The inequality virus

By the end of the Cold War, the buoyancy of the free market and the ideological triumph of liberal globalization over state capitalism in the former Soviet Union and its satellites prompted American political scientist, Francis Fukuyama, to declare the ‘end of history’, arguing that Western liberal democracy ‘could not be improved on’ and represented the endpoint of ideological evolution (Fukuyama, 1992: xi). The drive for deregulation under neoliberalism, however, removed restraints from the banking sector to separate savings and investment divisions and resulted in speculative lending, mostly in the property market. When Lehman Brothers collapsed in 2008, the global banking sector was sitting on a pile of toxic debt that needed a state rescue package not seen since the Great Depression to prevent the banks from going under (Grice, 2009; Collins, 2015). The response to the crisis in the European Union and North America was to double-down on neoliberalism by imposing wage freezes, cutting public services and eroding the welfare state, an austerity programme imposed under the guise of debt management. The results were predictably disastrous. By the end of the decade following the crash, 3.4 billion people were living on less than $5.50 per day, with the rate of poverty reduction having halved since 2013 from 1 per cent a year to 0.5 per cent a year. In the same period, the number of billionaires doubled (Oxfam, 2019: 9–10).

The COVID-19 pandemic, therefore, impacted on the global economy at a time of extreme vulnerability for millions across the world already struggling to meet essential needs after ten years of austerity. Described as the ‘inequality virus’ by Oxfam, COVID-19 has ‘exposed, fed off and increased existing inequalities of wealth, gender and race’ (Oxfam, 2021: 2). Former United Nations’ Rapporteur on Extreme Poverty and Human Rights, Philip Alston, similarly suggested that ‘COVID-19 is a pandemic of poverty, exposing the parlous state of social safety nets for those on lower incomes or in poverty around the world’ (2020: 9). As in 2008, it was the taxpayer who came to the rescue, with central banks injecting $9 trillion into economies worldwide. Once again, billionaires benefitted, with much of that stimulus going into financial markets and ‘from there into the net worth of the ultra-rich’ (Sharma, 2021). India, for example, saw the wealth of billionaires soar to more than 17 per cent of its gross domestic product (GDP), one of the highest shares in the world. Globally, Forbes’ annual rich list in 2021 recorded the number of billionaires at 2,755, an increase of 660 on 2020 (Forbes, 2021). The collective fortune of these billionaires was £13.1 trillion, an increase of $8 trillion on 2020, pointing to how the super-rich had profited from the stock-market, with the world’s richest person, Jeff Bezos, earning $13bn in just one day (20 July 2020) at the height of the pandemic (Neate, 2020). A few months earlier, in April 2020, 20 million Americans were reported unemployed, the highest jobless total (at 14.7 per cent) since the Great Depression, as shuttered businesses shed workers during extended economic lockdowns (Kelly, 2020).

While the state response to the 2008 crisis was to squeeze wages and force us to work harder for less, the pandemic demanded that economic activity be severely contracted and that most employees stay at home. The world also discovered just how ‘essential’ public-facing, frontline workers were to our surviving COVID-19. They included drivers, bin-men and women, supermarket workers, carers and of course health workers. By July 2020, a few months into the pandemic, Amnesty International (2020) calculated that 3,000 health workers in 79 countries had died after contracting COVID-19. Moreover, 60 per cent of the 540 health workers who died in the UK identified as being members of the Black and minority ethnic sector (Amnesty International, 2020). The pandemic preyed upon and exposed the sexism and racism inherent in the neoliberal economic system. Oxfam reported in early 2021 that in Brazil, people of Afro-descent were 40 per cent more likely to die of COVID-19 than White people. By June 2020, 9,200 Afro-descendants would still have been alive if their death rate had been the same as White people (Oxfam, 2021: 8). Oxfam summarized how neoliberalism had underpinned and entrenched the inequalities exposed by COVID-19 when it suggested: ‘This inequality is the product of a flawed and exploitative economic system, which has its roots in neoliberal economics and the capture of politics by elites. It has exploited and exacerbated entrenched systems of inequality and oppression, namely patriarchy and structural racism, ingrained in white supremacy’ (Oxfam, 2021: 10).

Neoliberal retreat?

