GUEST BLOG: Dave Brownz – Who is going to pay for the ‘recovery’?


As stated in TDB repeatedly, the pandemic is not an isolated event, but a symptom of capitalism in its terminal crisis.  The virus was released as a result of centuries of plundering and disrupting nature. Therefore, the spin coming from the ruling class that the pandemic has crashed an otherwise ‘healthy’ or ‘prosperous’ economy is fake news. 

This is exactly the argument put up by the new leader of the National Opposition Todd Muller. Once the pandemic is out of the way, National will make sure that the huge debt run up in keeping it on life support, will be managed by experts to get back to business as usual, paid for by the working class, as usual! 

I have also argued on this blog that the pandemic is an effect of terminal crisis, triggers that crisis into a crash, enforcing lockdowns to prevent the pandemic from doing even more damage. In the process we have a real time crash causing an instant depression which exposes how the capitalism system works. 

So, if by now you don’t see that capitalism is a system that exploits labour for profit to the point of driving us all to destruction and extinction, and which needs to be replaced by socialism for humanity and nature to survive, let me spell it out for you. 

The need for a lockdown was to close down business because there was no way capital was capable of dealing with the pandemic under normal working conditions which allow rapid transmission of the virus. Had public health systems been in place to manage transmission by testing and quarantining victims on the job then a mass lockdown would not have been necessary.

So why did no adequate public health provision exist? The answer as Marxists have pointed out for decades is that capitalism in structural crisis cuts its taxes as a drain on already falling profits, which means cuts in social spending including a health system able to deal with any predicted pandemic. That known risk was discounted to counter falling profits!

So, it is clear that both National and Labour led governments in the neoliberal period were responsible for the massive run down of the health system as part of an attack on the welfare state to reduce taxes on already falling profits.    

Hence while the mass lockdown imposed by the Labour Coalition is talked up by Todd Muller as necessary, he is not going to acknowledge that the cuts to the health system to save profits is the main cause of the pandemic. Rather he argues for the ‘recovery’ of a ‘prosperous’ economy by targeting the fiscal stimulus to business that can lead us out of the global depression. So much for the ‘hidden hand’ of the neo-liberal state.

TDB Recommends

We can predict that National’s ‘plan’ will continue the bailout of business but target only those businesses which are able to survive, revive and return to profitability. This will be mainly SMEs that employ most workers in this country and are the source of regional prosperity. The wage subsidy will go as a return to profitability requires market-led pay cuts, longer hours and insecure contracts. 

Larger businesses with balance sheets boosted by bailouts and theft of wage subsidies will be left to compete to see who will come out as winners, as in any depression. Most of these big corporates are already enmeshed in the state apparatus because they are ‘too big to fail’. No question that state will pick winners in the process of the recovery. The state-induced depression in Aotearoa will, under either National and Labour, become a state-managed shakedown and restructuring of big business and MSEs. 

Doesn’t all of this point to one thing? That for capitalism to survive, the state acts to manage the relation between labour and capital when the market fails. But that each time the market fails the situation is worse as capital is exhausting its host – nature. Labour pays the total price for the survival of a diminishing number of increasingly large monopolies. 

In the process labour shares the same fate as nature as a whole, its labour power is sucked out in greater productivity (greater exploitation) to compensate for declining profits. The working class is divided between those in work surviving on slave wages, and those who are cast into the labour reserve army to die, pandemic or not. 

Yet the pandemic stripped all the ideological bullshit from this process. The need to drive workers back to work proves that without labour power capitalism is dead. Jobs are needed by capital to produce value and hence profits. That’s what the hurry to ‘create jobs’ is all about. Those consigned to the scrap heap prove that it is only exploitable workers that capitalism wants, the rest can die. 

A few fundamentals recapped. Capitalism is driven by the exploitation of labour power which is the capacity of labour to create value in the form of commodities (law of value). The definition of value is the socially necessary labour time to create it.  

In order for this to work capital has to separate workers from the means of subsistence so that wages are needed to live. The reserve army of labour mired in misery competes for jobs and drives down the value of the wage. The pandemic has produced a graphic picture of this in the misery of the lockdown, especially in the poorer countries like India and South Africa. 

Unlike the mythical free market ideology, capital cannot live in equilibrium. To extract more value, it replaces living labour with ‘dead labour’. This is the ‘organic composition’ of labour. This is the previous labour required to create machines which do not produce more value (in fact they use up or depreciate dead labour). 

The competition to extract value from labour exhausts its value producing capacity as it sucks nature dry for profits. Marx explained how this led to a long-term tendency for the rate of profit to fall (LTRPF) and ultimately the stagnation and collapse of capitalism in a series of worsening crashes. 

