PART 4 – How COVIDNOMICS Works – Labor Flexibility, Privatization & IMF Revival

A historic flood of liquidity at the top with a crisis of survival for everyone else

“We would rather die than to return to the previous ways which, enslaved to egotism and property, lead to buying and selling, working for money, practicing usury, eating and drinking the sweat of the poor.” – Declaration from the rebel town of Münster, Germany, 1534

2 – LABOR FLEXIBILITY

Taming Labor

Despite being packaged in the guise of historical inevitability, a key tenet of neoliberal economics has always been that policies aimed at “easing labor market rigidities” to achieve “flexible labor” costs are an essential pre-condition for profit maximization and consolidation of power. Coupled with lax environmental laws, this explains why so much of global production has been sub-contracted to China, India, México and other centers in the global south over the past four decades.

Putting aside the preciosity of neoliberal financial jargon, Investopedia offers the classic definition of labor flexibility.

[A] truly flexible labor market only exists when there are few labor force regulations in place. When this is the case, employers are able to set wages, fire employees, and change their work hours at will.

Boom economies are often mischaracterized as such based on low official unemployment numbers. Yet even in so called boom times, the World Bank reports that half of the global workforce lives at or near subsistence levels on less than $5.50 per day.

Under COVIDNOMICS, workers are being devastated at an entirely new level. The International Labor Organization (ILO), a UN organ, reports the stark news.

“The continued sharp decline in working hours globally due to the COVID-19 outbreak means that 1.6 billion workers in the informal economy – that is nearly half of the global workforce – stand in immediate danger of having their livelihoods destroyed.”

An in-depth June 22 analysis from the Becker Friedman Institute at the University of Chicago corroborates ILO estimates, concluding that the “COVID-19 shock caused 3 new hires for every 10 layoffs, [and] 32-42% of COVID-induced layoffs will be permanent.”

Gig workers, whom the ILO estimates may account for 40% of the workforce, are among the hardest hit. A May 1, 2020, analysis by the London School of Economics (LSE) points out that “The global pandemic exposes the inherent precarity at the heart of the gig economy…” while the conditions of this precarity “…are amplified in the current crisis.” The LSE report emphasizes that the possibility for “...improvements after COVID-19 remains unlikely without significant legislative change.”

The de facto result is that COVIDNOMICS is on track to produce permanent “flexibility” in global labor markets. Even the Washington Post has taken to quoting Karl Marx on the role that “the reserve army of the unemployed” will play in suppressing post-COVID wage demands. Time magazine characterizes the scale of the change in the US.

The coronavirus epidemic has, in a matter of months, wiped out roughly a decade’s worth of job creation, destroying some 20 million positions as of late May [in the US] and pushing the unemployment rate to its highest level since the Great Depression.