The State, Public Responses, and the Day After the Pandemic

The international media coverage and academic analyses have mainly focused on the magnitude of the COVID-19 crisis in the affluent societies of the North, in particular the European countries. The rather biased references to Europe, however, hide profound differences in the ways the crisis is affecting diverse countries and social sectors. This article examines the responses of the public sector to the pandemic in the European context and then suggests possible “lessons” for Latin America and other regions of the world.

A cornerstone of free-market economics is privatising gains and socialising losses. In the midst of a global pandemic, however, even fundamentalist libertarians are demanding stricter market regulations and a more proactive role for the state. In most countries around the world (with the probable exception of North Korea, and only to some extent) the national economy is basically structured around three components: household consumption, government spending and private sector investment. In “normal” times, household expenditures and private investments keep the economy growing, but in times of crisis – whatever the origin might be – even the most ardent defenders of the free market demand the public sector to intervene.

This logic became clearly evident during the recent global financial crisis: around the world, and in particular in the richer countries of the North, in the aftermath of the great recession of 2007/08 the state stepped in to rescue the banking sector and other failing sectors. In some countries, the government directly disbursed money to households and increased public investments to offset the shrinkage of private sector operations in crucial areas of the economy, but in too many cases the priority was to rescue the banks. According to data compiled by International Monetary Fund (IMF) researchers working for over the period 2007–17 in 37 countries, direct public support to financial institutions amounted to $1.6 trillion ($3.5 trillion including guarantees!).1 But what about the workers and low-income households?

Job insecurity is spreading as fast as the virus itself, and presenteeism – people going to work outside even when ill – is becoming another problem hard to contain.

A crucial difference with previous crises is the fact that now the troubles are not economically driven. In this context, temporary cash transfers to people currently in work to be rolled out by richer countries (like the bill currently being discussed in the US Congress,2 which includes direct payments of up to US$1,200 to most adults) will be rather futile. People will not stop shopping due to lack of money, but because of social distancing and quarantine measures that will prevent them to go out. Direct economic support to ordinary people is still hugely important, but monetary support should be reoriented towards those who are losing their jobs, not mainly those who will keep them.

Workers who might be at higher risk of becoming unemployed should also be supported. A basic assumption of current measures to prevent the expansion of the pandemic is that, in all the sectors where working from home is feasible, workers will continue to perform their regular tasks and responsibilities as usual. But job insecurity is spreading as fast as the virus itself, and presenteeism – people going to work outside even when ill – is becoming another problem hard to contain. It is vital then that workers in essential sectors, who cannot afford to work from home, do not risk becoming sick themselves or spreading the virus, being assured that their jobs or their income will not be threatened by the pandemic. Even the conservative and business-friendly British government has decided that the state will pay grants equivalent to up to 80 per cent of the salary of workers if companies keep them on their payroll during the recession triggered by the pandemic. Such payments will be worth up to a maximum of £2,500 per month (US$ 2,800), just above the median income.

The millions of workers trapped in poverty are more likely to have insecure jobs, with fewer rights and employee benefits, and they are less likely to have savings to help cover additional unplanned costs or gaps in income.

In Europe, the virus has found fertile ground for rapid replication in wide sectors of the population highly affected by austerity policies. The measures implemented by the European Commission (EC), the European Central Bank (ECB), the IMF and conservative governments, have created a precariat class that is highly vulnerable to COVID-19 and similar threats. The new European precariat includes millions of homeless people and food bank users. A survey published last year by the European Council on Foreign Relations noted that only a third of Germans and a quarter of Italians and French had money left over at the end of each month for discretionary spending.3 At the same time, part-time and zero-hours contracts have expanded enormously, greatly undercutting the economic resilience of millions of households.

