‘World Pandemic, Global Crisis, No Global Government’: Ladislau Dowbor  

Pravda.Ru – Edu Montesanti

'World Pandemic, Global Crisis, No Global Government': Ladislau Dowbor. 64050.jpeg

On May 15, the same day Brazil’s Health Minister, Nelson Teich, resigned less than 30 days after taking office (April 17), aggravating the political crisis in the midst of the pandemic, the Ministry of Health reported that there are a total of 14,817 deaths from coronaviruses in Brazil, and 218,223 confirmed cases.

In the 24 hours between May 14 and 15 alone, 824 deaths were recorded across the South American country, and 15,305 cases of infected with the novel coronavirus included in the balance, in the same period. If these alarming numbers were not enough, the underreporting rate due to the scarcity of tests is considered high in Brazil, which faces the rising phase of the contagion curve and deaths from coronavirus.

According to a study by researchers at the University of São Paulo, the Federal University of Rio de Janeiro and other major universities in the country, those infected may be almost 1.5 million, more than 15 times greater than data released by the Brazilian government.

In Brazil, there are more nursing professionals dying with the coronavirus infection than Italy and Spain combined: 73 of them have died in the South American country so far victims of the “mild flu”, according to President Jair Bolsonaro, who is about to end the lockdown to which, since the beginning, was vehemently opposed.

While chaos seems to find no limits in Brazil, overwhelmed by the far-right, the world-renowned Brazilian Economist, Ladislau Dowbor, analyzes exclusively for Pravda.ru the world’s economic and political conjuncture, pointing out solutions.

In the following interview, Professor Doctor Ladislau Dowbor insists on combating the financialization of the economy that, according to him, not only makes the world deeply vulnerable in pandemic crises like this, as it is also the cause of the successive crises of the capitalist system.  

“It is not a question of capitalism or socialism, of right or left: it is a question of human decency,” says the economist who, mentioning the 2030 Agenda, UN Sustainable Development Goals, proposes as a solution that, according to him, should be “economically viable, but also socially fair, and environmentally sustainable.” 

Dowbor is the author of The Age of Unproductive Capital: New Architectures of Power (full book), among about 40 books in several languages, Dowbor is a Professor of Economics at the University of São Paulo and has been consultant to several United Nations agencies, Brazilian governments, and municipalities. Recently, he published a 15-minute video exposing, in English, how speculation has destroyed the Brazilan economy.

Below, the full talk of Ladislau Dowbor to Edu Montesanti, a must-read interview in which the Brazilian economist analyzes the world economic situation during the pandemic, caused by the novel coronavirus.

Edu Montesanti: Economists across the globe are arguing what kind of world will emerge from the novel coronavirus. In the preface of your new book O Capitalismo Se Desloca – Novas Arquiteturas Sociais, to be launched in the coming days, you present three different views on that: Wolfgang Streeck, who says that the current crisis may not be the end of capitalism, but will surely be the end of democratic capitalism; Joseph Stiglitz, pointing out to progressive capitalism coming up on the horizon; and, Bernie Sanders who, according to you, has rescued the legitimacy and potential of the concept of socialism.

As for you, Professor Doctor Ladislau Dowbor, what kind of world is more likely to emerge from this deep crisis mankind is living?

Ladislau Dowbor: We do not know what will emerge from this crisis, mainly because of the little information we have on the virus. But we do know what we must fight for: we must organize society so that it is economically viable, but also socially fair, and environmentally sustainable. 

This triple bottom line is widely accepted so that we have a “north” in organizing policies. This bottom line has been clearly detailed in the 2030 Agenda, the Sustainable Development Goals. So we do know what must be done. 

On a second level, we must reconsider the decision process that will allow us to reach these goals. The mail line we must work along with is that instead of ideological polarization for and against the State, we should recover a basic balance between the public sector, the private sector (and particularly the giant corporations), and civil society organizations. We must fix the decision process in society. 

