The Covid-19 pandemic has once again shown that, despite all the tragedy involved with people losing their lives, events like these are shamelessly exploited by big cooperations as well as the government. In the end, a great majority of the population will not only lose financial assets but also personal freedoms and human rights. Yet, huge cooperations will be the big winners of this crisis which allows them to strengthen their market position to attain immense profits in the upcoming decade.
The big players get saved by the government because they are “too big to fail” whereas small companies end up bankrupt. But should corporations really become too big to fail? Isn’t this inherently bad because it creates dependency and bears a high risk? We should’ve learned from the 2008 financial crisis that there is no guarantee for economic growth and that sudden recessions happen even for no reason.
Yet was any of the big players prepared for a huge crisis? No, because as soon as the economy goes down big cooperations drop their strictly capitalist perspective and become socialist. Now, it is suddenly the community that is supposed to save them. But as soon as the company becomes profitable again, there is no giving back to the community. Then the profits will be privatized in a strictly capitalist manner.
In the Western world, we allow companies to work under strictly capitalist rules in times of growth without the risks that are associated with such a system. In a strictly capitalist system, the state doesn’t save your ass if you go bankrupt. But because there are so many jobs associated with these mega cooperations, and there is such an extensive entanglement with other industries, big players are not allowed to fail by the government.
Megacorporations profit from financial crises
The best insurance against any financial crisis nowadays is to get too big to fail. Everyone who is not big enough gets sacrificed by the government. It doesn’t matter if you own a barbershop, coffee, or run a small handicraft business, the government will sacrifice you. Because there are usually not many jobs associated with your business. And also because after the crisis, someone else will fill the market gap left by you.
The government always promises to better regulate megacorporations after financial breakdowns so that there is no such high dependency on them. Yet that doesn’t happen. Instead, these megacorporations profit from the crisis because smaller competitors get wiped out of the market. Instead of many small competitors, many key industries are dominated by a few megacorporations.
For example, take a look at the food and beverage industry which is almost completely dominated by 10 megacorporations that own all the popular brands:
Another example is the auto industry which is dominated by 14 megacorporations:
Another example is the Alphabet conglomerate. I’m sure every one of my readers uses at least one of their products or services.
The flaws of unregulated capitalism
The formation of a few megacorporations that dominate the market is a typical syndrome of late capitalism. Smaller players get bought by the big players or they get outcompeted by larger corporations until they go bankrupt. The way to win the game of free capitalism is to obtain a monopoly that gives you the dominance of a market without competition.
Of course, everyone knows that monopolies are harmful. Without competition, there is no innovation and the monopolist has the power to exploit others. That is why there are anti-monopoly laws in place.
However, problems start to appear long before a monopoly is obtained. The bigger a company grows, the more people are involved in it. The more people are involved in it, the more fatal it gets if the company fails. Once a company has reached a certain size, it is too big to fail. That is when the cost of letting the corporation go bankrupt is higher than the cost to save it.
Big corporations offer employment for many people, yet they also hinder new startups from entering the market in the same niche because it is impossible to outcompete the big cooperations in their key business. And even if a start-up is successful it often gets bought by one of the big players over time.
The older an industry or market gets, the less diverse it usually gets. If a technology is new, many startups might be in competition with each other. However, over time, most of the competitors will go bankrupt while a small minority succeeds. This small minority will then grow into the big corporations that dominate the market.
If you were to start an e-commerce business nowadays that you want to set up to compete with Amazon: forget it. No startup has the resources to compete with one of the world’s most powerful corporations. You cannot beat Amazon in its key business anymore. Amazon has grown too big to face serious competition.
How big companies grow bigger and bigger with every financial crisis
Financial crises like the one during the Covid-19 outbreak are fatal for market diversity. The biggest players get saved by the state while the smaller competitors get wiped out of the market. This results in big gains for the megacorporations as soon as the market recovers.
Yet the next crisis will inevitably follow. We never know exactly when the markets will crash again. All that is sure is that we will never enter a phase of uninterrupted growth. But even though big corporations are well aware of that, they don’t prepare for a financial breakdown. They know that the cost of letting them go bankrupt is higher than the cost to save them.
It’s a vicious circle. Crisis after the crisis, the megacorporations will be saved and come back stronger than before the crisis. That is unless the system collapses at some point if the state runs out of money to save its megacorporations.
Specialization is a fundamental principle of capitalism. Everyone does only what he is most efficient at. Labour is cheap in developing countries which is why most of our textiles are produced there nowadays. Developing countries specialize in manufacturing jobs and manual labor whereas developed countries specialize in research, development, and service offerings.
This obviously has the advantage that we in the Western world can buy cheap consumer articles from East Asia. However, it also poses many risks. We are dependent on long supply chains that are very fragile. If a war or pandemic breaks out then we are fucked.
For example, many pharmaceuticals are nowadays produced in China. During the Covid-19 pandemic, supply chains were suddenly interrupted so that Germany was in fear of running out of antibiotics. The antibiotic industry is nowadays in control of a few megacorporations outside of Europe.
Whoever becomes overly dependent on others bears a high risk
Germany cannot exist as an independent country anymore. All over the world companies rely on others that the supply chains will never be broken. Yet you can never be sure that we will always live in times of peace and economic cooperation.