In the words of a British researcher, “the millions of workers trapped in poverty are more likely to have insecure jobs, with fewer rights and employee benefits, and they are less likely to have savings to help cover additional unplanned costs or gaps in income”.4 It is therefore crucial that governments take all possible action to reduce both financial pressure and increased anxiety. Some possible measures to protect these workers are: (a) the introduction of job guarantee, which would provide income security to anybody facing the prospect of being made redundant or lack of income, including workers affected by factory closures as a consequence of the pandemic, employees in the retail sector, freelancers, artists, performers, and small business owners; and (b) restructuring the gig economy, with the introduction of new measures to force employers to pay sick and holiday pay and to treat all workers as employees rather than independent contractors.5

As other researchers have argued, in the framework of a pandemic “the real economy needs help in the form of popular debt forgiveness, green public works, free higher education, and significant socialization of health care”.6 In recent days, several European governments have taken concrete steps in this direction. For example, and with references to only a few countries:7

• Belgium: More than a million workers have already been placed on temporary unemployment. For the first month, furloughed workers will receive an advance of €1,450 (US$1,572), while their dossiers are being processed. The regional government of Flanders will support workers placed on temporary unemployment with the payment of their energy bills.
• Croatia: The government will limit and control the market prices of 28 basic items, including flour, eggs, sugar, cooking oil, fresh meat, fish, medicines and sanitary products.
• Denmark: The government will offer financial help to freelancers and students, as well as compensation for fixed expenses such as rent and easier access to state-guaranteed loans.
• France: The payment of taxes, social security contributions, house rentals, water, electricity and gas bills have been suspended for people with reduced income as a result of the crisis.
• Italy: Starting retroactively from February 23, a 60-day moratorium will shield workers from dismissals for objective reasons, preventing companies to fire employees on economic grounds. The government also allocated €10 billion (US$ 10.8 billion) to protect labour rights, including the payment of a bonus of €600 (US$ 650) to workers who have lost their job. Leave permits for workers with disabilities or in care of family relatives have been extended from three to fifteen days. Likewise, parents with children up to 12 years of age may request a new parental leave of up to 15 days with a compensation equivalent to 50 per cent of the salary.
• Portugal: Workers who might need to remain at home to take care of children during the closure of schools will be guaranteed the payment of 66 per cent of the salary.
• Spain: Mortgages and electricity and water bills for people left without a regular income will be subject to a moratorium. Employees temporarily out work will collect unemployment benefits without computing the provision time. Self-employed workers may also stop paying taxes if their income is reduced during the pandemic. A new and specific contingency fund will reinforce care for the elderly, the homeless and people in nursing homes. Spending rules for municipalities will be relaxed to allow local authorities to expend any surplus in social care programmes.

Moreover, even though all occupations are important in times of crisis, in Europe, in the particular context of this pandemic, society has rediscovered the great need for public service staff. Public health workers – in all areas: medicine, nursing, cleaning, etc. – are literally giving up their lives caring for the sick population, but there are other sectors – for example the police, the firefighters and the teachers – who are also working under extraordinary and difficult conditions. A new social ritual in many European cities is to applaud health workers at dusk, but the public servants need not only applauses; they also need the reversal of the budget cuts that made working in hospitals, schools and other essential services much harder.

COVID-19 did not come to a surprise for the many epidemiologists and other public health specialists who had warned early enough about the risks of a pandemic. If European countries had invested in the physical and social capacities required to face an epidemic, the region would have been in a far better position to control the virus.

Some of the European countries most affected by the pandemic are precisely those that had suffered the worst cuts in public expenditure in the context of the austerity measures implemented in the eurozone during the global financial crisis, with Italy being a clear example of what a team of researchers has referred to as “death by austerity”.8 Even countries that had developed strong and highly admired public health structures, such as the United Kingdom’s National Health Service (NHS), are currently being overwhelmed. First in Italy, and now rapidly in Spain and in Britain, health facilities are beginning to collapse under the massive influx of COVID-19 patients. After a decade of austerity implemented by Conservative governments, the NHS now has fewer hospital beds, doctors, and nurses per capita than most other industrialised countries, and (as it is already happening in Italy) doctors are being forced to decide who lives and who dies.9

But austerity has affected European countries in other ways that diminish even further the national capabilities to fight the pandemic. In many countries of the region, the municipal and regional authorities have had their budgets brutally reduced, undermining the response capacities of the police, fire and ambulance services.10 And despite “hijacking” some proposals and demands of progressive European political parties and social movements, the recent measures announced by many governments hardly address the appalling erosion of social services and public health infrastructure under the ill-conceived budget cuts of the last decade.

