Covid Crisis - Extreme Injustices and Inequalities of Gloabl Economic System (February 07, 2021)

Covid Crisis and Shallowness of Neo-Liberal Policies

The webinar focused on understanding the complexities and paradoxes of capitalism and neo-liberalism pertaining to Covid-19 situation especially after the distribution of the vaccine by pharmaceutical companies and policies of the governments supporting their profiteering. As evident from the theme of the webinar, the discussion intended to highlight the injustices and inequalities of the global economic system towards poor countries and regions and the poorer people within the rich countries. Though a danger to the life and wellbeing of the humanity at large, the Covid 19 was being used as a business opportunity as a huge proportion as, according to some estimates, the pharmaceutical companies were earning around 70-80% profits. Besides that, the poor countries were left at the mercy of the pandemic. As an example of such countries, the socio-political and economic situation of Pakistan was discussed in length by well-known economist and social theorist, Dr Kaiser Bengali.

Ever Widening Inequalities

The theme of the program was explained by OPP’s moderator through a PowerPoint presentation. He said world situation under Covid was more apparent since our last webinar on this issue, which was meant to understand the pandemic and its possible impacts. He reminded that OPP had predicted that the gap between haves and have-nots will increase with an intensified conflict between civil liberties and surveillance. There will be grave and deeper risks to democracy as polarization and extremism will rise in the societies. Individual privacy will come under great threat in the pretext of health monitoring. The bigger governments will make a comeback with joblessness as a small business will wipeout giving an incredible increase in the wealth of billionaires who will invest eagerly in trade wars and authoritarianism. 

 

He said all such grave prediction, unfortunately, were coming true. He told that more than 200 million people had entered extreme poverty while 2020 was the Year of the Rich with 1100 billion-dollar increase in wealth. On the other hands, the theft of Vaccine funds, falsified vaccines, nepotism, underutilization and leakage of emergency funding was the order of the day. Giving the examples of Hurricane Katrina, Tsunami, Iraq war etc. he explained, how disaster capitalism exploited the disasters to implement their agenda.

A case study of Poor countries under Covid 19 pandemic 

Dr Kaiser Bengali divided his presentation into two parts – pre and post-Covid. He discussed the evolution of the economy in Pakistan to explain the flawed concepts and policies of the world economic system and its crony set up at national level existing in almost all poor countries. He divided the economic history of Pakistan into two phases: 1947-77 and 1977 onwards. He said in its first phase, Pakistan created huge economic capital and built fundamental infrastructures such as dams, canals, highways, power stations, ports, heavy industries etc. It changed the economic geography of the countries from a barren land to a rich agricultural country. He said it was not the private sector or Bretton wood institutes rather it was public sector lead by PIDC that put Pakistan on the path of economic growth and human development. After 1977, however, the Pakistani ruling elite converted the country from growth orientation to security orientation and started building debts which were used in non-development expenditures.

He said Pakistan recorded 21% growth rate in its first phase (1947-77), which fell to 2% in its second phase as Pakistan became a security state and stopped investing in human growth sectors such as education, health, infrastructure etc. Explaining the current situation, he said Pakistan has ceased to produce wealth by goods production rather it was making money from stock markets etc. becoming a “Casino Economy”, which does not create jobs. This led to handing over effective control of the economy in the hands of foreign creditors. He denounced the commonly held myth that nationalization hurt Pakistan economy, rather, he said, it helped to rebuild the economy. He said Covid 19 situation has exposed the capitalist system and its injustice. He suggested that Pakistan should abandon export lead growth, reinvent its agriculture abandoning cash crops such as cotton and sugarcane and seek other sources of revenues instead of GST. 

 

He said Covid 19 has shown that the profit orientation of the capitalist system and its prescriptions for poor countries are not working. In every crisis, the private sector scream for “Uncle” and governments must rescue them. Pakistan needs to focus on Housing, Utility, Health, Education and Public Transport. We will have to give universal social security to the poor. Especially after Covid 19, at least 50% of the population needs support from the government. It was possible only by reengineering the economy from export orientation to domestic market needs. It was possible only by reducing non-developmental expenditures such as military and civil bureaucracy. He said Pakistan needed a paradigm shift in favour of people and their growth. 

The Way Out of the Crisis 

The question-and-answer session created a rich and lively debate between participants and the speaker. One participant asked about the role of the military in the economic sector and another wondered why pharmaceutical companies could not work together and why there was no fair distribution of Covid vaccine in Europe and around the world. Dr Bengali said the world has never been a fair world and powerful nations do aggression against poor nations. He said a new kind of Vaccine Nationalism was emerging in the world. Responding to another question, he said all the governments in Pakistan, military or civil, sought international monetary institutes to seek quick solutions and now they are subjected to their dictates. 

Another participant asked how to develop new economic paradigm without losing connection with IMF, WB and WTO. Responding to that, Dr Bengali said people needed to organize themselves and fight for their rights. He gave an example of the farmers' movement in India. A participant pointed out that it was not PIDC rather it was WB who funded the Pakistan economic growth in the first phase. Dr Bengali explained that till the 70s, Pakistan opted to take Project Loans and after that, it resorted to Program Loans and now we are taking loans to collect garbage from our streets and we need loans to pay back interest on our debts or to pay salaries to employees. About CPEC, he said possibilities of Pakistan getting out of the Western economic system and adopting the Chinese system are remote and there were no long term benefits in CPEC as it is very poorly designed. For example, 91% of Gwadar port revenues will go to China and 9% to Pakistan. He said CPEC was only a ploy to faceoff India. It has no benefit for Pakistan and especially for Balochistan. 

A participant mentioned vaccine wars among countries while saying that vaccine nationalism was on the rise and hospitals had become shops, which were out of the reach of the poor segments of the society. He asked about a possible impact on the global economy. Dr Bengali said those countries that have made the vaccine and had invested in their health sector will benefit whereas countries like Pakistan will have to take loans for the vaccine. Within the country, the rich will immediately access the vaccine, the gap between rich and poor and the mortality rate will rise. He said Covid will become a disease of poor and lower-middle classes.

He said new liberal capitalists launched massive campaign to blacken the face of the public sector saying that it was only a burden. The resultant dominance of the private sector turned everything into commodity stripping all the moral values. A teacher is no longer a guide, rather an employee. The Pakistan skill level is at the bottom of the world. We are simply not able to take advantage of trade agreements or other opportunities. The whole model of export-led growth has bankrupted our economy. We are a resource-rich country we can produce all the food, clothing etc. For this, we should produce basic commodities ourselves.

OPP, in their closing remarks, again referred to the disaster capitalism and its predatory nature.  As a result, the recovery period of poor countries will be prolonged. Millions of more people are being pushed into extreme poverty while the concentration of wealth will grow. Rightwing extremism, conflicts, violence migration etc. will increase. The world needs to reassess investments in healthcare and education, not leaving them to the free market. 

Report by: Ceciel Shiraz Raj is a freelance journalist, writer and poet. He writes for various national and international media outlets.