Finally, we have experienced excessive state take-over, and are experiencing excessive corporate take-over, neither of which brought the expected results. The present neoliberal globalization process has led to an economic stale-mate, explosive social inequality, and an ecological disaster. 

The private sector works best for the production of bicycles, cars and tomatoes, but certainly not for health, education, security, and other social policies, for which decentralized public systems with strong participatory civil society organizations work best. 

We must cease using our guts and political hatred, but just look at what is working in different sectors and in different countries. We can look at Finland and see how education can be more efficient, or China to see how finance can be more productive, or Germany to understand that worker’s participation in top management can be useful for industry and so forth. 

And we can look at so many community consensus-building experiences for the management of the commons, from water resources to knowledge, as has been so well presented by Elinor Ostrom. 

We know what should be done and how, and we also know that the main obstacle is the gigantic inequality and the power distortion that comes with it. The world will not work with one percent taking over more of the social product than the 99%. 

It is not a question of capitalism or socialism, of right or left: it is a question of human decency. 

To get this level you now predict, will the world face a deepest crisis than the 1929 Great Depression which hit internally the United States, reflecting in the world as this pandemic is directly striking each country in every sector of life, just growing and with second waves in some regions of the planet?

This is a world pandemic, a global crisis, and we have no global government. In fact, we are tearing the world down with 193 member-states of the UN each seeking its own advantages, and the main economic power, the Unites States, chanting nationalistic slogans when the world depends on solidarity. We are just one humanity and have only one earth. This is much more than a pandemic crisis, it is the convergence of four global crises, a civilization challenge. 

It is important to look beyond the pandemic. We are destroying the earth, with climate change, biodiversity destruction, agricultural soil loss, world-wide water sources pollution, general loss of rain forests. We are filling our food with chemicals and antibiotics, filling the rivers and oceans with plastic. Hardly any clean river remains in the world, and we are exhausting the groundwater reserves. 

We are bringing about this destruction of the earth we live on, basically for the advantage of the happy few, precisely the one percent. We have more than 800 million going hungry, while we produce 1,5 kilos of food per day per person, losing one-third of it through mismanagement. 

There is no economic reason for the existence of the scandal of having people suffer from hunger, and there is no economic reason for people to be destitute. What we nowadays produce, US$ 85 trillion world-GDP, means we are producing an average US$ 3,500 per month per four-member family: even with a slight reduction of inequality – for example, corporations paying taxes – we can rapidly ensure a dignified and comfortable life for all, reducing suffering and permanent conflict. Deep inequality is destructive. 

On a third level, we must consider what we are doing with the money. We used to have money printed by the State, presently we have money emitted by banks, 97% of it, just information on computers, traveling basically without control around the world, in the so-called high-frequency trading, with shell-companies, tax havens, and public bail-outs when the speculation world breaks. 

This chaotic financialization has been widely studied, with Joseph Stiglitz, Michael Hudson, Thomas Piketty, and so many others. Money is simply siphoned out of the productive system, contributing both to the environmental destruction and the inequality explosion. The debt system is ruining families, productive companies, and governments. 

Thus, the COVID-19 explosive impact on the world is to be seen as one more destructive trend, and we are facing the convergence of these four crises, environmental, social, financial, and sanitary. And it is a question of survival, not only because of the virus. We are the main virus. 

We have a world challenge, and no world authority or management capacity. There is no solution if we do not build innovative collaborative arrangements. 

Do you point out neoliberalism to be blamed for the current deep crisis, proposing reformedcapitalism or criticize this system as a whole claiming for a total economic change in it? 

We certainly are heading for destruction if we do not change how we behave as humans, as nations, as corporations, as persons. This is not an academic formal catastrophe flag-waving. We have all the necessary information on the accumulation of systemic dysfunctions on this planet. 