Long before the eruption of the pandemic, forecasters in Europe and around the world had expressed serious concerns about an imminent new global economic crisis, already visible in falls in productivity and tax revenues in several countries. But the implications of COVID-19 for the world’s medical and economic health have become so drastic and so abrupt that most middle-term predictions are quickly becoming outdated. The IMF’s managing director has warned that the global recession prompted by the pandemic will be as bad as the 2008 financial crisis, if not worse, in terms of severity.11

The social distancing, isolation and quarantine measures implemented by European governments to contain the pandemic entail an enormous collapse of demand for all but essential supplies, leading the region (and the world) to what economists call a “supply shock”, meaning the closure of factories or production at reduced capacity. At the same time, there is a “demand shock”, as consumer spending plummets.

Perhaps this is also the perfect time to have a serious conversation about the real meaning of “degrowth”, or more specifically “planned degrowth”

Even mainstream economists and conservative politicians are beginning to recognise that this is an unprecedented emergency which demands coherent and sensible responses, away from the usual obsession with public deficit, business profits, debt levels and GDP growth. The financial crisis of 2007/08 was dreadful in both economic and social terms, but the impact on output, livelihoods and jobs threatened by the pandemic might be immensely worse. As the head of the United Kingdom’s Office for Budget Responsibility (OBR) said: “This is not the time to be squeamish about one-off additions to public sector debt … it’s more like a wartime situation”.12 The Spanish Prime Minister has even called for a “Marshall Plan” to be implemented by the European Union to combat the spread of the virus and its social consequences.

In the context of the pandemic, even the jargon of economists seems inappropriate. The term “recession” usually refers to a decline in production and employment, but today the main concern should not be the health of “the economy”, but the health (and the lives) of people. This also means challenging the discourse (and the actions) of economists, credit rating agencies and government officials obsessed with government debt or public budget deficits. What is the value of an AAA rating for a national government when doctors in intensive care units must decide who gets a ventilator, who lives and who dies?

Perhaps this is also the perfect time to have a serious conversation about the real meaning of “degrowth”, or more specifically “planned degrowth”, with governments facilitating a climate- and people-friendly transition instead of implementing stimulus programmes aimed at securing profits for large transnational corporations. A reinvigorated role for the state should not be confused with the tax reforms proposed by billionaires like Bill Gates,13 or the traditional Keynesian recipes for facing recessions based on transfers to encourage consumption or large public infrastructure projects to “reignite the economy”. Attempts to encourage economic activities at the present moment could worsen the spread of the virus, and in the context of forced isolation encouraging consumption would doubtfully be effective to boost the economy.

The calls for public sector interventions are getting louder and more urgent, as the economic (and social and political) impacts of the coronavirus pandemic will be much more dramatic than anything the world economy has suffered in recent years. Not surprisingly, European governments have been eager to bail out the private sector: in the United Kingdom, the government announced a £350 billion (US$403 billion) package of loans and grants to help British private companies cope with the impacts of the pandemic. In France, the state treasury will disburse €300 billion (US$ 325 billion) to private businesses to avoid bankruptcies. Similar measures have been implemented by other European governments. But at the same time the calls to bring public services under democratic public ownership and control are also becoming louder.

In mid-March, the news that the Spanish government had “nationalised” all the hospitals and healthcare facilities in the country made headlines in newspapers throughout Europe. The news was rather exaggerated: there had not been a change in ownership and the measure was limited to put all private health providers under governmental control, but nevertheless the Spanish decision might signal more radical measures to be implemented by other governments.

The shift towards greater public control could be expected from the Spanish government, being composed of a centre-left coalition of social-democrats (the Socialist Party, PSOE) and the new left (Unidas Podemos, UP). But even the conservative British government has announced its willingness to move in that direction. The Transport Secretary announced that airlines, railways, and bus companies could be nationalised in the framework of the pandemic, but also made clear that the aim of the measure was to protect the private sector and avoid “good companies going bust”. He also guaranteed a return to private ownership once the crisis was over,14 despite the fact that many of these companies had been privatised during the neoliberal heydays of Thatcherism and that now the government would get clear social support if it were to reclaim ownership. Experts in this field have also demonstrated with very convincing data that the idea of renationalisation makes perfect economic sense.15

