Capitalist Profiteering in the Age of the Coronavirus

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The legal framework under which capitalism operates allows the wealthy and big business to engage in the same kind of petty thievery as profiteers and price-gougers, except with impunity and on a massive scale. With the coronavirus pandemic, this is made blatantly obvious every day.

Image From South China Morning Post/ Illustration: Craig Stephens

“Anytime where there’s a crisis like this, criminals will look for ways to take advantage of it.” That’s how Ryan McConnell, a lawyer specializing in e-commerce fraud, described the Amazon situation back in early March. Unscrupulous sellers — profiteers — were increasingly using the platform to sell counterfeit products and jack up prices to take advantage of demand as the coronavirus pandemic began to spread.

Under pressure to rein in such activity, Amazon claimed to have eliminated as many as a million listings for price gouging. But profiting at the expense our health, safety, and economic wellbeing is not limited to those peddling consumer commodities online. Yes, profiteering and price gouging are illegal in many U.S. jurisdictions, especially in times of crisis. But what the big capitalists are involved in right now is a different kind of “criminality” that is sanctioned by the two pillars of most law in this country: bourgeois legality and the jungle-like laws under which capitalism as a system operates. These laws protect Amazon, its owner, Jeff Bezos, and the entire capitalist class, which in the age of Covid-19 is engaged in behavior that makes selling overpriced hand sanitizer look like petty thievery.

At a moment when people incarcerated in America’s jails prisons — overwhelmingly Black and brown and including huge numbers of people behind bars despite never having been convicted of a crime — are dying in large numbers in overcrowded facilities where little can be done to stop the spread of coronavirus, it’s important to take note of who the real criminals are in this country.

The Predatory Financial Sector

Let’s start with Wall Street brokers, investment banks, and hedge funds. As the New York Times reports, “The recent misfortune of American businesses — many of which are struggling to raise cash to stay afloat — is creating new moneymaking opportunities for hedge funds and private equity firms, big investors that have been relatively unscathed by the pandemic.” These are the giant funds loaded with the money of the wealthiest exploiters in the world, hundreds of billions of dollars. And what are they up to? They’re scouring the financial horizon and “plotting strategies to extend high-interest loans to companies, especially smaller, already troubled ones,” and they are “exploring buying minority stakes in public companies” — all to take advantage of a crisis that affords opportunities to concentrate even greater wealth in the hands of even fewer people.

The relief, according to the Times, “may come at a high cost.” Indeed it will. Imagine those billions being used instead to save lives and ensure that working people have the money they need to get through the crisis. But that’s not how predatory capitalism thinks or works. “Hedge funds and private equity firms are pursuing ways to profit off the current crisis much as they did during the 2008 financial meltdown.”

Much of the activity on Wall Street, at least for the wealthiest investors, involves “scouring for opportunities to short the stocks” of companies traded on the market “amid the market turmoil.” This is a hedge fund specialty: making money because you know or can guess that certain stocks are going to lose value. Some U.S. senators have been caught engaging in insider trading after getting classified briefings about the coming pandemic; they short-sold some stocks and invested in others they knew were going to increase in value because of the business of those particular companies. The short-selling game is truly insidious: a broker “lends” you the stocks, sells them on your behalf, credits the proceeds to your account, and eventually you “close” the short by buying back the shares and returning them to your broker. If the price drops, you can buy back the stock at the lower profit and make profit on the difference!

Of course, shorting stocks happens when there aren’t global pandemics. It’s long been in the capitalist tool kit — just another part of the reliance on markets to establish “value” in lieu of establishing value according to what people need.

Blackstone Group, one of the world’s largest investment firms, is doing what the hedge funds are doing. As Investopedia News reports, it is “reopening the 2009 and 2010 playbook when the company stepped in and bought thousands of foreclosed property.” Blackstone manages some $3 trillion in assets and has offices all around the world. It is “perfectly positioned to find the most profitable buyout plays as the pandemic wreaks damage on businesses and corporations.”

