51吃瓜

You pay little attention to the systems of your body 鈥� circulatory, digestive, pulmonary 鈥� unless something goes wrong. These automatic systems ordinarily go about their business, like unseen clockwork, while you think about a vexing problem at work, drink your morning cup of coffee, walk up and down the stairs and head out to your car to begin your morning commute. If you had to focus your attention on breathing, pushing blood through your veins and metabolizing food, you鈥檇 have no time or energy to do anything else. The body abhors the micromanaging of the mind.

The same applies to the world鈥檚 markets. They whir away in the background of your life, providing loans to your business, coffee beans to your nearby supermarket, labor to build your house, gas to fill your car. You take all of these markets for granted. All you have to concern yourself with is earning enough money to gain access to these goods and services. That鈥檚 what it means to live in a modern economy. The days of hunting and gathering, of complete self-sufficiency, are long past.

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And then, in a series of sickening shifts, the markets go haywire. As with a heart attack, you no longer can take the optimal performance of these systems for granted.

Cardiac Arrest

The coronavirus crisis has thrown the global economy into cardiac arrest, and now you are acutely aware of the very markets that you had previously just assumed would function as normal. The first indication was the precipitous drop in the stock market that took place in late February. Then, as the United States began to enter quarantine, the labor market collapsed, and hundreds of millions of people were suddenly out of work. Shortages in a few key commodities 鈥� masks, ventilators, toilet paper 鈥� began to appear.

It is one of the central tenets of laissez-faire capitalism that markets behave like automatic systems, that an 鈥渋nvisible hand鈥� regulates supply and demand. Market fundamentalists believe that the less the government interferes with these automatic systems, the better. They argue, to the contrary, that markets should increasingly take over government functions: a privatized post office, for instance, or Social Security accounts subjected to the stock market.

Market fundamentalists are like Christian Scientists. They refuse government intervention just as the faithful reject medical intervention. Much like God鈥檚 grace, the invisible hand operates independently of a human plan.

Then something happens, like a pandemic, which tests this faith. States around the world are now spending trillions of dollars to intervene in the economy: to bail out banks, save businesses, help out the unemployed. Countries are imposing export controls on key commodities. As in wartime, governments are directing manufacturers to produce critical goods to fill an unexpected demand for greater supply.

These are emergency interventions. The market fundamentalist looks forward to the day when stay-at-home restrictions are lifted, people go back to work, the stock market barrels back into bull mode and the invisible hand, with perhaps a few Band-aids across the knuckles, returns to its job. But some pandemics fundamentally alter the economy. In such emergencies, people realize that an economy is constructed and thus can be reconstructed. Are we now at just such a moment in world history? Will the coronavirus permanently transform the relationship between the state and the market? Let鈥檚 take a look at three key markets 鈥� oil, food and finance 鈥� to measure the impact of the pandemic and the prospects for transformation.

Oil

In 2007, Ecuadorian President Rafael Correa offered to  beneath the Yasuni national park in exchange for $3.6 billion from the international community. No one took him up on the offer.

When the US price of oil went below zero last week, I immediately thought of Correa鈥檚 offer. The mainstream scoffed at the Ecuadorian leader back in 2007. How on earth could you possibly propose to keep oil under the earth? The world economy runs on fossil fuels. You might as well ask your kid to keep her Halloween candy uneaten in the back of the cupboard. Today, however, the world is glutted with oil. The global recession has radically reduced the need for oil and gas.

In the United States, transportation absorbs nearly 70% of . With airplanes grounded, fewer trains and busses in operation and highways uncongested, the demand for oil has dropped precipitously. Businesses, too, are using less energy. It鈥檚 not just oil. Companies devoted to pumping natural gas out of shale deposits are filing for bankruptcy as their market value drops precipitously: the price of a share of fracking giant Whiting Petroleum fell from $150 a couple of years ago to 67 cents on March 31.

It鈥檚 gotten to the point that you almost can鈥檛 give away the stuff. After all, if you somehow found yourself with a bunch of barrels of oil, where would you store it? Oil storage tanks in the United State are near capacity. 鈥淥il supertankers are looking like petroleum paparazzi, crowding the Los Angeles shoreline, either as floating storage or waiting on some kind of turn in sentiment,鈥� Brian Sullivan . 鈥淲ith prices higher in coming months, for now it pays to sit on oil and hope to sell it for more money down the pipeline.鈥�

Oil-producing nations, after years of boosting their supplies, finally agreed in mid-April to  by 10% 鈥� about 10 million gallons a day. In other words, they are deciding to leave oil in the ground. Now, however, it doesn鈥檛 even qualify as a half-measure, since demand has dropped by 35%. The oil producers are awaiting the end of recession, when the quarantined go back to work, and everyone jumps on their transport of choice to make up for lost travel. They are awaiting a return to normal.