The change in the hegemonic discourse on state ownership in Europe was summarised in a recent editorial of The Guardian, a leading British newspaper:

We are living in a different world, one in which it looks as though quarantine discipline will be required for long stretches of time. In a democracy the lockdown will have to be largely self-policed and not heavily infringe on people’s rights. People have proved themselves to be extraordinarily resilient. But individual fortitude, human kindness and local solidarity cannot replace the radical national effort required. Ultimately, it is only the state that can ensure the scale of action necessary to show that life can continue with security, and to equalise sacrifice across the population.16 

This might also be the time for a real nationalisation of the financial sector, beyond the limited and time-bound measures implemented during the last global financial crisis. Based on an increasing critical mass of empirical research on the benefits of public ownership, activists across Europe are proposing the creation of public banks. Once again, as it happened in the past decade, private banks will ask to be bailed out by the state, becoming insolvent unless their operations are guaranteed by the government. There is plenty of real-world evidence that demonstrates that a different and publicly-owned and run financial system that curbs the power of big corporations and serves people and planet is indeed feasible.17

Recent research from the Transnational Institute and its global partners shows that in the past decade alone, globally, there have been more than 1,000 cases of creation of new public enterprises or the return of privatised enterprises to state (national, regional or local) ownership. This trend has been traced in 58 countries. Workers and their unions have often been at the heart of these processes, striving to improve workplace conditions while endeavouring to place their valuable knowledge and experience at the centre of public services.18

As the pandemic spread all over the world, one of the few good news widely shared in social media has been the apparent positive impact of the crisis on the environment. The plunge in economic activities caused by the measures to contain the COVID-19 transmission seems to be causing noticeable improvements, with satellite imagery from the European Space Agency revealing a marked fall in global nitrogen dioxide levels in the atmosphere. According to a British environmental researcher, “we are now, inadvertently, conducting the largest-scale experiment ever seen […], looking at what we might see in the future if we can move to a low-carbon economy”.19 This data is indeed hopeful, but clearly it will not be enough if the world economic order is not radically transformed once this health crisis is over.

Reclaiming public ownership is not enough. We should also democratise the public sector.

On the other hand, all actions aimed at fighting the climate emergency will help us to be better prepared for the next pandemic. State interventions will be essential to avert an outbreak of a pathogen similar (or worse) to COVID-19. Public agencies should lead research in health and environmental sciences, not just providing resources, but ensuring that all publicly-funded research is publicly available.

Climate actions and preparedness for the next pandemic go hand in hand. For instance, preventing deforestation can diminish biodiversity loss and decrease the risk of infectious diseases. The recent Ebola epidemic in West Africa has been linked to bats – a carrier of the virus – being forced to migrate into new habitats after their natural forest habitat had been cut down to grow export-oriented palm oil trees to supply Asian and European markets.20

The only option to stop or at least slow climate change is a drastic reduction of greenhouse gas emissions from fossil fuels (coal, oil and natural gas). This means a radical transformation of the energy system, generating power from low-carbon sources like wind and the sun. Low-carbon electricity generation would also decrease air pollutants that cause or aggravate cardiovascular diseases, obesity, diabetes, and premature deaths that put further strains on our health care systems, as it was proven by the COVID-19 pandemic. But the energy transition that the world needs will not be brought by the private sector: a growing mass of empirical evidence from around the world demonstrates that the profit-based approach to renewable energy is failing and that the only viable pathway is to pursue public alternatives.21 Privatisation of the energy system must be reversed, as it is already happening in diverse parts of Europe.22

As it happened during the global financial crisis a decade ago, governments across the Global North will be ready to intervene to prop up the market and failing transnational corporations. Direct bailouts for highly polluting airlines, oil companies, and other corporations hit by the pandemic have been already suggested by European (and the American) governments. The alternatives to that kind of bailouts have been already outlined:

In this case, any government interventions should be predicated upon making the urgently required transition to a post-fossil fuel economy and society. Rescued or subsidized institutions (especially oil companies, airlines, and the banks that finance them) should be put under public control as part of an emergency climate transition plan. Once in public control, these institutions should be wound down or converted in alignment with a green industrial strategy that breaks free from the extractive business model that continues to fuel climate catastrophe.23

