The nationwide lockdown in response to Covid-19 has delivered a cataclysmic shock to the US economy, but it may also provoke fresh solutions to some of capitalism’s most intractable problems. Take the rise of a grassroots movement of tenants’ rights activists who are demanding that the government halt rent and mortgage payments for the duration of the pandemic and forgive any back payments. “It’s not that we can’t do it,” said New York Democratic Representative Alexandria Ocasio-Cortez, an avowed democratic socialist, in response to the #CancelRent social media campaign. “We lack enough politicians with the political will to actually help people who are tenants.”
#CancelRent is hardly confronting a new problem. Wages are stagnant for many, but the cost of housing is not. Rents in many United States cities are “too damn high,” as Jimmy McMillin, a failed candidate for New York City mayor, famously proclaimed. The #CancelRent movement addresses an issue-driven by our society’s increasing inequality, and thus raises an interesting question: could a generalization of the movement to other sectors of the economy be a good way of redistributing income?
The theories of many classical economists lend support to the #CancelRent campaign. David Ricardo’s “Law of Rent” argues that landowners don’t produce any wealth for the nation. A similar idea is expressed in Keynes’s euthanasia of the rentier: “Interest today rewards no genuine sacrifice, any more than does the rent of land.” For both economists, rentiers are an obstacle to economic development. Landlords are takers, to borrow a term from modern conservative ideology.
And at the moment, many tenants don’t have much to give. The current economic situation is grim. In the first quarter of 2020, GDP fell by 4.8 percent. A solid 14.7 percent of workers are out of work in the United States according to official unemployment figures, which almost certainly underestimate the actual carnage. More than twenty million people lost their jobs in April alone. One in six young children lacks sufficient food. Only the Great Depression had a comparable collapse in production and employment rates in the United States: between 1929 and 1932, GDP declined 30 percent, and the unemployment rate almost reached 25 percent in 1932.
Many American citizens are receiving some financial support from the government. By the end of April, Congress and the president had approved nearly three trillion dollars in emergency spending to help alleviate the economic problems produced by the pandemic. Unfortunately, we still don’t know how much longer Covid-19 will impact the economy, nor do we know how Congress and the president may respond going forward. Until scientists find a vaccine or an efficient treatment, there is still the risk that future lockdowns might be necessary to avoid the collapse of the health system. It is also possible that not all sectors will be able to reopen safely anytime soon. At the same time, many people are not even eligible to receive government support. There are over eleven million undocumented immigrants in the United States, and about one million international students, many of whom are now unable or afraid to take flights back home.
A stimulus package can work if the lockdown lasts for only a couple of months. Workers can take loans, people who lost their jobs can receive unemployment benefits, and families can use the relief check to help pay their bills. The problem in the United States, and in other countries such as Brazil, is that the death and infection numbers are not decreasing as expected. Making matters worse, the United States doesn’t have the capacity to test its population properly. Any additional relief packages costing trillions of dollars will cause public debt to spike, and arguably exacerbate already destabilizing income inequalities. If the illness continues to spread and the market cannot work properly in the coming months, we will need to plan a better response.
A good solution would be to separate the economy into two sectors: essential and non-essential. Obviously, the essential sector includes all the institutions and businesses that are necessary for society to survive and protect itself from the pandemic: the provision of food, health care services, common utilities, logistics, and banking. In this sector, the market and monetary mechanism will keep working as usual. But all other activities will be considered non-essential and should be frozen unless these non-essential activities can be done virtually from a home office.
Market transactions in these sectors should be suspended until the end of the crisis. In other words, business and householder payments for those employed in non-essential sectors will not continue during the lockdown, since these people will not be able to receive any income while their activities are suspended. The public workforce should also be divided into essential and non-essential sectors so that the decrease in wage payments can compensate for lower tax revenue. This system seems a good solution because it takes away the pressure to open prematurely, and causes a slower increase in public debt.
In short, I am suggesting a generalization of the #CancelRent demand to cover people employed in all non-essential sectors who cannot continue to work from home. However, there is an obvious problem: the interconnection between these two sectors. Even with canceled rent, many who work in the non-essential sector will not be able to pay for their food and common utilities without working. And how can banks maintain their solvency and expand credit to the essential sector without mortgages and debt payments from non-essential workers? One possibility is to expand the food stamps program to cover all non-essential sector workers. Once accepted in a food stamp program or receiving unemployment benefits, an individual would automatically become exempt from paying rent and utilities. Other transactions should be paid by the government or financed by the Federal Reserve.
Suspending monetary payments in the non-essential sector might also make it easier for people to see market relations as essentially social relations. Fetishizing money is one of the things that prevents people from appreciating the cooperation and solidarity that forms the basis of civil society. One important cause of political polarization in contemporary societies is an over-valorization of competition in market relations. In other relationships, though, competition can obviously be destructive. Between religions, it causes intolerance; between nations, it causes xenophobia; and between ethnic groups, it causes racism. It is a fertile ground for fascism.
A period of time in which the monetary veil is lifted (even if only partially) could prove beneficial. The sacrifices currently being made by essential service workers show us that a society in which competitive self-interest is not the main motive for action is still possible.
Theo Vasconcelos de Almeida is a PhD student of political science at the New School of Social Research.