Johnsonism, the Capitalist State, and Coronavirus

EDITION: Bad New Times.

Johnsonism’s response to coronavirus aims to reconfigure state-capital relations, both in guaranteeing private sector activity, and in extending the commodification of social reproduction.

This piece is part of our What Is ‘Johnsonism’? series.

It has become impossible to separate the Johnson government from the Coronavirus pandemic – and nowhere more so than in the case of economic policy. Whatever path Johnsonism (if it can be called that) might have taken independently of the virus, it will now be permanently marked by it. After the initial economic shock, a long period of dampened consumer demand and low investment (due to the burden of new and existing private sector debt), will at the very least lead to a deep recession, followed by under-performance and erratic growth. The Johnson government may have demonstrated a willingness to ‘intervene’ in the economy, but all capitalist societies are marked by forms of state intervention. What is at stake is the precise configuration of state-economy relations. The immediate economic policy response to the Coronavirus pandemic has seen the state assume responsibility for guaranteeing continued private sector activity. The legacy of this is likely to be a form of state-guaranteed capitalism in which an underperforming private sector is backstopped by the state and new areas of social life are commodified through the state.

The immediate policy response to Coronavirus has reflected the pattern of earlier state interventions established during the 2008 financial crisis (including the extension of liquidity support across the financial sector), while breaking from them in the form of various de facto state guarantees to the private sector. The furlough scheme, for example, subsidises the wage bill while ensuring the reproduction of the capital-labour relation in circumstances that would otherwise see its dissolution. One of the major costs to firms – the wage bill – has been, however temporarily, guaranteed by the state. The government has also offered extensive support to small and medium sized firms in the form of partially and fully state-guaranteed loans issued via financial intermediaries. The Bank of England has stabilised financial markets via more or less the same methods as it used in 2008: rate cuts, asset purchases (including short term commercial paper), direct funding to government, and swap line arrangements with the US Federal Reserve. In an interesting break with neoliberal orthodoxy, the Chancellor, Rishi Sunak, has announced a fund to support innovative start ups, which are highly capital intensive and often unprofitable in their early stages. The possibility of the government taking equity shares in these small firms is evidence of a desire to maximise avenues for capitalist innovation in the tech and data industries.

It is hard to avoid the conclusion that a depoliticised, technocratic economy breeds a cronyist, corrupt politics.

The state is now involved in the creation of private investment opportunities for capital via the public sector (through public procurement, outsourcing and investment). The state is also dependent on private capital as a source of demand for liquid government bonds, which are used as the main source of collateral in repo transactions. The latter are a source of leverage in contemporary financial markets and allow the continued growth of financial activity. This makes government debt central to modern financial systems and deepens the interdependence of the state and finance.

The Bank of England has stepped into this fray by guaranteeing not only government debt and other financial assets in secondary markets, but also the debt of large non-financial firms. This commitment to intervene in the market for short term corporate debt has pushed financial markets into rapid recovery even as job losses and bankruptcies have risen. The Bank’s actions have created a sense in financial markets that the big corporates are safe and that their debts will be protected. While the Bank is often seen as the archetypal ‘depoliticised’, technocratic governing institution, it is in fact very much a part of the economic model that has produced Johnsonism: the centralisation of political and economic power; the cartelisation of corporate interests; the rentierisation of the wider economy; the super-exploitation or workers and renters. It is hard to avoid the conclusion that a depoliticsed, technocratic economy breeds a cronyist, corrupt politics.

Government procurement of private sector services have followed a familiar corporate welfare pattern. The controversial outsourcing giant Serco has been put in charge of the test and trace system only to bungle its launch. The consultancy firm Deloitte was contracted (amid a veil of secrecy and reputedly close ties between it and the Cabinet Office) to supply PPE to the NHS with predictably ‘useless’ results. £1 billion in government contracts has been doled out under a Coronavirus fast-track scheme that loosens government accountability. Although these contracts reflect the tendency of the state to centralise political power and outsource service provision under neoliberalism, new fields of social reproduction are being opened up to the private sector in the midst of the crisis. Serco, for example, has been put in charge of running emergency contact centres for the vulnerable. Concerns have also been raised about how the personal data of those using the NHS test and trace app may be used by third parties such as the US data-mining firm Palantir. These new public-private connections suggest a willingness to bring the private sector deeper into the provision of public services and to extend the commodification of social reproduction.

Although there is ample evidence for a form of state-guaranteed capitalism emerging from the immediate policy response, the precise political and economic relations that will form between the state and capital remain to be determined. The central problematic that Johnsonism must attempt to resolve – how to guarantee the continued control of private capital over the increasingly social character of economic activity – is overdetermined by capitalism’s relation to nature, to public health, to the contradictions of politics and so on. The development of various forms of state-economy relations will have to be studied carefully. The extent to which the state successfully secures the existence of the capital-labour relation; the successful backstopping of the whole payment structure of capitalism; the degree to which the state is able to maintain and intensify capital formation; the opening up of new spheres of social reproduction to commodification; the potential for the state to aid processes of ‘creative destruction’ and even decommodification; the successful reproduction and extension of the legal forms of capitalist social property relations – all of these are matters of contingency which depend on multiple points of political struggle.

The personal political history of Johnson, as documented by Douglas Murphy in his book Nincompoopolis, suggests a possible political form for Johnsonism in government. In his time as Mayor, Johnson took on the role of ambassador to capital, providing personalised and municipal support to spectacular public works projects that (while not always immediately profitable) paved the way for new speculative investment opportunities for financialised private capital (especially in the construction and housing markets). As the government looks to some form of recovery from the crisis, it can be expected to provide private capital with new investment opportunities via public procurement contracts, seed financing (the state as venture capitalist), guarantees and subsidies. Johnson’s predilection for public monumentalism could easily combine with the creation of deregulated ‘innovation zones’: the ideal would be Stratford’s Olympic Park meets the Silicon Fen. Perhaps more likely is a system of state-corporate cronyism that profits from public health and other fields of commodified social reproduction.

Whether or not these types of state-economy relations do emerge depends both on Johnsonism’s ability to resolve the various contradictions it is confronting and on the response of other social forces – particularly workers and their trade unions in sectors that have found a new prominence since the outbreak of the pandemic. Indeed, it is through coming political, social and economic conflicts that Johnsonism will either be forged or broken.