But reclaiming public ownership is not enough. We should also democratise the public sector. Both the European and Latin American experiences of state-owned enterprises show why the pre-neoliberal model of public ownership should not be romanticised, as too many of them were highly top-down and centralised, offering their service users and workers very little space to participate or have any real influence in the way they were managed and run.24

A very positive and beautiful side effect of the pandemic has been the proliferation of solidarity networks. In Europe and in all the other regions of the world, in the context of the physical distancing and quarantine measures put in place to control the pandemic, local communities have developed very creative mutual-aid alternatives, despite the erosion of social bonds caused by four decades of neoliberal policies.

The self-organised solidarity networks are growing rapidly in scope and scale, as “grassroots, horizontal, community-led aid that has emerged spontaneously to help”, including diverse “resource guides, webinars, slack channels, online meetups, peer-to-peer loan programs, and other forms of mutual aid emerging online and on-the-ground”.25

These initiatives might be included within the broad conceptual umbrella of the commons and the Peer to Peer (P2P) economic and social transition. They refer to the evolution towards a system that responds to social needs and creativity as a viable alternative to both obsolete and centrally planned state systems and failed market economies, enabling a transition to a more egalitarian, just, and environmentally sustainable society.26

In particular, the urgency for mutual-aid responses to the incapacity of both the market and the state to cope with the crisis has mobilised the open source community. The European country worst hit by COVID-19, Italy, has experienced a crippling shortage of hospital equipment; in reaction to the emergency, “good samaritans” have used their 3D printers to produce respirator valves that they are giving away for free.27 

A powerful and rather poetic summary of the power of commons-driven alternatives has been offered by a Canadian researcher:

Meanwhile, the quarantined and semi-isolated are discovering, using digital tools, new ways to mobilize to provide care and mutual aid to those in our communities in need. We are slowly recovering our lost powers of life in common, hidden in plain sight, our secret inheritance. We are learning again to become a cooperative species, shedding the claustrophobic skin of homo oeconomicus. In the suspension of a capitalist order of competition, distrust and endless, pointless hustle, our ingenuity and compassion are resurfacing like the dolphins returning to the Venice lagoon or birds to the smog-free sky. […] When the Spring arrives, the struggle will be to preserve, enhance, network and organize this ingenuity and compassion to demand no return to normal and no new normal.28

Even though has (so far) fewer COVID-19 cases and a slower rate of infection than Europe, the region is at risk of suffering huge social and economic losses. But the speed and the scale of the reaction have been much slower and limited than in other regions of the South. In Africa, where several countries were quick to impose severe restrictions to the circulation of people, “the tough and timely action is borne less out of political maturity than it is bitter experience, and an awareness that already overburdened public healthcare systems cannot sustain an onslaught”, in the words of an African journalist.29 The Ebola epidemic of 2014 is still fresh in the mind of many Africans, reminding them that prevention, containment and a swift governmental reaction offer the only hope of fending off thousands of deaths.

The observations on the predictable overload of hospitals in Africa are also relevant for Latin America. In comparison with Europe – where hospitals are already collapsing under the sudden and enormous inflow of patients in need of critical care – the region’s weaker health systems and other contributing factors – such as higher malnutrition, large urban conglomerations (including tens of megalopolis with more than five million inhabitants) and deficient provision of water and sanitation services –, the rates of mortality could be much greater than what has been seen so far in Europe. In cities like Rio de Janeiro, in Brazil, many residents in the favelas of Rocinha, Tabajaras, and Providência are unable to follow the advice of washing hands due to the lack of running water. As a local dweller puts it, echoing similar concerns across Latin America:

This quarantine is very selective. Whoever can afford to stay at home will be fine. But those of us who survive on a daily basis will have to go out despite everything, because we need to earn enough to eat. If there are no federal public support programmes directly targeting the poor, when the virus arrives to the favelas people will fall sick like in a domino game.30

And economically, the pandemic risks ushering an unprecedented recession. Latin America emerged from the global financial crisis less affected than other world regions, and for some years even enjoyed a bonanza fuelled by the rising demand for raw materials from China and other expanding economies, between 2010 and 2015. Resource-rich Latin American countries exhibited high rates of economic growth and most of them diminished poverty and inequality indicators during the boom years. But the so-called “commodities supercycle” ended five years ago, and in the face of the pandemic there are no war chests and no financial space for stimulus packages or insurance payouts comparable to those being launched by European governments. The region was already struggling with stagnant economic growth and widespread political unrest since last year, long before the crisis hit.