Back to the future. We are now living through this predicted decline and fall of the capitalist system. Attempts at ‘recovery’ must make the working class pay the price. Yet the pandemic shows us already that workers are not prepared to pay that price. 

First, everywhere we see that where the forced lockdowns leave workers without money to survive food riots are occurring. Workers are not prepared to rot on the scrapheap of the reserve army. They are demanding the right to live, and get PPE and money to survive. 

This is workers asserting their control over their own lives and means of subsistence where jobs are denied them. They are challenging their separation from their livelihoods. Where they are met with repression by state forces, they step up their resistance. As Marx said revolution will come when the masses have nothing to lose but their chains.

Second, where the capitalist ruling class imposes a ‘recovery’ in the form of Trump’s “opening up” and forces workers back to work in unsafe conditions workers are refusing to go back or striking on the jobs. Over 200 strikes have occurred in the US in the last two months most recently by auto workers refusing to work on the production lines without health and safety protection. 

Here too, workers are demanding health and safety conditions necessary for work in the post-modern pandemic of the decline and fall of capital, refusing to pay for the bosses’ crisis with their own lives. 

The message is clear. Capital lives off the labour power of workers. They refuse to accept the conditions imposed by capital in its terminal crisis to pay with their lives. When the tiny ruling class defending its pile or wealth threatens nature and humanity with destruction, then the fundamental contradiction facing humanity is starkly posed. Life or Death.

Either we succumb to the death drive of capital towards extinction, or we rise up and oppose it with a massive global movement to take back control over our lives, our means of subsistence, and control of the economy and political decisions necessary for our survival.  

Seize the time!

Dave Brownz is TDBs guest Marxist Blogger because ever left wing blog needs a Marxist.


  1. I pretty much agree with all you have said, Dave.

    I would like to add two components of the system you did not mention.

    1. Although the system is described as capitalism, in most cases there is no capital. At the time of the great expansion of capitalism gold was generally not used for payments or used as collateral: promissory notes, issued in far excess of the gold to back them were!

    The Bretton Woods agreement saw the Pound displaced by the Dollar. The deal done with the House of Saud secured oil for the Western World on the basis of recycling US dollar back to the US in exchange for ‘security’ in the form of military hardware and personnel.

    The closing of the gold window in 1971 (by the Nixon administration -Tricky Dicky and all that) meant that the promissory note system was largely abandoned and the ‘printing press’ system was adopted. Can’t pay with tangible resources: just print the money you need and use that printed money to ravage nature and push up the population -thereby generating increasing numbers of debt slaves- and use the military to gain/retain control of resources.

    Once computerised banking became almost universally adopted the ‘printing press’ system was phased out and replaced with the ‘keystroke system’, whereby loans or grants were generated at the tap of a finger on a keyboard.

    The final phase of expansion of virtual assets was the implementation of ‘derivatives’ system, whereby loans could be bundled and sold as collateralised debt obligations. And the final nail in the coffin of the financial system was the widespread adoption of computerised trading systems, whereby computers were programmed to make fake bids on equities and then cancel the fake bid milliseconds later, causing equity prices to be jigged around (usually upwards) with no human really in control.

    Unstated throughout the entire history of fractional reserve banking was the matter of where the money came from to pay the interest charged on loans. As long as it was possible to steal vast quantities of gold, silver, diamonds, timber, oil etc. from colonised nations it was always possible to expand the resource base of ‘developed’ nations. Once the previously subservient nations began to assert their rights to their own natural resources the resource wars ramped up to ever higher levels.

    The constant decline in the purchasing power of the money in people’s pockets was passed off as ‘inflation’, and governments and central banks had the gall to declare inflation targets, as if devaluation of fiat (declared but with no tangible backing) currencies was a good thing! (For me as a child, a farthing -1/960th of a pound- had spendable value, and a half-crown (50 cents in modern NZ currency) was quite a treasure).

    The ‘kick the can down the road’ (on the basis that at some point society will be able to generate the wealth necessary to retire debt) system has been in place since the first major crisis of the twenty-first century -the dotcom meltdown of 2001 and its flow-on effect to the general market. The unravelling of the system over 2007-2009 that was associated with fraudulent issuing of loans to people who were known to be incapable of making could mortgage payments was patched up via government-instigated fraud and jigging down of interest rates by central banks to historically low levels approaching zero (an in some cases NEGATIVE). The ongoing crisis that resulted from peaking of conventional extraction around 2007 was overcome via encouragement of fracking and extraction from tar sands via ‘junk bonds’ at extraordinarily low interest rates.

