asked to pay the bill. What is missing now is a political organisation of the working class that can reject the capitalist excuses and put forward a programme based on workers needs.

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