We Need A Much Stronger Public Sector, Says Subin Dennis
September 27, 2020

We Need A Much Stronger Public Sector, Says Subin Dennis

Article by Yadul Krishna

In the Washington DC based Radio Sputnik show, ‘By Any Means Necessary’, Subin Dennis, economist and researcher at the Tricontinental Institute for Social Research, speaks to Sean Blackmon and Jaqcuie Luqman about the failure of capitalism in saving people’s lives and why a strong public sector and a state-interventionist strategy is imperative to overcome the crisis, with reference to left-ruled Indian state of Kerala’s response to the pandemic.

Sean Blackmon: We are at a point where there are close to two million cases of coronavirus worldwide with hundred and twenty thousand deaths. Here in the US, we have about five hundred and eighty thousand cases with over twenty thousand deaths. The IMF is projecting that the pandemic will lead to the worst recession since the great depression. You have recently published a piece with the AlterNet titled “Coronavirus pandemic brings to light the need for a stronger public sector” where you have hone in on the frailties of neoliberal system and its weakness. Could you break some of these down and show how the neoliberalism that has been so strongly promoted, led to a lot of the difficulties that we are seeing right now under the pandemic and will likely have ripple effects for a long time?

Subin Dennis: Yes. So what I have been trying to say is that neoliberalism, which has been around for four decades, has led to a substantial weakening of the public sector. It has entailed fund cuts in public healthcare, the effects of which have been felt even in the countries of Western Europe, which have fairly robust public healthcare systems. In the US, it is more of a largely privatised healthcare system. But even those countries that had a robust public healthcare system, they have suffered because of fund cuts which have occurred in the recent decades. That is one part of it.

The second part of it that I try to explain in my article is that the importance of the public sector goes a long way because especially in times like these, like an emergency situation of a war or a pandemic such as the current one, you need to be able to really ramp up production in a range of sectors like industries and agriculture. It really shifts the production to the sectors that are really necessary to handle the crisis. However, if you have weakened the public sector, you’ll be on the back foot. On the other hand, if you have a strong public sector, you’ll be on the front foot, at a massive advantage. So that is why China is able to handle this crisis in a much more effective manner. That is why Vietnam is able to do much better although at a smaller scale.

Practically, every country is trying to commandeer its private sector right now, with its own limitations because the private sector is not easily amenable to such changes. They may try to resist being controlled by the state sector being directed by the government. On the other hand, if you have a large public sector that you can easily commandeer, then you’ll be at an advantage. That is why the current crisis has brought to light the need to put the efforts of privatisation to an end immediately.

We need to really focus on developing production capability. So what has happened in many countries is that they have assumed that they don’t need to have production capabilities on their own and what you need to do is to engage in international trade and get whatever you want. But what happens in a situation of an emergency is that there will be all sorts of restrictions on exports because every country will be trying to cater to its own needs, especially when you cannot immediately shift production capacities to the sectors that you really need. Such emergency measures will be needed. When that is the case, international trade will not be very effective. As you can currently see, the poorer countries are at a very significant disadvantage because countries like the US and other western European countries are paying many times the normal price to buy masks, ventilators, gloves, etc. Thus many countries in Asia, Africa and Latin America are finding it difficult to access many of these goods.

It shows that all these developing countries should really try and develop their own production capabilities. They used to do that earlier. If you look at their history after WW2, when many of these countries that became colonised gained independence, they had set up their own industries, their own public sector, which in turn developed their production capabilities. But in the recent decades, they have instead gone for privatisation and try to export raw materials and import finished goods and so on. All of these things are not sufficient right now. It is time to go back to developing production capabilities. Only such a return will benefit the working people at large, the workers and peasants and so on. A return to that kind of strategy will be needed at this point of time.

Jaqcuie Luqman: On the other side of this, the IMF is now projecting that coronavirus will lead to the worst recession like the great depression. That is pretty grim but they also say that they urge policy makers around the world to keep using lockdown policies to stop the virus from spreading, noting that that’s the best way to eventually be able to resume normal economic activity. This is what China has been able to do and other countries are beginning to do as they are fairly easing their lockdown restriction as their infected numbers and their rate of death have gone down after implementing strict lockdown policies, thus they are able to slowly “open up“ their economies again and get back to work. But in countries that have a much more of a privatised neoliberal focus that is not being done. So, how is that going to affect the economic recovery of the countries, especially since the countries with a neoliberal focus like the United States is focused so much on reopening the economy?

Subin Dennis:  Well, this is something that brings to light the sheer irrationality of the system. If you look at this crisis in a long historical view, it is not really the biggest crisis the world has seen – It is not even the biggest pandemic, it is not a war which led to the deaths of millions of people, at least not yet. But still even when the economies are forced to shut down their production lines or impose certain restrictions for a few months, then also this is happening. This is leading to a crisis of historic proportions. So it actually shows how irrational the system is; that you cannot even think of a holiday for many of these industries for a few months without workers having to starve. So if you cannot even manage that, what is the point of the system which cannot keep people alive? This is a system that cannot prevent starvation of people. So that is why you need to move to a much more planned system.

