More than 1.6 billion people, nearly half of the world's economically active population are at risk of losing their jobs due to the coronavirus pandemic, the International Labour Organization (ILO) reported.

These figures contrast sharply with the new euphoria that has gripped the world's stock markets, especially in the United States. After falling by about 30 % when business was halted and borders closed to stop the spread of the coronavirus, the U.S. stock market grew by 30 % in April. It has not yet recovered from the total losses, which were already being recorded prior to the coronavirus, but it is still drawing attention at a time when the economy and employment are shrinking dramatically.

One of the reasons for this phenomenon is the gigantic bailout ordered by the Fed (U.S. Federal Reserve), which has been injecting funds to purchase bonds and financial instruments of all kinds. The Fed made it clear that its ultra-low interest rate regime and its program of financial asset purchases, supporting all financial markets (stocks, bonds, municipal debt and corporate bonds) would continue practically indefinitely.

The European Central Bank and other central banks are intervening in a similar way, although nothing comparable to the U.S. case. This injection of money has created a new fictitious valuation of shares of stock, a fact that is obvious when you compare to the collapse of economic activity, the fall in sales, production and employment. This new bubble, which is likely to be short-lived and is preparing an even more pronounced burst, is, contradictorily, indicating not the vitality but the well in which the world economy is submerged, since this gigantic mass of money is not directed towards productive investment but towards speculation. This highlights once again that the crisis of overproduction and overaccumulation is still at the base and the backdrop of the current economic hecatomb we are facing.

The precarious nature of this rise can be seen in the fact that the stock markets, like oil, have once again experienced a downward fluctuation (still reduced considering the rise experienced), resulting from the resurgence of tensions between the United States and China. Trump has been waging a very virulent campaign against the "Chinese virus" (as the U.S. president calls the coronavirus), blaming the country for the pandemic. He has just dusted off the threat to raise tariffs that had been in the freezer.

Temporary crisis?

There are those who point out that this new stock market boom is influenced by the belief that it is a crisis associated with the coronavirus outbreak and that the economies will be reactivated in six months at the most.

For example, the United States Secretary of the Treasury, Steven Mnuchin, reiterated his view expressed at the beginning of the outbreak of the pandemic that "the economy will really recover in July, August". Larry Summers, former Treasury Secretary under Bill Clinton, says the crisis over business closures is similar to that of businesses in summer tourist resorts that close during the winter. As soon as summer comes, everyone opens up and is ready to operate normally. The crisis, therefore, would only be a seasonal thing resulting from the pandemic.

Renowned Keynesian economist Paul Krugman argues that this is "a natural disaster, like a war, a temporary situation". The state, as it is doing now, must incur -according to Krugman- a deficit until the pandemic passes. Other establishment consultants believe, in the same vein, that the crisis is not economic but a health crisis and that as soon as the coronavirus is contained the economy will "bounce back".

Keynesian economists think that as soon as people go back to work and start spending, "effective demand" will skyrocket and the capitalist economy will return to normal. But if the crisis is approached from the angle of supply or production, and in particular profitability, which is the Marxist approach, the crisis is bound to deepen.

What is omitted is that the crisis was preexistent to the coronavirus. Before the pandemic broke out, the economy was heading for a recession. We were facing an investment strike and this was based on a sharp fall in the rate of profit that went hand in hand with a boom in deflationary tendencies, an excess of unsaleable products and surplus capital that had no place in the productive sphere. Since the financial crisis of 2008, the annual growth of US GDP per capita has averaged only 1.6 %. It did not recover the levels previous to that crisis and this fall is more severe if we take as reference previous decades such as the 90's, not to speak of the post war period. Even Trump's initial impulse to reverse this trend, through a large tax incentive such as the one he implemented at the beginning of his term, was deflated over time.

But the other element that cannot be left aside is the enormous debt, both public and private, which in both cases has reached record levels. Far higher than the level they were at twelve years ago. The corporate debt, encouraged by cheap interest rates, was not destined mainly to production but to the repurchase of shares and the payment of dividends and, in a general way, to the purchase of financial assets, as is happening now with this new summer of the stock market. The truth is that this mountain of debt, on the one hand, poses an extremely delicate situation – and brings millions of companies to the brink of bankruptcy (it is not only a problem of liquidity but also questions their economic solvency) and, on the other hand, conditions the capacity of States to deal with this situation. With the degrees of indebtedness, the states are forced to resort to a gigantic emission and this means throwing fuel to the fire since it accelerates the depreciation of the main currencies –that is to say, dollar and euro- that have been acting as international means of payment and as value reserve, and opens the risk of a flight of both currencies towards the gold as a last refuge, which is what happens when the great international commotions are unleashed. This would cause a jump in the fracture and dissolution of the already punished international economic relations.

