We are witnessing in growing horror daily scenes of panic-buying and empty supermarket shelves. Australians are hoarding basic goods, like toilet paper, pasta and rice, in preparation for a large-scale COVID-19 outbreak. Similar behaviour has occurred in other countries, like the United Kingdom. In the United States, people are reportedly queueing up to buy guns.
These actions are apparently irrational. Australia produces enough food and toilet paper for all, so there is not real risk of running out. The same applies to the United States. So, what is going on?
Some have argued that panic-buying reflects a psychological need to reassert control in a highly uncertain situation. This is likely true, but focusing on individuals’ psyche provides only part of the explanation.
The real story behind panic-buying and hoarding is the collapse of trust in the state’s capacity to address serious societal problems. Many people can no longer see an alternative other than market or barbarism. Either they look after their families’ own needs, or no one will. In this context, hoarding appears rational.
This much-bemoaned collapse in public trust did not occur all on its own. It is a result of decades of piecemeal changes to the role of government and public institutions, accompanied by constant messaging from political leaders urging people to become self-reliant in the market – ‘lifters’, not ‘leaners’ in former Treasurer Joe Hockey’s formulation.
After the upheavals of the two world wars and the Great Depression, Australia and other Western states developed extensive capacities to intervene in society to ameliorate the disadvantages that naturally accompany capitalist development. High levels of progressive taxation ameliorated income and wealth inequalities. States constructed hospitals, schools, universities and even housing on a large scale. They provided education, unemployment benefits, and healthcare. Critically, states also dominated capital, restricting financial adventurism and developing national industrial policies to promote favoured industries.
I do not wish to romanticise the postwar welfare state. Its bureaucracy was often stifling and officious. Industrial policy often propped up favoured but inefficient industries. It did, however, enjoy far higher levels of societal trust and possess a capacity to mobilise a wide range of institutions towards a shared political goal. Both are badly needed but in short supply today.
From the late 1970s, successive governments in Australia and other Western states have slowly dismantled the welfare state to restore capital’s profitability. Many public functions, like housing, were almost entirely eliminated. Others, like education, health and unemployment benefits have remained but subjected to powerful ideological attacks and institutional tweaks to encourage reduced societal reliance. Industrial policy has all but vanished, and financial capital was freed to roam the globe. Unequal access to assets and finance has meant wealth inequality has skyrocketed.
Meanwhile, the state has retreated to a regulatory role. It is fragmented and decentralised. Government’s capacity for purposive intervention has weakened drastically. Instead it now mainly attempts to coordinate the actions of a host of quasi-independent agencies and regulators. No wonder that using the military, one of the state’s few remaining command-and-control organisations, has become increasingly attractive for managing domestic challenges, like the bushfires.
In response to supply shortages in supermarkets, for example, the Australian government has largely attempted to cajole private companies and individuals. But why should individuals stop hoarding? For decades they have been told not to expect assistance from the state. It was up to them to gain sought-after qualifications to be competitive in the job marketplace, find a place to live, look after their retirement and so on. And their suspicion of the state’s impotence, if not indifference, is not unfounded. It was created by design.
In order to understand what is possible, two comparisons are apposite. The first is between countries like Australia, the US, the UK, and many EU members, where the transformation of the state has been deepest, and countries like Singapore, Israel and Korea. These rather different states have coordinated a largely successful response to COVID-19, and panic-buying scenes have been quite rare too.
Singapore, for example, recorded its first confirmed case eight days before Italy. Yet, whereas Italy now has around 35,000 confirmed cases and nearly 3,000 fatalities, Singapore is yet to record a fatality from the coronavirus and has kept confirmed cases to around 300. Israel recorded its first COVID-19 case in mid-February, but has so far managed to avoid exponential growth, recording only around 430 confirmed cases to-date and no deaths. Korea was initially one of the worst hit countries, but has managed to ‘flatten the curve’ of infection successfully so far, without resorting to draconian measures like China.
Arguably, Singapore, Israel, and Korea’s capacity to respond to COVID-19 stems in part from these states’ enhanced capacity to mobilise people and institutions for war. But it is not essential to go down this path to improve the state’s capacity to address public health crises.
This brings me to my second comparison, between the US’s feeble public health response to COVID-19 and the Federal Reserve Bank’s rapid and forceful actions to stabilise financial markets. As critical markets, like the trade in US Treasury Bonds, seized last week, the Fed enabled US$1.5tn in cheap loans to banks to restore liquidity. A similar injection of funds to fight the coronavirus pandemic would have arguably yielded remarkable results.
This example shows that rather than state capacity declining absolutely, it has been redeployed to protect capital from destroying itself: this is a political and ideological choice. To restore trust and avoid society’s descent into barbarism it is time to make a different choice.