Some economists (MacFarlane, 2021; Mason, 2021) have sourced the pandemic itself to the economic system’s encroachment on nature, which has transmitted animal diseases to humans. COVID-19 is ‘not a random act of God’, argues MacFarlane: ‘Like climate change, it is a symptom of accelerating environmental breakdown, which in turn is a product of an economic model that is reliant on growth and accumulation’ (MacFarlane, 2021: 123). Government responses to the pandemic ripped up the austerity narrative of the post-2008 period by injecting massive amounts of spending into fiscal supports to businesses and the furloughing of workers. The International Monetary Fund estimated the total global spend at $9 trillion by May 2020, which suggested that the days of ‘slash and burn’ economics were over (Battersby et al, 2020). While much of this fiscal support delivered corporate welfare to undeserving multinationals (Reich, 2020), governments appeared to concede that the austerity approach of low taxes, a small state and balanced budgets had to be abandoned to rescue the global economy. The state appears to be back as a development actor after COVID-19 exposed the collective jeopardy arising from the chronic underfunding of public services, particularly healthcare (Lal et al, 2020). In India (our example), the government has stubbornly implemented neoliberalism despite the chronic problems that have beset the health sector and wider economy during the pandemic. These problems are considered in the next section.

Entrenched neoliberalism amid emerging neo-Keynesianism

The root causes of the social misery that was reported during the COVID-19 pandemic are embedded deep in the structure of neoliberalism. The pandemic set forth in sharp relief the negative impacts of the unbridled pursuit of profit, while – in many regions – whittling away the hard-fought social welfare infrastructure. The reasons for the incapacity of the public systems to respond adequately to the heath emergency were not episodic, nor will such incapacities disappear with the pandemic. Both the causes and the impact are a function of four decades of conscious policy shifts towards a set of neoliberal prescriptions – including in the health sector.

The eruption of large-scale infection during the COVID-19 pandemic in the first quarter of 2020 was a cataclysmic event for many across the world. While the large-scale illness and death was indeed a shock, what was even more unbelievable was the swiftness with which public health systems came under severe strain due to the pressure of citizens seeking curative assistance. Even though a series of platitudes were expressed about the health infrastructure being overwhelmed, the reasons for such an outcome are not difficult to find under neoliberal policy prescriptions, which have hollowed out the liberal state and led to a concomitant shrinkage of public services (Rao, 2010). The simplest way to underline this argument is to look at the sources of health expenditure in India between 2000 and 2018 (WHO, nd). Public expenditure on health remained low throughout the previous two decades, with some spikes but registering a sharp decline in more recent years. Further, over the past two decades, out-of-pocket spending on health – money spent from regular earnings without any public or insurance support – makes up around three quarters of the total expenditure on health. It should thus be no surprise that the health system faced a veritable collapse under the demands of treatment during the pandemic. In different terms, the right of – or to – life itself was thus forced into a contested reality owing to the decline in the public health infrastructure (Singh et al, 2020: 1).

Excess deaths in India owing to the incapacity of the health system is a fact, the precise scale of which is a subject of debate. While official data claimed around 461,000 deaths as of 7 November 2021, some experts have calculated this figure to be underreported by a factor of 5 or more (Hindu Data Team, 2021). The scale of death owing to the pandemic was such that in the absence of financial wherewithal, thousands could not be cremated and were consigned to rivers or buried in shallow graves along the river beds (Pandey, 2021). Further, the overwhelming of the hollowed out public health system was also evident in the acute shortage of medical oxygen and other treatments at the peak of the pandemic – something that needed an order by the Supreme Court to be addressed (Supreme Court Suo Motu Writ Petition [Civil] no[s]. 6/2020). Such orders from the apex court notwithstanding, the degree to which the issue could be addressed by the under-capacitated state and the overwhelmed health system is questionable.