But the market for fossil fuels is not normal. The notion that the invisible hand will steer economies in a sustainable direction is hogwash. We are long past the moment when we should have paid Correa and everyone else to leave the oil and gas in the ground and move toward a world powered entirely by clean energy. The market treats the environment either as a commodity like any other or as an 鈥渆xternality鈥� that doesn鈥檛 factor into the final price of goods and services. That is so 19^th century.

Climate change demands an intervention into the energy markets with restrictions on production, subsidies for clean energies like solar, and government purchases of electric cars. Returning to 鈥渘ormal鈥� after the pandemic is not a viable option.

Food

Like the oil exporters, food producers in the United States are restricting production as well. In Delaware and Maryland, chicken producers are euthanizing  because the processing plants don鈥檛 have enough workers. Sickness and death in these facilities, which has caused closures that are disrupting the supply chain, has prompted Trump to  as 鈥渃ritical infrastructure鈥� that needs to remain open. Meanwhile, thousands of acres of fruits and vegetables are  in Florida because of the suspension of bulk food sales to schools, theme parks and restaurants. The shortage of pickers 鈥� often migrant laborers whose mobility has been restricted 鈥� is complicating harvests.

Unlike oil, however, the overall demand for food remains high. The grocery business is . Food banks are  by a surge unlike any in recent decades. The US Department of Agriculture (USDA) ordinarily could swoop in and buy up surplus production 鈥� as it did for soybean growers during the trade war with China 鈥� for use in food banks and other distribution programs. But as with so many other government agencies in the Trump era, the USDA has been , despite repeated pleas from growers and governors.

The pandemic is highlighting all the problems that have long plagued the food supply. First, there is the mismatch between supply and demand. Around  didn鈥檛 have enough to eat in 2018, a figure that had been rising for three years in a row and contrasts with another rising number: the 672 million obese people in the world. In the United States, fully  goes to waste every year. So, obviously the invisible hand does a pretty poor job of achieving market equilibrium.

Second, despite a growing movement to eat locally and seasonally, the food system still eats up a huge amount of energy. The problem lies not so much with bananas arriving by cargo ship, which is relatively efficient, but with perishable items . And it鈥檚 what we eat, rather than where the products come from, that matters most. 鈥淩egardless of whether you compare the footprint of foods in terms of their weight (e.g. one kilogram of cheese versus one kilogram of peas); protein content; or calories, the overall conclusion is the same,鈥�  Hannah Ritchie. 鈥淧lant-based foods tend to have a lower carbon footprint than meat and dairy. In many cases a much smaller footprint.鈥�

Third, because of economies of scale and abysmal labor practices, food in the industrialized world is too often grown by agribusiness, processed by transnational corporations and picked or handled by workers who don鈥檛 even make close to a living wage.

Returning to this kind of food system after the pandemic fades would be truly unappetizing. The livable wage campaign must spread to the countryside, meat substitutes must get an additional lift through government and institutional purchases, and innovative programs like the in Europe 鈥� which sells extra restaurant and supermarket food at a discount 鈥� must be brought to the United States to cut down on food waste and get meals to those in need.

Finance

The financial crisis of 2008-09 exposed the fragility and fundamental inequality of the global financial system. But all along the invisible hand has been pickpocketing poor Peter to pay prosperous Paul. Bankers, stockbrokers and financial gurus have constructed a casino-like system that occasionally doles out a few pennies to the people playing the slots even as it enriches the house 鈥� the top 1%-2% 鈥� at every turn.

The most outrageous part of this scheme is that the financial crisis demonstrated just how bad the financiers were at their own game. Not only did they not go to prison for illegal activities, they were 鈥� with a few exceptions 鈥� not even punished economically for their market failures. They were either too big, too rich, or too powerful for the government to allow them to fail.

In The New Yorker, Nick Paumgarten  a prominent investment banker at a bond fund: 鈥�’In the financial crisis, we won the war but lost the peace.’ Instead of investing in infrastructure, education, and job retraining, we emphasized, via a central-bank policy of quantitative easing (what some people call printing money), the value of risk assets, like stocks. ‘We collectively fell in love with finance,’ he said.” 