We are reaching eight billion inhabitants on this a small planet, and for a perspective, it is enough to remember, for example, that when my father was born – this is not ancient history, it is my father – we were 1,5 billion. And we are growing by 80 million a year, adding a nation like Egypt to our common woes. 

If we take as a starting point Amartya Sen’s The The idea of Justice, instead of debating whether the future will be capitalist or socialist, conservative or liberal, Keynesian or post-Keynesian, we can turn to the obvious priorities, to “what should keep us awake at night”: preventing manifest injustice in the world. 

We know what we should do, the goals are well organized in the 2030 Agenda. We have the financial resources, but they are busy speculating and evading due taxes, money begetting money. And we have the technology to reach out to the most dramatic and urgent problems, information, transportation, able people. What we lack, obviously, is governance. 

The key issue is obviously inequality. The explosive trend of reinforced inequality, in its various dimensions is clearly presented by Piketty, by Emmanuel Saez and Gabriel Zucman, with basic data well organized and presented in the WID – World Inequality Database – and so many others, ranging from the Crédit Suisse report on wealth, the Forbes publications on billionaires, and the word spread through so many organizations like Oxfam, Inequality.org, and others. Apparently, the rich of the earth are not listening. 

The mechanism is simple: If a billionaire puts his money in financial papers – in English we will say he “invested”, while in French it will not be called “investissements” but “placements financiers”, financial locations – he will be earning between seven percent and nine percent a year without producing anything. A seven percent yield on one billion means the invested billion earns its owner 192 thousand dollars in a day. 

The cumulative earnings will lead his fortune to mushroom, which explains precisely the one percent explosive wealth growth, and particularly the 0.1% and 0,01%, not because they are so productive, but because they drain the productive economy: this is not profit on productive activities, but rent on unproductive capital. 

What Marjorie Kelly and Ted Howard have called extractive capitalism works precisely in this new way. Since it is draining, rather than supporting, the productive economy, Michael Hudson rightly calls the process “killing the host”. 

Thus, while concentrating income and wealth through paying low salaries continues, a second powerful mechanism was added, which is debt on families, companies, and governments, creating what we presently know as financialization. 

An old-time shoe factory had an owner we could know, living in the same city where his factory was located, he could even be interested in having a good name in the community. We could protest the wages he paid, but he did create jobs, produced shoes, and paid taxes. 

Nowadays huge financial galaxies, as the UN has appropriately calls them, control thousands of factories throughout the world, extracting dividends on the papers they own, reducing reinvestment capacity by producers, consumption capacity by the families, and public policies in governments. 

We created a debt industry and a financial unproductive monster. As Stiglitz and others pertinently show, the huge fortunes, in turn, generated a huge political power and a systemic stalemate. 

What the present coronavirus has bought about, is an economic paralysis and a cultural shock that is leading people throughout the world to reconsider the system as such, in its various dimensions.

The UN has recently reported that in 2020, 130 million people will starve due to the novel coronavirus, so totalizing 235 hungry people all over the world. 

How to avoid that, in times of world lockdown? 

The Food and Agriculture Organization (FAO) published The State of Food Security and Nutrition in theWorld, estimating 820 million undernourished people in the world in 2019, roughly 10% of the population, and growing. 

We also have numbers for near starvation, over 100 million, and people in the situation of food insecurity, reaching two billion, not to speak of the growing mass of obese persons, an indirect result of having to eat unhealthy food. 

Millions die of hunger every year presently, it is curiously not called an emergency. The registered cause of death is usually the illness which resulted from weak resistance, not hunger. Children dying from diarrhea in poor districts are usually actually dying from hunger. 

Where we place the limit of our indignation, whether starvation, undernourishment, or no access to healthy food, is not important. The important thing is that we have the food, we have the money, we have the information, and we are doing nothing. What is more, the drama is worsening. 

To not only save millions, but to ensure them healthy childhood and adult life, and empowering them to have constructive contributions, costs very little. But they are poor, vulnerable, and their hunger does not concern higher social strata, and does not lock society down. This is the real scandal. 

