Buenos Aires-based Claudio Katz, author of many books and articles on political economy, gave this interview on March 30 to El Círculo Rojo, the radio program affiliated with the online socialist news site La Izquierda Diario. Lance Selfa translated the interview with permission from the author.

How would you characterize the crisis of this pandemic?

It seems to me that we’re facing a natural calamity that contemporary capitalism has enabled. Already, we’ve been anticipating something like this happening because of climate change, global warming, and the accompanying increase in serious floods, wildfires and droughts. But now the coronavirus has erupted, with its devastating consequences of massive infection. What’s most striking isn’t the number of dead so far, but the massive confinement of people in their houses. It’s an unprecedented social experiment.

I think it’s important not to say “we’re at war.” There are no armies, battles or air raids. In war, human lives are destroyed, but in catastrophes like this one, protection of life is paramount. They are opposing situations even though they require similar mobilizations of government resources. The “war” analogy is very dangerous and Trump can use it to whip up hysteria against the “Chinese virus.”

Comparing the pandemic to a natural disaster under capitalism also emphasizes that we’re not just facing an economic crisis. Unlike the 2008 economic crisis, the epicenter of the crisis isn’t the financial system. The pandemic has hit the entire system.

It’s true that the virus lit the fuse of another financial bomb underneath corporate and sovereign (or government) debt. The Wall Street stock indexes dropped by the greatest amount in 30 years, and undoubtedly, the coronavirus has revealed another instance of overproduction. The price of oil collapsed and global supply chains have been disrupted.

But, to me, it seems mistaken to analyze those tensions through the lens of the last economic crisis. Today’s volatility stems from giant imbalances characteristic of contemporary capitalism. It’s not a natural happenstance that came from outside that system.

It’s clear that increased urbanization, caused by increased concentration of the working class over the last few decades has facilitated the spread of the virus. The destruction of wildlife habitats and agro-industrialization has increased the spread of bacteria. Today we’re stunned as we observe the revenge of nature against 40 years of neoliberal extractivism.

Let’s also remember that we’ve created globalized consumption without globalizing health. Tourism is internationalized, but health provision isn’t. The result is the collapse of the hotel and airline industries. To sum up: the pandemic has been made possible by the devastating operation of a digital, globalized, financialized and precarious capitalism.

And what are the most visible impacts of the upheaval caused by the virus?

The most immediate is the hammer blow to neoliberalism. In a few weeks, the world’s states have undertaken massive interventions in the economy, whose breadth probably outweigh those of 2008. It’s affecting a number of sectors that have already been heavily privatized. The neoliberal ideologues worry that those privatizations are threatened and that this period will start a new era that will reverse the great trend of making everything submit to market forces. They hope that the crisis will pass quickly and end like the subprime crisis of 2007-2008 did: with little meaningful change to workings of the system. They’re looking for whatever argument they can use to obscure the fact that privatization in the health care system left the population unprotected. They want to hide the fact that Trump, only two years ago, dismantled his advisory unit on global health, which had warned for years of an outbreak similar to what we’re experiencing now.

Another important feature of the pandemic is its differential impact across social classes. It’s not a “democratic” virus that hits everyone equally, with the possible exception of older people. The gaps in insurance coverage and resources to confront the tragedy are evident. That distinction was somewhat hidden because the virus first appeared among tourists and travelers. It hit the middle class and elites, including presidents and government ministers, first. But inequality came to the fore as the infected sought treatment. In the U.S., the virus spread in a population where more than 30 million don’t have health insurance.

It has also revealed a striking difference in peoples’ work situations. There is a sharp division between those who can tele-work from home and those who have to work outside the home, like health care and grocery workers. And that’s not even to mention informal sector or “gig” workers who are completely unprotected from the disease.

The capitalists will take advantage of this situation to boost their fortunes with little regard for other peoples’ suffering. The U.S. government rescue package, approved in March, will provide enormous subsidies to profitable companies (like the airlines) while doling out crumbs to workers. The checks being sent to workers are insignificant compared to rapid job losses and unemployment. Incomes of people who are being prevented from working have been left seriously damaged.

