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COVID Crisis breathes new life into State Monopoly Capitalism

Written by: John G. on 4 April 2020


Government has taken control of or overseen merging of management of industry after industry as the Covid-19 crisis unfolds.

The first was to organise supermarket chains to form a government-managed cartel, an association regulating their supply chains, how much each supermarket will seek to have produced, divide the supply amongst themselves, and ensure limited price competition among them.

The competition regulator was converted into a manager of corporate syndicates, cartels.

The big banks have been brought together under state directions to systematically manage the provision of credit, parcelling out government-backed loans and allocating provision of credit among mercantile and industrial capital. 

Government put $105 billion in their hands to prop up the circulation of money through the economy.

Gradually the combination of government and corporations extended, but only late in the piece were private hospitals brought into the command state, despite them being crucial to dealing with the source of the health crisis. The priority accorded people’s health by the machinery of state proved lower than the health of banks. 

Morrison’s reported riposte to a statement by private schools closing their doors, where he threatened their government funding if they did not submit to government directions to stay open, was revealing. It summarised the new reality of State management of capitalism, state capitalism.

Capitalism’s new form completes old parasitism

Means of production, means of subsistence, availability of workers, all the elements of production and consumption were taken under government direction. Owners have been reduced to onlookers. Even majority shareholders in large corporations found themselves on the sidelines, while minority shareholders farewelled even their illusory engagement in company management. Salaried employees, managers, alongside state functionaries, conduct all the functions of the capitalist other than pocketing company profits.

Individual capitalist’s role is rendered completely superfluous to the operation of society. In this period of state capitalism, they have no role in corporate operations at all. In society’s cycle of production and consumption, individual capitalists have completed their transformation into parasites on the whole community.

Capitalists control of the Machinery of State

Capitalists in aggregate as a class, or at least the leading elements in that class, have taken command of the machinery of state more directly, more thoroughly, than before. The transformation has been rapid and thorough. They wield it freely with only passing reference to laws, quickly removing legal constraints to their tactics and strategies.

Parliamentary democracy is paid scant attention, being brought into action to rubber stamp directives drawn up outside its walls. Laws with huge scale and impact, expenditure of as much money as any budget, passed with less than half a day’s parliamentary examination. Leaders of other parliamentary parties collude in it. Some MPs have been sidelined as stunned onlookers.

ACTU leaders not only go along with it, they participate fully in the planning and organisation of this new state outside parliament.

ACTU leaders with mouthpieces in the capitalist media and bourgeois cultural institutions are relied on to promulgate the directives to the people.

State monopoly capitalism is at the core of the response to the COVID-19 crisis.

Institutions of State Monopoly Capitalism outside Parliament

A range of state capitalist institutions have been established.

First was the National Cabinet of Prime Minister and state and territory leaders. It took command swiftly and decisively. It is advised directly by a body of health bureaucrats, and indirectly by respective government department heads.  This form lasted as the first responders. It has been quickly supplemented by a new committee of capitalists and state functionaries to “co-ordinate” the economy. 

The National Commission, to coordinate the management of the elements of production across the country, has been constituted by the Federal Government. It consists of business people, a former ACTU leader and state functionaries.

The National COVID-19 Co-ordination Commission consists of a group of former powerbrokers led by Neville Power (Fortescue metals boss), including David Thodey (Telstra boss), Greg Combet, (Labor Minister and ACTU leader), and Jane Halton (federal Health Department head) and Paul Little (Toll Holdings). Also on the commission, is the current managing director of EnergyAustralia Catherine Tanna integrated with public sector chiefs, Philip Gaetjens, from Department of the Prime Minister and Cabinet secretary, and his counterpart at Home Affairs, Mike Pezzullo.

National COVID-19 Coordination Commission’s (NCCC) role was stated to be to coordinate advice to the Australian Government on actions to anticipate and mitigate the economic and social effects of the crisis. Its method was advertised as being to connect government with private and public sector networks to unlock resources, break bottlenecks and fix problems. No time constraint was put on its existence though there was a vague reference to its role being exercised for “coming months”.

Its actual role is not yet clear but its existence confirms the nature of the new form of economic relations with the special position of representatives of capital in its organisation and the virtual suspension of parliamentary democracy as state monopoly capitalism.

Expanded powers given to agencies of state violence 

At State and Territory level, the agencies enabled to use violent force have had their powers ramped up under the cachet of Covid Crisis, social distancing and isolation.

Emergency powers have been instituted with little engagement of parliament. In each jurisdiction, the Police Chief has been appointed the Emergency Coordinator, in charge of operations of all state agencies, including government departments, in relation to the health and economic crises.

Police patrol the streets moving people on, closing down businesses, invading homes to count heads, stopping people, blockading beaches, parks, playgrounds, regions and borders. They have been given power to require and force people to provide private information just for being there, to move or be arrested, and some arrests have been made. They are holding people in detention in hotels, guarding the exits and oversighting their compliance.
Extraordinary fines and gaol terms for resistance have been set in place using the pandemic as justification.

While some level of enforcing social distancing appears justified, the line where justification is transformed into pretext concealing a sinister purpose is not clear yet. When the health crisis recedes, it seems we may well find out.

The shadow of outright monopoly capitalist rule free of democratic constraints stretches across the country. Force is being exercised over the people, with impact limited largely to restrictions called for under this health emergency. But the danger of wider fascism stalks society.

After the virus passes?

All this has been set in place for a limited period of three or six months for now. Dangers of extension of the powers exist, because the Covid crisis will likely have a long economic tail.

Consider the situation of a long-term recession or depression, with high levels of unemployment, removal of financial support to displaced workers and small business, and loan repayments due.

The scale and impact of the post-pandemic crisis in prospect is extensive; unemployment, house prices plummeting, homelessness, popular resistance, conflict between democratic urges and state capitalist ascendency.

Rule of the monopoly capitalists, by the monopoly capitalists, for the monopoly capitalists stands in conflict with people’s drive for control over their lives, for the benefit of the community, rule of the people, for the people, by the people.

State monopoly capitalism will engender resistance, particularly as a deep economic crisis takes hold. Then the powers state agencies have been given will not be used to save people from the virus, but to save capitalist power from revolt.

The country has entered a period of great dangers, but also great prospects.


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