But the weaker position of Latin American countries in the global economy does not mean that they will be all powerless in the face of the pandemic. In fact, several Latin American countries still have relatively robust public health systems and institutional structures close to that of a “welfare state”. At first glance, compared to Europe, the region as a whole has far fewer hospital beds per 1,000 people, an essential indicator to tackle the pandemic: just 2.2, compared to 5.6 in the countries of the European Union.31 But these figures could be misleading, since the countries of the Southern Cone (Uruguay, Argentina and Chile), in particular, have stronger health systems than various countries in Eastern Europe, according to comparable data, but health expenditure and hospital infrastructure indicators of even these supposedly better prepared countries (Cuba could be added to the short list) are much worse than those of Italy and Spain, two countries that are hardly coping with this crisis. And at least 10 countries – Colombia, Ecuador, El Salvador, Paraguay, Bolivia, Nicaragua, Venezuela, Haiti, Honduras and Guatemala – have neither the hospital capacity nor other basic structures to face the pandemic, even on a much lower scale than what we see in Europe today.

Nevertheless, even small countries and economically poor countries are proposing social emergency measures to protect the workers and the vulnerable population comparable to those implemented by European countries. El Salvador, Central America’s smallest country, has suspended electricity, internet, and phone bills for three months, frozen monthly rental payments, mortgages, and loan payments for three months, and raised the salary of health workers.32

Other Latin American nations are better positioned to fight the pandemic thanks to the resilience of its public enterprises. Countries such as Uruguay and Costa Rica have strong and extensive state-owned companies that provide world-class water, energy and telecommunications services.33 For instance, in Uruguay, the government announced that the state-owned company ANCAP (responsible for the production of petroleum products, cement and alcoholic beverages) will increase the production of alcohol-based hand sanitizer gel and other disinfectants to guarantee supply in the market and avoid speculative practices during the emergency.34 Also in Uruguay, scientists from the National University’s Laboratory of Molecular Biology and the Pasteur Institute have locally developed a procedure to diagnose the Covid-19 virus that will lead to the production and distribution of cheaper and faster diagnostic kits than those offered in the international market. These examples show the significance of the public sector as a crucial instrument to confront the pandemic.

This is the time to think and prepare for a world that will be much different after the end of the COVID-19 pandemic. As it has been rightly observed, “right-wing and capitalist think-tanks are panicking, fearful that half a century of careful ideological work to convince us of the necessity of neoliberalism ⁠— the transformation of our very souls ⁠— will be dispelled in the coming weeks and months”.35 This is the time to rediscuss the real meaning and feasibility of “socialism”, “ecofeminism” and the “commons”, among other big words that have been the focus of endless (and often purely abstract) debates among those of us committed to building a more just and more democratic society.

Eco-feminist thinkers and activists had already warned us, long before the start of this crisis, that we needed to pay much more attention to the ethics and politics of care, recognising social and ecological interdependencies as guiding principles for building a different kind of society beyond capitalism. The rediscovery of the ecofeminist perspective implies recognising that it is not possible to think about the future of humanity without considering the relationship of our species with other living beings and with the planet as a whole,36 as it become evident when considering the conditions of origin and expansion of this pandemic.

Decades of privatisation, in Europe as in Latin America and other regions of the South, had rendered our public services profoundly lacking in the forms of care that now we clearly see as the most appropriate strategy to confront crises like the current pandemic. Now we are much more aware that those working in hospitals, schools and services for elderly and disabled people do so under a lot of stress, facing intense time-pressures and in highly precarious conditions. The pandemic has also shown us how our energy, food, transport and water systems, which were based on perpetual extraction patterns leading us to an imminent climate and ecological emergency, had to be radically restructured. COVID-19 brought plenty of suffering, but also provided some useful lessons that we cannot afford to ignore.