A Blackstone-involved buyout of a company is a bad omen for workers after the pandemic abates. The firm’s history, along with Bain Capital (Mitt Romney’s old company), with which it has sometimes partnered, is to break up the companies it acquires, sell off the assets, and destroy most if not all the jobs. The objective is not to infuse capital into a business so it can thrive; it is to pick, like vultures, at the rotting corpses of other capitalists along the vast “value” highway of fictitious capital.

Lest you think that only the big capitalists are looking for financial opportunities spurred by Covid-19, we always have Jim Cramer, the former hedge fund manager and longtime host of CNBC’s Mad Money, who has tips for everyday investors playing the market. He’s been touting the “stay-at-home, work-at-home economy” and offering some hot picks for all you day traders out there reading Left Voice. There are the companies with technologies people need to work at home, among them Zoom (its stock is surging) and cybersecurity firms. There are companies still making home deliveries, such as Amazon, Walmart, and Costco, which are all enjoying record profit growth as they squeeze their workers — Walmart calls them “heroes” — on hours and pay while subjecting them to deadly conditions in their warehouses and stores. Cramer also mentions at-home entertainment companies that provide games and movies, Domino’s Pizza, and a plethora of remote services (such as online document signing and telemedicine platforms) as worthy of your market-playing attention.

Everything you just read about financial institutions large and small is perfectly legal. In fact, capitalism encourages such behavior.

Unscrupulous Suppliers and Shippers

I’ve already mentioned Amazon, and Left Voice has extensively covered how it is treating its workers inside warehouses across the country while making windfall profits because of the sharp increase in orders. But what about UPS, its shipping partner?

Like Amazon, UPS is enjoying booming business. Whatever revenue has fallen off from making deliveries to closed business appears to have been made up for by the increase in residential deliveries, at least according to workers. But in a crisis, why not extract a greater rate of profit? One way to do that is to keep labor-related expenses as low as possible. That explains why authorities in Louisville, Kentucky, have had to order UPS — one of the city’s largest employers — to comply with social distancing regulations. Even that, though, hasn’t changed the widespread reporting coming out of UPS facilities of coronavirus cases, inadequate protective equipment, and insufficient changes in work protocols.

It is another form of profiteering, but all perfectly legal. Meanwhile, UPS just announced that it is working with the Federal Emergency Management Agency (FEMA) to help transport and distribute medical supplies around the country. You can be sure there’s plenty of taxpayer money to be made there, especially with Jared Kushner likely reviewing the contracts.

Manufacturers and Their Lobbyists Cashing In

There’s a lot more criminal capitalist behavior to cover if we expand our scope to the manufacturing and processing sector. The meatpacking industry, for example, offers a glimpse of what is taking place in other sectors across the country.

A little over a week ago, Senator Charles Grassley (R-Iowa) tweeted, “Beef is flying off grocery shelves but farmers are seeing prices go down. If packers are illegally manipulating markets during crisis, we need USDA & DOJ & CFTC to investigate + help farmers. Four companies control 80 percent of market & they’re taking advantage.”

Farmers, from agribusiness on down to small family farms, are a huge constituency for an Iowa senator, so it shouldn’t come as a surprise that he might go after one industry when he is likely in the pocket of every other U.S. industry. Politicians want nothing more than to be reelected.

But Grassley’s call for an investigation reveals that the source of price gouging on meat products is the companies in the middle — between the suppliers of beef and the grocery stores that sell what those companies package. It’s another cruel illustration that “value” is set not by what people need but by what the market and its big corporations want and can get away with.

Drug Companies and Health Insurance Merchants of Death

By now, most everyone knows the story of Trump touting hydroxychloroquine, an antimalarial drug that is untested for Covid-19, as an alternative that could be rolled out very quickly to fight the pandemic. Reports of the president’s financial stake in the company that produces it appear to be overblown (a trust of his owns just a little over $1,000 in the company, something he was unlikely to know about), but that hasn’t stopped some capitalists from using his endorsement to push a money-making opportunity that has put people’s health at even greater risk.