The social dimension of the crisis

The ongoing rescues are far from being able to counteract the scale of the crisis. The dominant fact now is that we are moving from recession to depression.

The ILO has been updating its forecasts upwards. In March it warned of the loss of 25 million jobs worldwide. In early April it noted that 195 million full-time jobs could be affected. In this latest installment, at the end of April, it forecasts a drop of 305 million jobs in the second quarter of the year.

Those who work in the informal sector are in a worse position to face this crisis. Worldwide, more than two billion people are working in the informal economy, that is, without contracts or benefits, let alone social security. The total workforce, formal and informal, is 3.3 billion people. The ILO estimates that the first month of the crisis "resulted in a 60 % decline in the income of informal workers globally". By region, the projected decline "is largest in Africa and Latin America, at 81 per cent".

The agency reported that "the situation has worsened" for all countries. But more hours of work will be lost in the different regions of the Americas than anywhere else. What about businesses and independents? According to the ILO, 81 per cent of the world's employers and 66 per cent of self-employed workers are working in countries affected by business closures, "with serious repercussions on income and employment". The current bailout, more than any experience in the past, is not in a position to prevent a massive bankruptcy of capital. The ILO report itself warns of this by pointing out that companies "are exposed to a high risk of insolvency".

The purging of surplus capital, as has always happened in the history of capitalism, will be traumatic and violent and, therefore, will be marked by national and international disputes, clashes and crises, at the commercial, political and military levels. The perspective that is opening up is an intensification of the commercial war and of the warlike conflicts, and also of rebellions and revolutionary uprisings. Let us not forget that the previous depressions led to the First and Second World Wars and to revolutionary tides that shook the planet.

The truce between the United States and China has been short-lived, and once again we are facing an upsurge in tensions. The same is true as the increasingly strained relations between the White House and the European Union are reemerging, and let us add that this is so also within the latter, as the attempt to issue Eurobonds -so that the debt is backed by the whole of the EU- has failed once again in the face of the refusal, first and foremost by Germany, to assume the costs of its weaker partners. Each nation must finance itself by issuing its own debt and therefore pay higher interests, which in the present circumstances will probably become even more onerous. This conflict adds one more grain to the tendencies towards the disintegration of the EU.

Perspectives

Depressive tendencies will further accentuate the ruthless struggle of corporations for survival, at the expense of their rivals. This moves into the health field and has dire consequences for the fight against the coronavirus. "Monopolistic control of the technology used in detecting the virus obstructed the rapid introduction of more test kits, just as 3M's 441 patents on mask No. 95 made it difficult for new producers to manufacture such products. In addition, multiple patents are in force in most parts of the world for three of the most promising treatments for Covid-19: remdesivir, favipiravir and lapinavir/ritonavir", (Clarin journal, May 3rd). The war for patents now extends to the vaccine, where the big pharmaceutical octopuses are gouging out their eyes, and lying down in this dispute in their own states.

The trade war is a lethal blow to the battle against the pandemic when global cooperation is more necessary than ever but, moreover, it conspires against any hint of economic revival that might come.

Nationalist tendencies are not only a stumbling block to the need for a coordinated response to preserve the health of humanity, but are also impracticable. The retreat into national economies is a dead end in a world that is now much more integrated than it was in 2008. The global value chain, as it is called, is already dominant and widespread. Even if some countries could begin economic recovery, the disruption to world trade may seriously hamper the speed and strength of that recovery. China, where economic recovery after its closure is underway, is hampered by the fact that Chinese manufacturers and exporters have no one to sell to. This was already evident prior to the current health crisis and the emergence of the virus. The growth of world trade has barely been similar to the growth of world GDP since 2009, well below its rate before that year. In a general way, nationalist tendencies are unviable as a way out of capitalist bankruptcy. They express the tendency to disintegrate the common blocks (EU, Mercosur) but that does not exclude the political attempts of the bourgeoisie to advance in that direction, trying in this way to pilot the crisis, even if this ends up unleashing contradictions and imbalances that are already latent and explosive in scope.

To this we should add that a second wave of the pandemic could force new closure measures. In these times of coronavirus and world crisis, the antagonism between the socialization of the productive forces and their private appropriation, between the tendencies to the globalization of the world economy and the fierce and ruinous division and competition between the national states and, in a general way, between the general interest, the health and the very life of the population, and capitalist profit, appears very clear. The integration and cooperation of the peoples is a task reserved for the workers who are called upon to carry it out as an aspect of an integral transformation of humanity on a new social basis.