I am not diminishing the pandemic, but reminding that children dying from hunger represent around five New York towers a day, and this could be faced without a lockdown, and without trillions of dollars of public money.  Something is deeply wrong with our overall priorities. 

Inequality is the problem. It is an ethical question, for they are not the poor who organized the institutions and the economic system we have, they are not responsible for their destitution and their hunger and their humiliations. We are responsible for their suffering, and the rich idiots at Wall Street chanting “greed is good”, as well as the billionaires they serve, should try to be responsible adults. 

If how we maintain billions in poverty is a huge ethical question, just as important as an ethical question is the fact that the financial resources of the very rich are based on unproductive speculation. The poor do not deserve their poverty, and neither the rich their fortunes. It is not a question of economics, but a question of justice, and of human decency. And there are no economic laws here, it is the question of a deeply flawed social contract.

Inequality is also a social and political blunder. No democracy can survive when most of the population is stuck to the “sticky floor”, unable to progress in life, while across generations the rich grow their bubble, with the “sticky ceiling” inheritance process. 

In a country with so much inequality as Brazil, democracy is but a temporary light between dark periods. But inequality is disorganizing institutions in so many countries. We do not have the same isolated or ignorant poor as a generation ago: the 40% of unemployed youth in Algeria are quite aware that another life is possible, and the poor of the world are angry, and rightly so. Angry and desperate, and this leads to dictatorships, terrorism, migrations and so much evidence of a world losing control. 

And inequality is economically stupid, or a question of “folly” to use Barbara Tuchman’s word. What works in economics is using our financial resources, technological power, organization capacity, and communication facilities to improve the well-being of families. 

As we have seen with the New Deal in the US, the Welfare State after WWII, the social policies in Nordic countries, or the social progress in China, even with very different political systems, improving general well-being generates demand for business, which in turn stimulates employment and production. 

Both improve economic activity and generate taxes, which allows the government to ensure social policies that improve the population’s well-being, and to expand infrastructures that improve overall productivity. This is the virtuous cycle. The mass of the population does not send money to tax havens or speculate on Wall Street. They make good use of money. Money at the top is the problem because the rich have lost the systemic capacity to use it productively. 

How stupid can be an idea of building a wall to protect the US from Mexicans? It didn’t work in China, and that was a long time ago. The rich of the earth should stop looking at their pictures in Forbes Magazine, and start doing something useful with the money they are extracting. Obviously, progressive taxation of unproductive capítal is long overdue. 

Now speaking about Brazil’s economy, two important questions are:

What is your prospect to the country, considering the pandemic and the Bolsonaroadministration’s response to it?;

What main national vulnerabilities are the virus exposing in the country; 

and, 

What are the measures the government should have to take, so that families, in general, can keep the quarantine with enough goods and the country’s economy can overcome the coronavirus, with the least possible economic trauma?  

The virus was introduced into Brazil much later, so we had the experiences of other countries, in particular of China and Italy, to understand the importance of reducing the exponential transmission process. Aping Donald Trump, Bolsonaro called the COVID-19 “mild cold,” that is, nothing to worry about. 

This virus has low lethality but quick-spreading, so the key measure is isolation. There is no real alternative between lives and the economy: isolating people before the virus spreads ensure containment, and reduces the expansion to the levels of treatment capacity. It took two months for the government to start taking measures, and presently the virus is spreading throughout the country, with much greater losses, both economic and human. 

The Brazilian situation is particularly worsened by the very low legitimacy of the present government – Bolsonaro was elected because Lula, who was widely favorite, was conveniently jailed for the time of the election, based on absurd corruption charges – and instead of uniting the country to fight the virus, the government authorities are fighting each other. 

