Capital gains and losses

Aunindyo Chakravarty

Senior Economic Analyst

Nature has no design. It does not defer to higher sentient beings. If a virus without a brain is fit enough to beat a human being’s defence mechanism, then nature simply doesn’t care. The human condition is subject to the laws of nature that unfold through a series of accidents. Yet, how nature affects us is determined by the structure of social relations that surround us and make us what we are.

In reality, it is the system that we live in which both causes Covid surges and their attendant economic impact.

The Covid pandemic is no different. The recent surge was inevitable, oddly, because we are a democracy. There had to be elections to local municipalities and panchayats and state Assemblies. Joe Biden might have become President by campaigning online, but it is impossible to do that in India, however low the cost of data might be. Netas had to address big rallies to display their strength, and dive into adoring crowds, often mask-less, to be one with the people.

The surge also has to do with what we value as a society. Central to that is the idea of private enterprise and accumulation of wealth. Days lost due to a pandemic are as good as lost wealth. This is a crucial aspect of market capitalism; time is quite literally money. Those who can control productive time, setting people to work on machines they own, accumulate wealth. So, shutting a part of the economy in the name of Covid, while letting other parts continue, amounts to a state-directed transfer of capital from one side to the other.

In countries where a large chunk of people is employed in the public sector, the state can absorb loss of workdays. It can even reorient output towards industries which can be run with social distancing, without keeping the profit motive in mind. That means the state can encourage employed and economic activity, but later redistribute the accumulated profits towards industries and sectors that had no option but to shut down because of the pandemic. The free market system can never do that. If the balance of accumulation of profits is disturbed through external circumstances, it is skewed permanently.

Therefore, it is impossible to impose lockdowns and restrictions in a planned manner in free market economies. Ultimately, all entrepreneurs have to be given the freedom to start functioning, simply because they must fend for themselves. The corollary of an entrepreneur-driven economy is also that others are dependent on them for their jobs. If the business reopens, employees have to go back to work as well, whether it means risking their lives or not. More often than not, the business owner will have a room of their own, where they can socially distance themselves from others. Their employees rarely have that luxury.

Then there are the millions of hawkers, traders and daily wagers who can’t afford to miss a single day’s work to survive. CMIE’s March count tells us there were nearly 128 million such people, up from 115 million one year ago. They have no option but to be in close proximity of the people they serve, or with each other, whether it is at a small grocer’s shop, a tea stall, inside a home while fixing a tap, or on construction sites where they pass bricks and cement to each other. Unless they are paid to sit at home, there is no way to stop them from catching Covid or passing it on.

There are also the bulk of Indians who live cheek-by-jowl in congested slums and tenement quarters. Entire families who share a couple of rooms, migrant workers who live 10 to a cramped dorm, sometimes taking turns to sleep. If one person catches the virus, it is only their luck and hardiness that will keep the rest safe. It is easy to tell them to mask up or wash their hands repeatedly. Braving the sweltering summer, under a creaking old fan, masks are the last thing on their mind. They don’t have enough water to drink and we are asking them to wash their hands 30 times a day.

Finally, there is the all-pervasive culture of machismo. Upper middle-class men, who have made good money by taking risks in business and the stock markets, believe that they can ride through the pandemic by embracing the risks. For such people masks are a sign of weakness, social distancing a symptom of effeminate cowardice. They imbue their families with this attitude as well. The contagion of brashness spreads through an entire social class, leading to a culture of laxity towards a serious disease.

Of course, one key reason the upper middle class does not take Covid seriously is because they know if it strikes them, they will be guaranteed a hospital bed, top doctors, insurance and medical leave. It doesn’t matter to them that their life choices could cause a surge in infections that could affect the less fortunate. The affluent feel stifled by lockdowns and restrictions — it costs them money. They actively oppose government action, which involves giving money and food to the poor and the needy, because it threatens the very basis of market capitalism.

In reality, it is the system that we live in which both causes Covid surges and their attendant economic impact. If jobs and livelihoods are entirely dependent on free market-driven private enterprise and self-employment, shutting down economic activity is as good as destroying livelihoods and profit- making. If most employment is in consumer-facing services, then social distancing amounts to unemployment. Only economies that are planned, where the state plays a significant role and where the public sector is a big employer, can withstand pandemics economically.

Herein lies a lesson for India — the free market economics that we embraced three decades ago has laid the structural foundations for our response to Covid and how it has affected us. Even now, there is an opportunity for a rethink. Unfortunately, interests of capital are too deeply entrenched in our political economy for any change of direction to be possible.

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