Another slice in the story of the neoliberal state that added to the misery and pain of the pandemic was the delay in rolling out the vaccine owing to the depletion of the country’s vaccine capacity (Bhushan, 2021). Privatization of large public sector vaccine manufacturing capacity under the neoliberal reforms ensured that the country was dependent on one corporate manufacturer – the Serum Institute of India, which in turn needed time to ramp up production to the scale required. Further, even amid the devastation of the pandemic, the state was unwilling to commit resources to enhance production capacity: no public support was extended for the development of a vaccine or expansion of production facilities until the advance order was placed as late as January 2021 (Anand, 2021). The state was careful not to tread on corporate toes, the Supreme Court’s nudge towards compulsory licensing notwithstanding. The Indian public ultimately paid one of the highest rates for vaccination by the private sector. While public health institutions offer free vaccination, the depletion of such institutions meant delayed delivery, which it was vital to avoid if the pandemic was to be managed effectively. An additional factor also needs to be underlined. The neoliberal reforms in healthcare had lionized the private health providers as a solution to the gaps resulting from the depleted public infrastructure. The experience of the pandemic highlighted the extremely limited capacity of private health providers, which were easily and quickly overwhelmed by the sheer numbers involved. Furthermore, even the small proportion of people that could afford their services were left to shuttle around, losing lives waiting for a bed to become available in five-star private hospitals.

The social costs of a hollowed out Indian state owing to neoliberal reforms also unfolded in what has come to be known as the great migrant workers’ crisis of 2020 (Infante, 2020). The challenge to the right to life itself was clearly visible in the incapacity and unwillingness of the state to step up and take responsibility for supplying food to migrant workers stranded owing to the sudden imposition of a stringent lockdown from 24 March 2020 (Government of India, 2020a). The workers were suddenly left without work and access to wages and, therefore, food. Such incapacity of the state, due to a misplaced concern with public finances, meant that millions of migrant workers had no recourse but to literally walk home to their villages. Many died of sheer exhaustion, hunger, thirst or in accidents (Rawat, 2020). The government’s chief law officer claimed in court that there were no workers on the country’s highways, notwithstanding hundreds of media reports to the contrary (Prakash, 2021). The extremely meagre support that did materialize was captured in the Stranded Workers Action Network (SWAN) survey of April 2020, which found that ‘96 per cent [of those entitled] had not received rations from the government and 70 per cent had not received any cooked food’ (SWAN, 2020a). In the following month, the story remained extremely bleak: ‘About 82 per cent … had not received rations from the government and 68 per cent … had not received any cooked food’ (SWAN, 2020b). No income support was extended, and the support to farmers and businesses that was extended was in the form of ‘softer’ loans and not budgetary support.

Ad hoc support that the state extended for employment to the poor was in the form of unskilled employment under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) 2005. This provides for a demand-driven 100 days’ employment during the lean season. Work provided under the MGNREGA is manual unskilled earth work at the basic wage rate. This programme – which the current ruling Bhartiya Janata Party (Beg, 2020) had reviled as a ‘living monument of [the] failure’ of the earlier United Progressive Alliance government – saw a spurt in demand for work despite it being one that only provides unskilled manual work at very low wages. This demand emphasized the extremely distressed condition of workers – but even this avenue of eking out an extremely precarious living faltered since the number of jobs provided in April 2020 under MGNREGA was lower than that provided in the same month in 2019. Such precariousness of the right to livelihood under the neoliberal state was not limited to the poor, unskilled migrant workers between April and July 2020 – 18.9 per cent of salaried employees also lost their jobs (Vyas, 2020), with 6 million professional jobs lost. This erasure of the right to life and livelihood was compounded by GDP contracting by 23.9 per cent during the first quarter of 2020–21 – the first economic contraction in four decades (Anon, 2020). This state of employment and absent public support needs to be contrasted with the meteoric rise in the wealth of the rich and corporates during the pandemic.

The conundrum that arises from the Indian state’s management of the pandemic is the following: in a world witnessing a flurry of neo-Keynesianism, the Indian state is among the few states that continue to soldier on with neoliberal policies. The grudging and meagre social relief that has been extracted from public funds as short-term relief is indeed just that: ad hoc, short-term relief. The desperate relief measures announced by the Finance Minister in a press conference on 14 May 2020 (Government of India, 2020b) were steeped in neoliberalism. The challenge thus remains to construct a global public policy consensus towards an expansion of an interventionist (neo-Keynesian) model, where publicly funded social rights become the cornerstone of any economic growth and where public services are not merely resources for financing the aggrandisement of the rich.