Some people say that a strong dependency on each other guarantees peace because, in the case of a war, everyone will lose. However, we can never be certain of that. Economic hardship has never prevented a war in world history.
Donald Trump often gets criticized as an isolationist. Yet he is right when he says that manufacturing jobs need to come back to America. He is also right that free markets don’t profit anyone except the large megacorporations. Free trade deals only make it more profitable for big companies to set up their corporations in tax havens like the Caribean islands and outsource production into third-world countries.
Isn’t it better if we produce fewer things of higher quality in our own country? Yes, then the prices for consumer goods might increase sharply. And yes, we might be more limited in the number of goods we can purchase. But overall, do we need new clothes every three months or a new flat-screen TV every year? Do we really need canned tomatoes from China if we can grow and process them in Europe at a slightly higher price?
Our current system relies on consumerism to obtain pleasure and lead a happy life
The Western world has been transformed into a very consumerist society. It is a major hobby of many people nowadays to go shopping. We buy stuff not because we need it but out of pure boredom. But the amount of happiness we get from purchasing a good is short-lived. So we keep buying stuff to satisfy our cravings.
Nowadays, some people claim that they are anti-consumerist and rather spend their money on adventures and memories. With adventures, they often mean traveling or visiting some kind of event like, for example, a concert. But that is consumerism too. While traveling, we are consuming the atmosphere and environment of our travel destination. We pay for the flight tickets, hotel rooms, tour busses, entrance tickets, and food. The impressions and happy memories associated with our travel trip are what we consume.
There is nothing wrong with consumerism per se. I love it to consume things too. However, we should also cherish times in which we act non-consumeristic. The Covid-19 crisis has led to the situation that traveling was suddenly restricted for the German population. Ever since the crisis started, traveling was one of the most discussed topics in Germany.
At first, the government encouraged people to travel around Germany. Then they opened the European borders to allow Germans to travel around Europe. You can often hear people say: “What do I work for if I can’t even go traveling during my vacation?”
People suddenly realized: Working hard and saving money is only worth it if you can use it for consumption. If there is no way to spend your money on pleasure, it becomes worthless. We work harder and harder every year just to be able to increase our consumption levels.
Yet consumption alone doesn’t produce happiness in the long term. We don’t need to increase our consumption every year. But that is what the system is built on. We work harder every year because we draw pleasure from consuming things. But just like a drug, the more we consume, the less pleasure we derive from it. That is why we need to consume more and more things over time to make up for the drop in pleasure.
With consumerism, less is more. I don’t want to live a life without any consumerism. That would be very restrictive. However, I don’t fall into a deep mental crisis just because there is nothing to consume at a given time. If we can’t travel for one or two years because of Covid19 – so what? Then our next trip will probably be one of the most pleasurable events.
The law of diminishing returns is a very real thing. The more we have of something, the less we are able to derive pleasure from it.
Governments take advantage of the corona crisis
Besides the economic impact, Covid-19 also impacts our privacy and personal freedom. Whenever there is a crisis, governments all over the world use it to justify measures that would otherwise not be accepted by the population.
After the terrorist attacks on the Christmas market in Berlin in 2016, the German government decided to ban the sale of anonymous sim cards in Germany. Whoever wants to buy a sim card in Germany now has to show his personal id card and get verified. The government propaganda wants you to believe that this is a measure to prevent future terrorist attacks. But it is not. It was just a convenient way for the German secret service and police to extend their monitoring possibilities.
After riots in Stuttgart in the summer of 2020, the city now starts video surveillance by the police in public places. Without the riots, this would not have been accepted by the general population. However, now it is hard to argue against it for critics.
The American government used 9/11 to start a senseless war in Iraq. Recep Tayyip Erdoğan used the 2016 Turkish coup d’état attempt to change Turkey’s parliamentary system of government into an executive presidency.
And the Covid-19 crisis now makes it easier for governments all over the world to establish more government control and surveillance. All the Covid-19 tracking apps weren’t just created because governments are worried about their citizens’ health. Even though they might be harmless in their current state, their usage can easily be extended. I can promise you that they won’t disappear once the Covid-19 pandemic has passed by. Years from now we might then be forced to install tracking apps on our phone under the premise of “national security”.
Covid-19 is another step towards a cashless society
The Covid-19 crisis also comes in very handy for banks and the big tech companies who offer cashless payments. The German government and retail industry have urged customers here to pay cashless because it is more “hygienic”. How cashless payment is more hygienic than every customer touching the payment terminal is still a mystery to me.
The percentage of people in Europe that prefer cash payments over cashless payments has steeply declined from 43 to 36 percent since the beginning of the corona crisis. One of the long-term goals of many European countries and the finance industries is to severely limit or even abolish paper money. A common argument against paper money is that it can be used for criminal purposes.
However, a cashless society also severely restricts the privacy of the population. All our monetary transactions can be tracked that way. And not just that. Banks and financial institutions will massively gain power in a cashless society. If you don’t have some kind of bank or governmental deposit account, you would not able to process payments. And if your virtual money gets frozen, you suddenly have no more access to money.
Nowadays, you have the freedom to keep cash at home. It will always be accepted. Cash cannot be frozen like virtual money.
While populations worldwide suffer from the consequences of the Covid-19 pandemic, we shouldn’t forget that, in the aftermath, the ones profiting from this crisis will be the megacorporations as well as governments which are looking for ways to extend their control of the population.