Economic realities in the wake of the global health crisis
This issue of ERA Review touches on aspects of the current health crisis, following the advent and global spread of the highly contagious corona virus. We are including an article by Richard Murphy, which makes the point that the nature of the recession created by this crisis is unlike previous recessions, in that the causation is supply-side, even though there is a demand-side reaction embodying a significant economic contraction.
In these circumstances, we believe that the primary objective of every responsible government should be to provide access to the material support needed by everybody impacted by the pandemic, so that the social essentials and the welfare of every citizen can be maintained. Dr Steven Hail has made the additional important point that we now have a situation in which the federal government feels obliged to make use of its unlimited ability to create money, consistent with – and constrained only by – the limited nature of the nation’s real resources. This power, enjoyed by every monetary sovereign government, is on view for everybody to see.
As governments and societies across the globe try to grapple with this health crisis, it is now unavoidable that main- stream economic doctrine has to give ground to the reality that goods and services constitute the real economy. Financialisation and speculation are essentially parasitic practices creating a pseudo economy which promotes ever greater inequality as well as social and environmental damage.
How has this happened? Karl Polanyi warned us about the three “fictional commodities”: capital, land and labour. When we treat these as commodities we corrupt the economic system and spread injustice. While the narrative continues of government debt being a burden for the future, the real economy of goods and services will be seen as what really matters and constitutes the wellbeing of a society.
Maybe this reality will start to sink in with economists and politicians and loosen up the orthodox mindset?
We really are in extraordinary times!