Project Syndicate recently posted a paper that provides a pretty clear window of the global economy that will follow the present pandemic. Written by two economists, Larry Hatheway and Alexander Friedman (the latter is the former Chief Financial Officer of the Bill & Melinda Gates Foundation), and titled "What the Stock Market Is Really Saying," the paper synthesizes current medical data on the virus with new economic data and reaches the conclusion that the US economy will be permanently transformed by the pandemic.
Indeed, it predicts that globalization, which is a network of “just-in-time” supply chains, will more and more be replaced by “just-in-case” production. To picture the scale of this transformation, recall the radical difference between flight travel in the pre-9/11 world and the post-9/11 one. Before boarding a plane, your body has to scanned, there are rules as to what you can and cannot bring on the plane, you need proof of your identity, and so on. None of these difficulties existed before four passenger planes were used as weapons on US soil.
The transformation of the economy into one that requires increased biological surveillance, among many things, will diminish the lifeblood of the market conatus: profits.
Hatheway and Friedman:
... a post-pandemic global economy will require businesses to have back-up plans to cope with the next epidemic or global systemic crisis. Such contingencies will be expensive, and they will not boost revenues. Investors will not be able to ignore the fact that operating a global business will be less profitable in the future than it was in the recent past.
Despite all of the bad news—the surge in unemployment, the disruption of market networks, the instinctive hoarding of cash by companies and households, the predicted decline in future profits, the potential permanence for forms of social isolation, the prevailing uncertainty—equity markets in the US are still alive and kicking. Why? Because speculators have concentrated their wealth in a few technology companies, two of which are based in Seattle (Microsoft and Amazon), and one of which (Amazon) has the exospheric market valuation of $1.2 trillion. An Amazon share is currently worth around $2,400. (Boeing is $129—at its peak, at little over a year ago, it was $400). The post-pandemic economy will unmoor a few cities that were already inflated by property speculation. Seattle will become a swirling satellite of cash.
Hatheway and Friedman write:
The five most valuable companies today – Microsoft, Apple, Amazon, Alphabet, and Facebook – are gargantuan quasi-monopolies, widely regarded as the winners in a world where lockdowns have forced everyone online. This year, they have collectively beaten the broader US market by leaps and bounds. In panicky times, these tech giants gain market share at the expense of their weaker rivals, and they have the kind of huge cash balances that investors love. The top five are so enormous relative to the broader market that their distortion effects easily muddle the overall picture. The market value of just two of these companies, Amazon and Microsoft, is higher than that of the entire FTSE 100.
Cary Moon, who ran for mayor in 2017, explained this development in these stark terms:
The five biggest corporations in the US are doing fine during the pandemic, and because stock valuation is no longer attached to the reality of profitability in the real economy, and because the value of these 5 dwarfs the value of other publicly traded corps, we have a situation where stock prices are not dropping to reflect the extent of the recession/depression we are beginning. So that makes even more clear, I think, that the economy is further splitting apart into two less and less related worlds.
There's much to consider in all of this, so I want to offer a small bit of social anthropology to this sober economic analysis of COVID-19's world-historical impact. It concerns the power of what the French economist François Chesnais calls finance capital, which, for him, "designates the simultaneous and intertwined concentration and centralization of money capital, industrial capital, and merchant capital."
The conventional view is that the content of this power is the business of exchanging capital goods. It begins here, in the real economy, and ends there, with the shares and bonds bought and sold on capital markets. But if this were the case, there would be no financial markets at all in our day and age. Investment banks and money managers should, if history is examined, and history is, of course, the greatest Marxist, be extinct. They have been ruined so many times over. Bad bust, the worst bust, the mother of all busts. How is it we have no Tower Records, no Pan Am, no Sinclair ZX81, no Zenith, but we still have Warren Buffetts? This fact defies the purported logic of the market: competition.
Now we are learning that the billions a few major tech corporations make in profit are enough to keep the multi-trillion dollar markets going and even growing. How is this possible? For an anwser, we must leave the path that concludes with enchantment. Why? Because the power of financial capital, its content, is purely social. Here the substance of money is really the thing without "an atom of matter," as Marx put it.
It's not that one can buy this or that good with money, nor is it a way to store wealth—or, put differently, a means to connect the future to the present, as post-Keynesians would say. It is synchronic. Meaning, this is the domain of the structuralist anthropology that went out of fashion in France at the end of the 1960s. And so, what must be analyzed is not money itself or its economic function, but rather the way it culturally relates a human to all other humans. Money is not possible without an ultra-sociality, which is the grund for our hyper-culture. Money descends from the cultural and absorbs the social. The presence and absence of cash, the universal equivalent, becomes biological. It is the presence or absence of our long-evolved sociality. The total absence of what people are equals people sleeping on the streets.
That is its long journey from gold to coins to paper to electronic bits of information. It ends here in the invisible field of human social lines of relation.