After the last financial crisis, the wealthy, who are heavily invested in the stock market, did quite well, while everyone else took a hit.  Colin Schultz in Smithsonian magazine: 鈥淲hile families hovering around the average net worth lost 36 percent over the past decade 鈥� dropping from $87,992 in 2003 to $56,335 in 2013 鈥� people in the top 95th percentile actually gained 14 percent in the same tumultuous period 鈥� going from $740,700 in 2003 to $834,100 in 2013.鈥�

The Trump administration is clearly in love with finance. Even before the pandemic hit, Trump鈥檚 tax reform provided the top six US banks with . That鈥檚 more than what the 2008 bank bailout provided 鈥� and remember, banks mostly paid back those earlier loans. The stock market also benefited from an  in stock buybacks 鈥� $2 trillion combined in 2018 and 2019 鈥� that enriched shareholders at the expense of workers.

The $2 trillion in initial stimulus funds that the US government is providing this time around has gone to individuals (those Trump-signed checks in the mail), small businesses (except when it went to big businesses), hospitals and unemployed workers. There鈥檚 also money for farmers, schools, food stamps, and (alas) the Pentagon. Future rounds of stimulus spending might include infrastructure, more aid to states and localities and funds for smaller banks.

There鈥檚 not much enthusiasm, at least publicly, to bail out Wall Street. Stock buybacks were explicitly excluded from the stimulus package. Meanwhile, the stock market has begun to climb out of the basement in the last couple weeks, largely on the strength of the news of all this new money being pumped into the economy.

But just as the tax bill was a covert giveaway to financial institutions, so have been several of the administration鈥檚 pandemic responses. Quantitative easing, by which the Federal Reserve buys bonds and mortgage-backed securities, has increased the amount of liquidity available to financial institutions. In the latest effort, the Fed announced that it will buy $500 billion in corporate bonds, but without any of the to other assistance such as limits on stock buybacks or executive compensation. The banks are even nickel and diming people by  stimulus check deposits to cover overdrawn accounts.

Out of a total pie of around $6 trillion in potential stimulus spending, banks and major corporations are well-placed to grab the lion鈥檚 share. Writes  at TomDispatch: “In the end, according to the president, that could mean $4.5 trillion in support for big banks and corporate entities versus something like $1.4 trillion for regular Americans, small businesses, hospitals, and local and state governments. That 3.5 to 1 ratio signals that, as in 2008, the Treasury and the Fed are focused on big banks and large corporations, not everyday Americans.”

Invisible hand? Hardly. That鈥檚 the very visible hand of government tilting the financial markets even more in favor of the rich. As for the invisible enrichment that goes on beneath the surface, otherwise known as corruption, the Trump administration has  that could bring those abuses to light.

It鈥檚 time to end America鈥檚 love affair with finance. That means, in the short term, higher taxes on the very rich,  built into all bailouts and reviving all the reasonable proposals for reforming the financial sector that were either left out of or didn鈥檛 get full implemented in the Dodd-Frank Wall Street Reform and Consumer Protection Act passed in the wake of the last financial crisis.

Post-Pandemic Economics

The Black Death depopulated Europe, killing  of the population in the middle of the 14^th century. Feudalism depended on lots of peasants working the land to support the top 1% of that era. By carrying off so many of these workers, the Black Death made a major contribution to eroding the foundations of the dominant economic system of the time.

The coronavirus will not kill anywhere near as many people as the Black Death did. But it may well contribute to exposing the failures of 鈥渇ree markets鈥� and the scandal of governments intervening in the economy on behalf of this era鈥檚 1%. The pandemic is already, thanks to huge stimulus packages, undermining the 鈥渟mall government鈥� canard. A state apparatus deliberately hobbled by the Trump administration 鈥� after earlier 鈥渞eforms鈥� by both parties 鈥� did a piss-poor job of dealing with this crisis. That doesn鈥檛 bode well for dealing with the even larger challenge of climate change.

The short-term fixes described above in the oil, food and finance sectors are necessary but insufficient. They shift the balance more toward the government and away from the 鈥渇ree鈥� market. They鈥檙e not unlike the New Deal: reforming capitalism to save capitalism. But this pandemic is pointing to an even more fundamental transformation, to a new definition of economics.

The tweaking of markets to achieve optimal performance is much like the rejiggering of earth-centric models of the universe that took place in the Middle Ages. These models became more and more complex to account for new astronomical discoveries. Then along came Copernicus with a heliocentric model that accounted for all the new data. It took some time, however, for the old model to lose favor despite its obvious failures.

The global economy remains market-centered, even though the evidence has been mounting that these markets are failing us and the planet. Tweaking this model isn鈥檛 good enough. We need a new Copernicus who will provide a new theory that fits our unfolding reality 鈥� a new environment-centered economic system that can maximize not profit but the well-being of living things.

*[This article was originally published by .]

The views expressed in this article are the author鈥檚 own and do not necessarily reflect 51吃瓜鈥檚 editorial policy.