If you have a planned system, for example, China imposed a lockdown at an early stage. That is another point which needs to be noted here. Countries of Western Europe, the US and so on were very late to impose the lockdown. Many of them were under the impression that the virus is an eastern malice, something that affects only the poorer countries. They thought that cleaner and richer countries like us will not be affected by this. So that sort of complacency was there in the beginning. So they were very late to impose lockdowns. But even when they imposed lockdown, the sheer fact that they cannot implement it properly or they cannot ensure services and essential goods to the citizens who are affected by the quarantine, made their responses much weaker. So, in China for example, Wuhan with its more than ten million population, they managed to impose a strict lockdown and the entire delivery of food moved online. The state ensured that everybody got their food in their homes delivered. Nobody had to starve there. All testing and treatment were free. They ensured that everybody who had symptoms were tested and were moved to isolation facilities.

In countries like the US, UK and so on, you can see that many of those who were tested positive are still at their homes. That is unthinkable. I’m in the state of Kerala in India, where in my state, ruled by a communist party, has managed the most robust response to Covid19 in India. It has garnered much attention in the international press also these days. So even in our state, if anybody has come from abroad or from other states and is exhibiting symptoms, they will be moved to a quarantine facility. They will not be at home. If they are tested positive, they’ll definitely be in a hospital. Not a single person who is tested positive for covid will be at their homes, knowing the danger that they will cause on other people. So this is something that shows the sheer irrationality of the system that you have hollowed out all the capacity to respond to a crisis in an effective fashion. So, definitely a lockdown period is necessary, at least that’s what all the evidence suggests so far.

As far as some large countries are concerned, there are some small countries which have managed without lockdowns. There is still a debate going on whether that is entirely effective or not. But for the larger countries, especially the countries who are already late in managing to start the responses, they will need extended periods of lockdown. They can perhaps still manage it. I would say they need to put up a much larger state-led effort to plan production in a manner that the most essential things are produced and delivered to people so that the people don’t starve. You can expand public healthcare facilities at a fast pace, so that you can produce things such as ventilators, masks, gloves and so on. Of course, many of these things cannot happen in a very short span of time, but you’ll need to plan for such things in the coming weeks and months.

Sean Blackmon: I was wondering if you could say more about Kerala and how that state has been able to see some of the progress it has. In the context of India that has a large population with over a billion people with poor healthcare system, which is under the leadership of Prime Minister Narendra Modi, how does this aspect of this planning of this overall orientation make for the kind of progress that we are seeing in Kerala, may be as a post to the rest of India?

Subin Dennis: Firstly, let me clarify that we don’t have central planning in Kerala, because Kerala is only a state (like a province) in a capitalist country which is India, like how New York is to the United States. India right now is ruled by a far right party led by Narendra Modi, who is the Prime Minister. But Kerala has a very strong left movement and in its entire history, for about thirty years, it has been ruled by a left coalition. So what we have done in Kerala is to build a strong public healthcare system over many decades. It didn’t happen overnight.

We have also resisted the efforts by right wing parties such as the one which is currently in power in the centre, but even other mainstream parties, such as the Indian National Congress, which has ruled India for a very long time and also have been in power in Kerala from time to time. So both these parties, BJP and Congress, tried to implement the policies of privatisation. But in Kerala, we have resisted that. Even when the left is not in power, it resists privatisation because the left has very strong trade unions. So, it is able to resist the efforts of privatisation in a fairly strong sense.

But when the congress is in power, it happens that it runs down the public sector. It doesn’t manage to privatise it, but it runs them down. As a result, the public sector will make losses and some of their plants will be on the verge of closing down. In the time of this pandemic, one such public sector which the congress had run down was the Kerala Drugs and Pharmaceuticals Ltd. It is a company that makes medicines and essential drugs and was made to reach the verge of closing down. But when the left came back to power in 2016, it turned that company around. So during this pandemic, it has increased its production of drugs and it is producing hand sanitizers in large scale for the use of hospitals and so on.

The BJP led central government had previously told all the state governments that they should privatise their district hospitals, which are the main public hospitals in every district, in every state. But the Kerala government said ‘No! We are not going to privatise our healthcare system’. So that is the kind of approach that we took.

As far as this pandemic itself is concerned, we were vigilant right from the beginning, right from the end of January, when it became clear that this epidemic is going to affect the entire world, especially because there are 2.1 million people from Kerala working and studying all across the globe, including in Wuhan. So our political leadership knew that there are students from Kerala in Wuhan and once they come back, there is a danger that they might be infected and might infect others as well. So when they came back, we successfully tracked them down, tested them and those who were tested positive were isolated and treated. All of them recovered and not even a single person got infected from them. But in February and March, more people came from other countries like Italy, the US and countries of Persian Gulf and so on. Thus, when more people came, more infections also came. But still we have kept our mortality rate extremely low, where we have only just 386 total cases and out of that only two people have died. You might be interested to know that more people from Kerala are actually dying abroad. In the US actually, I think 11 people have died, but in Kerala it’s only two. Our mortality rate is 0.5, which is exceptional. These are all the ways how Kerala is trying to flatten its curve.

Yadul Krishna has been associated with the left students’ movement in India. An alumnus of Delhi University’s Shri Ram College of Commerce, he writes on issues concerning economy and politics. Reach him here.

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