How Covid-19 Illustrates the Difference Between Markets and Capitalism

What a Break in the System Reveals About it

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The coronavirus is causing firms to go out of business.

That is an obvious statement. Let’s pick that obviousness apart, though — the “obvious” is where all of our greatest assumptions about the world hide from us.

First off, it isn’t the coronavirus itself that is causing firms to go out of business. It is the lockdown being instituted to fight off the deadly disease — a society’s version of a body deliberately raising its own temperature to fight off infection. It hurts us — but, hopefully, it will hurt the virus more.

Regardless, that statement isn’t exactly true either — the lockdown doesn’t cause firms to go out of business. The lack of income due to the lockdown causes that. But no — that isn’t quite right, either. The lack of income isn’t what causes the firms to go out of business — it’s the lack of the ability to pay rents and interest on debts that are causing these firms to go out of business during the coronacrash.

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Let’s rephrase that: it is the requirement that these firms pay rents and interest on debts that are causing them to go out of business.

“Requirement”: let’s investigate that word. Why is it a “requirement”? What would happen if they simply shrugged and ceased paying rents and interests, while remaining open and paying all other costs that they normally would? Why, the police would (eventually) come to enforce those rents and interests, of course. They would do this through evicting the business or foreclosing on its property, of course — and so, to avoid paying this greater cost later, the business must shut down now.

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So, let’s rephrase that: these firms must pay rents and interests, to avoid the loss of even further value due to the actions of the police — and because they now know that they will not be able to continue to pay these tithes, they are choosing to cut their losses and go out of business now — before they can incur these further costs.

And who are the police, after all? They are merely the armed component of the state, and should be addressed as such for clarity. And how, after all, are the police paid? Through taxation, of course. From this perspective, it begins to feel as though the rents and debts are merely a form of tax farming — the state collects taxes from those who hold property or financial capital, and those who hold those use the enforcement of the state to collect rents or interests on them.

Rents and interests are, ultimately, merely tithes being paid to agents of the state. From this perspective, any bail-out that the state might offer to firms that would otherwise go out of business is faintly ridiculous: here is money from me, so that you can pay (me and) them, so that they can pay me.