Another fact that seems significant to me is the difference in the reactions between governments and cultures. Public health professionals have been advocating the necessity of quarantines, but their application has depended on each society’s affinity with neoliberalism. Among the extreme right, denialism has dominated from the start. Moreover, we’ve seen a stark Malthusianism from presidents who proposed that we had to tolerate the spread of the virus to create “herd immunity” in the population, completely disregarding the elderly and vulnerable. They looked favorably on rising death rates that would shrink social welfare spending. These insane free-market and social Darwinist ideas delayed and obstructed quarantines in the U.S., Britain and Brazil.

Leaders prioritizing public health and some countries in Asia, which had experience from the SARS outbreak a decade ago, have taken another path. It seems that the capacity to maintain social distancing in Asia has its roots in these traditions and mindsets. While it’s said that China successfully implemented social distancing because it’s an authoritarian state, it’s forgotten that the same results (using similar methods) prevailed in Taiwan and South Korea as well. What stands out is the contrast between these practices and Western governments’ irresponsibility. In the last instance, China could act more efficiently because it relied on a state that was more autonomous from neoliberalism.

What are the main differences with the 2008 crisis and how do you think this will affect global geopolitics?

The most important difference is the absence of global coordination. In 2008, there was a coordinated action on the part of the central banks and the G20, under the command of the U.S. Federal Reserve. The determining factor was the rescue of global capitalism that China implemented. Now the opposite prevails, with increasing national regulation and the re-establishment of borders, in a climate of “beggar thy neighbor.”

Competition continues to get in the way of solutions in the health field. A disastrous combination of unscrupulousness and rivalry persists. Inattention began in 2018, when the World Health Organization warned of the possibility of a pandemic. Because pharmaceutical companies are not interested in producing drugs for the prevention of mass diseases, Western governments defunded research programs focused on the virus. This shortsightedness now coincides with a brutal competition to decide who will get the vaccine first. Europe, the U.S. and China are vying for this trophy, to protect their own populations first and to score future patents. Trump went further, trying to bribe several German scientists so that the U.S. could corner the research.

To me, three situations are unfolding in the geopolitical arena. China has been in the best position, having triggered the problem. That initial outbreak was consistent with its leading role in globalization. Its economic role enhanced its capacity to export economic and health care innovations to the rest of the world. China’s weight in the global GDP has increased by more than 30 percent since 2008.

At first, Western governments watched with some satisfaction and malice as China fell first to coronavirus. They expected the problem to be confined in that country, with the consequent weakening of their Asian rival. There are even suspicions that the US military played a role in generating the virus. It is very difficult to corroborate or deny that possibility, but it should not be ruled out in light of the contagions that the CIA unleashed in Guatemala and Cuba in the past.

It seems that China is beginning to contain the pandemic inside its territory, using a centralized health structure with little input from the private sector. There is already a triumphant feeling from the Asian giant as it offers help to other countries and shares with the scientific community the virus’ genomic sequence. I would associate these achievements with the limited functioning of capitalism in that country. The restoration of capitalism has not been fully consummated in China.

At the opposite pole is the United States, which, at the beginning of the crisis, appeared to be the great beneficiary of the influx of international capital. That U.S. role as financial “safe haven” appeared to repeat what happened in 2008. But now we see how the northern power is the main center for the coronavirus pandemic. The table was turned. Trump is desperate. Every day he comes up with a different initiative, without devising a coherent strategy. Rifts inside the U.S. government are getting worse, and chaos reigns in the response to the crisis. Governors are acting on their own initiative, challenging presidential authority, in the face of the growing need for a national health system.

It is very shocking to see how the image of the United States is falling across the globe. It no longer acts as an empire that “rescues” the rest of the world. On the contrary, it appears as a brooding power overwhelmed by its inability to deal with the disaster inside its borders.

