Coronavirus capitalism

US authorities took the highly unusual move of suspending trading on the Dow Jones industrial exchange this week; the same day that 5% was wiped of the country’s top 500 companies and 7.25% was lost from the UK’s largest 100. Meanwhile, in South Korea temporary restrictions are being put on shorting, once again echoing some of the panic of the financial crisis.
Coronavirus then is not only the cause of much hand wringing – and washing – across the world’s health services, but also across its business leaders. As the death toll climbs, so too do the prospects of a bleak year for investors. Economists already warn shareholders to anticipate zero returns from US companies.
The disruption caused by the outbreak has served to highlight inherent weaknesses in modern capitalism. As a recent piece by Rana Foroohar in the FT pointed out, this sorry state of affairs simply demonstrates the weaknesses in a system that has until now benefited from cheap labour, an emphasis on increasing profits over increasing wages, alongside increasingly starved public services and falling taxes. Overseas supply chains that make production cheaper can also make it vulnerable.
And the decline of traditional employment relationships may also contribute to the spread of the virus. In a world where companies utilise zero hours contracts, are not obliged to pay certain tiers of workers any sick pay and that which is available from the state is unsustainable, then we will see individuals turn up to work and either catch the virus or spread it further. They simply cannot afford to self-isolate – no matter how appealing that might sound – for two weeks. And in cases where companies will bear the brunt of sick pay, it is no small burden. Delivery company Hermes, which usually sidesteps sick pay for gig workers, said it will set aside £1m to fund 15,000 couriers should they need to move into quarantine.
However not all firms that utilise gig work are following suit, and the spread of the virus to the US is inevitably feeding into the political debate about the nature of its healthcare system. So long as businesses and consumers rely on cheap supply chains overseas and weak employment rights at home, then the likelihood of the system crashing at it has done with Coronavirus this time is more likely in the future.
If anything positive can come from the outbreak it is that practices will evolve to shun short term gain and the human cost that entails, to focus on a sustainable system that protects workers and pays into public services that can withstand future health scares.

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