1,2 trillion reais (240 billion dollars) was finally proposed, but most of the money is going to banks, with very little trickling down to the population. And the banks are commenting that they should not spread this money to families and businesses, because they are responsible and should avoid risk. Human costs are the least priority here.  

Here also inequality is an essential issue. Wealthy and middle-class families can afford to isolate, but most of the population has neither housing nor economic conditions to follow the recommendations. The feeling of impotence and insecurity is generating political chaos. 

Instead of organized solidary reactions to the pandemic, we have the sterile struggle between economy-first and lives-first clans. And the poor, who cannot lockdown, respond to the president’s arguments. At the time of the present interview, we can only imagine what will happen when the pandemic reaches the favelas and other fragile communities, which is already starting. 

But in the absence of central government leadership, we are seeing a great number of local and regional initiatives, with 9 state-governors from the North-East presently organized in a consortium to collaborate in facing the virus, a great number of mayors taking things in their hands locally. 

Even slums are organizing emergency measures, such as Paraisópolis, one hundred thousand residents, or Heliópolis, with two hundred thousand people, both in São Paulo city, using their own savings, renting ambulances, mobilizing volunteer people. 

The MST (Landless Workers’ Movement) is working in 23 states bringing food to urban peripheries, the over 100 community development banks are organizing local funding, universities are bringing online technical support, like the Rio de Janeiro State University with an online network community support “Emancipa”, and so many other initiatives. 

All this is bringing hope that in the future we will have more self-government, and stronger communities, and eventually new power relations emerging from the crisis. Local currency and escaping the banking drain system is spreading.  

How do you evaluate President Bolsonaro’s sayings, that the Brazilian economy cannot be stuck due to a virus, considering that many will also die of lack of money? 

Jair Bolsonaro’s idea is that the coronavirus is a natural part of the landscape of the world, comparing the COVID-19 to car accidents: 

“We do not lock car stores down, due to accidents in the streets and roads of Brazil.” 

Your view, please, Doctor Dowbor. 

We do not have the poor we once had, resigned to their fate, absorbing the narrative that if they are destitute, it is because they lack courage and initiative and personal capacity. This is clearly losing ground. 

Insecurity, the feeling of being powerless to face the situation, the impossibility to protect themselves and their families, is leading to deep political polarization, and demagogy and hate-discourse find fertile ground in this situation.

The present president is clearly attempting to get power instruments much beyond the Constitution and is daily claiming the chaos we are living in is a result of his enemies who are tying his hands, Congress, the judiciary, the media, and of course the communists, resurrected for the sheer necessity of having someone to blame. 

The generals in charge of the Army, Navy, and Air Force have jointly declared that they stand for democracy. When Latin-American generals claim that they will defend democracy, we should worry. 

Overall, we have a deep feeling of uncertainty, and so many issues are at stake that we hardly can point to future developments. But on the positive side, an impressive number of scientists, politicians, social movements, journalists, and communities throughout Brazil are discussing outcomes and proposing the lines of systemic change. 

Importantly, the lockdown has generated an explosion of online meetings, “live” discussions, online publications, and a richness of ideas flowing without the limits of the academic walls or social differences. A new culture is being built. 

And of course, this is not just about Brazil. An impressive number of new approaches not only to economics, but to social organization and the overall decision process have surged in different parts of the world. A Financial Times editorial (April 4, 2020) states that basic income and taxing wealth need to be in the mix of new policies.

Joseph Stiglitz and the Roosevelt Institute have drawn up “new rules for the 21st century”, New Economics Foundation in the UK, the group around Thomas Piketty in France, the Francesco Economy promoted by the Pope, Kate Raworth’s Donut Economics, even discussions in Davos and so many other discussions and publications are building a new world view. 

Winds of change are blowing, facing the pandemic but going well beyond.

Photo: https://pt.wikipedia.org/wiki/Ficheiro:Coronavirus_patients_at_the_Imam_Khomeini_Hospital_in_Tehran,_Iran_–
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