The third situation is found in Europe, which, by becoming the first main center of the contagion, precipitated the generalized crisis in the markets. The European Union is conspicuous by its absence, and each country is on its own. On the one hand, they claim that the virus “has no passport,” and on the other hand, they close borders.

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It is very shocking to see how the image of the United States is falling across the globe. It no longer acts as an empire that “rescues” the rest of the world. On the contrary, it appears as a brooding power overwhelmed by its inability to deal with the disaster inside its borders.

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For many reasons, the outbreaks in Italy and Spain have become extremely serious. But it is clear that neoliberal health policy and budget cuts have been decisive in those two countries. The contrast with Germany, which maintained greater investment and centralization in its health system, is striking.

In this dramatic health context, what type of economic scenario do you see?

Up to now, there’s been a blind reaction from Western governments. They say they have to “flatten the economic curve” (like the health curve), so as to spread out the decline in GDP over time. This was the formula they used to help the capitalists in 2009. Lower interest rates, liquidity injections and fiscal policies. But the impact is very doubtful, because unlike that time, the rescue today doesn’t involve the banks. It includes countless parts of the economy.

So we should be cautious in making predictions. A whole mythology has been created around economists who make predictions. This extends even to the Bill and Melinda Gates Foundation that took credit for having predicted the pandemic. There are many fallacies with these theories of “black swans.”

There is a certain consensus that assesses the seriousness of today’s crisis according to how long it lasts. If it lasts for only weeks and China is able to get up and running in the second quarter, the disruption will find a floor of sorts. If, on the other hand, the pandemic goes on longer, a recession more serious than the one in 2008 will be likely. And finally, if the pandemic goes on for months or a year, we could be looking at something like the depression of the 1930s. Therefore, there could be three possible courses: a slowdown in growth, a recession or a depression.

Still, a purely economic reading of the situation is insufficient in this case, because the scenario will also depend on the development of an effective treatment or vaccine against the virus. The number of fatalities distinguishes this pandemic from its predecessors in the Middle Ages or the early part of the 20^th century. The Black Death killed a third of the population of Europe and the Spanish flu of 1918-1919 claimed the lives of 20-50 million people. Because of historical changes in the functioning of society, today’s pandemic can spur an economic collapse without approaching the death tolls of those historical examples.

The distinct scenarios of a growth slowdown, a recession or depression will determine the degree of shock that the cheapening of capital will create. Already, there is an immediate impact on tourism and transport, and its spread to other areas is somewhat unknown. In this regard, it’s worth taking a look at what will occur at the periphery of the world economy.

Yes, I’d like to follow up on that topic. What is your impression of the impact on the periphery, and specifically on Latin America?

So far we all know that the effect has been less in the warmer regions and, for seasonal reasons, in the southern hemisphere. There is also a great awareness that a serious situation lies ahead, if contagion becomes widespread in regions of Africa, South Asia or Latin America, where health systems are non-existent or barely functioning.

On the economic front, the impact is already visible in the so-called emerging economies. They have been hit hard by the sharp fall in commodity prices and capital flight. In the first 45 days of the coronavirus outbreak, that hemorrhage of funds out of emerging markets exceeded $30 billion. When the International Monetary Fund promises to rush out loans to these countries, it is simply plugging a leak that has already opened up. We’re on the edge of a dramatic deterioration in foreign debt payments, which have ballooned at a dizzying pace. The ratio of emerging market debt to GDP jumped from 100 percent in 2008 to 160 percent in 2019.

The impact of the pandemic is still limited in Latin America, but the economic consequences are already in sight. The UN’s Economic Commission on Latin American and the Caribbean changed its 2020 forecast from one of slow growth to one of contraction. And it’s worth remembering that unlike 2008, China’s imports are declining and tourism has collapsed.

In Latin America, the different reactions of governments to the pandemic are equally significant. Bolsonaro embodies a pathetic extreme of neoliberal contempt for public health. He makes fun of the “little flu” (gripecita), calling for people to go to work and to church. For this reason, he faces a monumental crisis. The justice system and many governors are rejecting his authority, and we’ll have to see how the military brass reacts. His unconscionable conduct is very similar to what [right-wing former President Mauricio] Macri would have done in Argentina. Both share the same privatizing contempt for the health of the population.