    The oversupply that has resulted from Covid-19-related demand destruction, in combination with the price war in and around OPEC, has put the nail in the coffin of the US fracking sector. Only a surge in oil prices [to around $60 or more] could facilitate resurrection of fracking and tar sands extraction. But in a world suffering financial catastrophe, the chance of oil prices rising to a level that make extraction from low EROEI sources is remote.

    2. The entire capitalist system is predicated on converting natural resources into waste using finite supplies of energy (which are rapidly depleting). The quantity of waste in the general environment has already reached the point of generating severe negative feedbacks but the system continues to generate humungous quantities of waste and desires to increase the generation of waste as the inevitable consequence of the desperation to keep the system running. The ‘plan’, as you correctly noted, is to render the Earth uninhabitable for humans and most other vertebrate species. But capitalists who endorse the loot-and-pollute system that capitalism represents will never acknowledge the chemical, physical, biological, geological facts and persist with ideological mantra based on infinite growth -of population, of energy consumption, of resource consumption, of waste generation- on a finite planet.

    The absurdity and mathematical impossibility of continuing on the path of the past 500 or so -of looting and polluting our only ‘home’- falls on ears that are generally deaf.

    Thus, NZ society, along with every other ‘advanced’ society, heads for the crash-and-burn phase of capitalism still attempting to resurrect financial, economic and social arrangement that not only have gone way past their use-by date but should never have been adopted in the first place.

    The good news is that the major source of misinformation and corruption -the US- is further down the path to collapse than most other nations.

    Charles Hugh Smith has published a must-read article on where the money currently is going and why collapse is the only possible outcome.

    • AFKTT
      There isn’t an answer that will save the “World” the way it, is and most are looking for answers in little dead end crack and crevices of hope.

      There is so much crap on the net promising a future if only greening of society was achieved but of course the multiple intertwined problems cannot be dealt with together or one at a time unless a simpler society is set up.
      Unfortunately much fewer people will be involved and how that all might work out is unknown.
      Collapse is highly likely to be coupled with population reduction, oe even drastic population reduction.
      Money may not matter further into collapse but sure as hell food and water will.

      Conflict is probably inevitable.

      China has an advantage in as much as when a path is carefully planned they just do it.

      The Western World haggle over who gets what and most wars over the last 120 years or so have been over stealing land and resources. That pattern is pretty much set and NZ is locked in with a viscous crowd.
      Can we change it a little from within is almost a stupid question.
      We need to be kind to our kids and family and enjoy them while/if we can.
      Many people in NZ have lost that luxury already.

  2. That is a mighty wind Afew… Thanks for that detailed exposition which is what I have been thinking about.. In return I send you a laugh, if you choose to accept it.
    This is a laugh from the UK about cults, which is basically what capitalism has turned out to be.

  3. Thanks for your reply AFEW.

    I think the two points you raise are explained by Marx in his analysis of capital. Marx didn’t actually talk much about capitalism. He talked of the capitalist mode of production of generalised commodities where labour-power was itself a commodity exchanged at its value, yet with a use-value of producing more value than its own exchange value.

    Exchange of various commodities evolved to the point where money became the universal equivalent, the means of exchange and hence a measure of value (snlt above). Whatever tokens used coins, paper or digital, they must be exchangeable for money as a measure of value, usually something whose value is relatively stable say gold or silver.

    Money is never the root cause of breakdowns in capitalist production since it doesn’t create value any more than value can increase with the exchange pf any commodity. I outlined the cause of crises above as the breakdown in the production of value. The LTRPF reaches the point where further investment of money capital in production of commodities ceases and is diverted into speculation on existing commodities (land, houses, as well as financial instruments that claim ownership of some asset).

    You are correct to claim that much in capitalism is not capital. For Marx this is money diverted from production into consumption of existing commodities. Because it does not represent capital he called it ‘fictitious capital’. But its remains an excrescence on the production of value, and its existence is only explained by the laws of motion of capital.

    In Marx’s day depressions restored the rate of profit devaluing constant and variable capital increasing the rate of exploitation s/c+v. Today a century and a half later capitalism has degenerated mightily, and the amount of fictitious capital that exists which can never be realised as value in exchange with commodities including money as gold or oil, will simply disappear and take with it the fictitious financial institutions of capitalism.

    We need a workers movement that expropriates the real accumulated value (historic snlt) as the productive base for a new socialist society which restores the harmony between humans and nature.

    On point 2 I wrote a post on TDB ‘Climate crisis, from Capital to Commune’ (Sept 15 2019) which relates how Marx’s theory of the Capitalist Mode of Production is grounded in the contradiction between nature and society which had definite limits. His study of the metabolic rift in agriculture illustrates his view that capitalism was parasitic on nature and would inevitably destroy its conditions of existence. It it this definite limit that we have reached today.

Comments are closed.