At the opposite pole is [Argentine President] Alberto Fernandez, who ordered quarantine when comparatively few Argentineans had been infected or had died, in a political climate of eclipse of neoliberalism. In Argentina, the population now values public companies and hospitals and centralized state intervention. The right wing is discredited and silenced.

But in the region there are very varied situations. In Chile, the government is using the pandemic as a pretext to increase repression against the popular rebellion and in Bolivia the dictatorship is taking advantage of an exceptional circumstance to try to keep itself in power.

How do you evaluate the pandemic’s impact on popular movements?

It is clear that the coronavirus has had very adverse effects on popular organizations. It not only disrupts their day-to-day functioning, prevents their deliberation and assemblies, but it cancels their mobilizations. With empty streets, the main channel of protest is blocked.

Another negative impact is fear. A plague psychosis prevails, weakening rational behavior. The media have created an “infodemia,” as hypertelevision takes over peoples’ time while they are confined at home. The media ratchet up fear, get in the way of rational reflection, and ignore capitalism’s responsibility for the pandemic.

Moreover, the danger of militarization is very apparent, and not only because the military and police are controlling the streets. Under the pretext of monitoring tests and ensuring social distancing, the groundwork is being laid for a huge increase in computer surveillance. But the problem is more complex, since a pandemic requires strict compliance with rules to prevent contagion. One must be very careful in evaluating the facts and to distinguish police abuses from public health protection. Neither simply justifying military intervention nor calling for lifting all restrictions is justified.

Having said that, I think it’s essential to acknowledge the positive elements in the new situation. We must avoid a kind of pessimism that assumes only a totalitarian outcome from current conditions. This is certainly a danger, but it is not inevitable. Above all, we need to take note of the significant increase in the public’s support for public health. The pandemic has destroyed the neoliberal idea that every individual is responsible for their own health, and that they have to manage it so that they can keep their insurance rates low. In the face of this capitalist nonsense, the pandemic has shown that health is a public good, and is tied to the ability to defend the entire society from disease.

There is also an emerging appreciation of solidarity action, embodied in the internationalist example of Cuban doctors. We are once again witnessing the extraordinary gesture of solidarity from a country which, instead of closing itself off for its own protection, offers help to other countries. Cuba is a small nation on the periphery that is offering its support to developed economies. Rarely has it been so apparent that we can see a direct counterpoint between selfishness and solidarity. The European Union banned exports of medicine and Italy requested help from China and Cuba, which responded immediately.

We should also pay attention to social networks. The pandemic has generated a great explosion of online communication. Since the beginning of the quarantine, data traffic has increased by 40 percent. Just as social networks played a big role in the global protests of 2019, they could now become the foundation of a popular response to the capitalist disaster.

What do you think movements should fight for?

There are already various proposals from different popular movements, and many initiatives are circulating. They all share a global perspective. Since the pandemic and the crisis are global, responses can only work if they’re global. This global perspective is in line with the tradition of the Social Forums of the early 2000s and two movements —feminism and environmentalism—that have also acted on a global scale.

All the programs emphasize, above all, the need to support calls to “stay at home” and to protect the life and health of the population. They emphasize the urgent need to test as many people as possible in order to act effectively to contain the spread of the disease. They also demand measures of centralization, intervention or nationalization of health care and the elimination of “intellectual property” in the field of medicine. They call for resources by taxing the rich and cancelling poor countries’ debt. They support a ban on evictions and the introduction of universal income.

These ideas push the envelope in the face of the current upheaval. We have seen the bewilderment and fear that the coronavirus has caused. But we also see a growing interest in people to understand what is happening. There is a great demand for explanations that link the pandemic to capitalism. Our lives are more important than millionaires’ profits. In this crisis, I hope that public health can win out over capitalism.