But that pales in comparison to what Big Pharma is up to. It’s one of the most disgusting illustrations of how capitalism works to kill. The pharmaceutical industry will likely produce a treatment and vaccine for Covid-19, either directly from its labs or, more likely, as a commercial version of something created by taxpayer-funded scientists working in university labs. The capitalists who run these companies are salivating at the prospect of winning what has turned into a global race to get to the riches first.

As the virus “spreads illness, death, and catastrophe around the world … one industry is not only surviving, it is profiting handsomely,” writes the Intercept. It’s a particular boondoggle in the United States, where Big Pharma makes so much money because the country lacks the basic drug price controls that most other countries have enacted. (That is why a drug in Canada might cost 90 percent less than in a town right across the U.S. border.) On top of that, industry lobbyists successfully fought back some initial efforts to have the recent federal stimulus package include limits on how much these behemoth capitalist companies could make from any vaccines and treatments they might develop. In a sign of the just how committed Democrats really were to that effort, it was mostly in the form of a letter from House members to Trump pleading that he “ensure that any vaccine or treatment developed with U.S. taxpayer dollars be accessible, available and affordable,” and that he make sure pharmaceutical companies are not “given authority to set prices and determine distribution, putting profit-making interests ahead of health priorities.”

The lobbyists made sure that didn’t happen; nothing is to stand in the way of reaping profits from U.S. health care. And the pharma lobbyists weren’t the only ones massaging the legislation. Some aides in Congress “likened the lobbying blitz around the stimulus legislation to a gold rush.”

Speaking of health care, this article would be incomplete without mentioning the health insurance industry.

Wendell Potter was, for decades, a health insurance company executive who, in 2008, walked away from his job at health insurance giant Cigna after a “crisis of conscience.” The next summer, he became a well-known whistleblower, and since then he has provided remarkable insights into exactly how the health insurance industry thinks. In an interview published on March 31, he explained that insurance companies already know how they’ll profit from Covid-19. In fact, it’s built into our health insurance system, which ties coverage to employment.

Asked how it is possible that insurance companies are about to rake in lots of profits, Potter said they “know how to … make money under almost any circumstance.” He pointed to the trend of increased out-of-pocket deductibles that extract cash from workers “before insurance companies will be paid a dime,” and that the hospitalizations that some will require will be on a different deductible tier than, say, regular doctor visits — meaning the premiums won’t be paid out to cover the bills.

But most important is that these criminal companies take a long-term view. “These companies know that if they do start having to pay more claims this year,” Potter said, “what they will do next year, and they’ve already said they will do this in a conference call with financial analysts on Wall Street, they’ll just increase their premiums next year significantly.”

So, tactic one is to recoup any losses by extracting more money out of workers on the other side of the crisis. But it doesn’t end there. Tactic two is pocketing more money right now:

The other thing that’s important is that insurance companies know that because a lot of hospitals are canceling a lot of procedures that are not related to the pandemic like knee replacements or anything that’s not emergency related, those patients are not being admitted now and in many cases are being released from the hospital to make way for Covid-19 patients. So as a result, a lot of the patients that insurance companies would have been paying for their treatment are not there now. And to the point that one of the CEOs of a big insurance company said that he can see that the insurance industry might have even a net savings this year because of the epidemic, which is kind of astonishing.

This is the logic of an economic system based on profit, not human needs, and in which the meaning of “value” is not what the dictionary says — “the importance, worth, or usefulness of something” — but is instead what it can do to line capitalist pockets. It is what spurs petty profiteering. It is what compels Google to allow ads on its YouTube service pushing herbs and potentially unsafe over-the-counter treatments for coronavirus — because there’s a profit to be made. And it’s the basis for the dozen or so other examples I compiled for this article but that space does not allow.

Let’s get through this crisis with a resolve to put these bandits, gangsters, pirates, and pillagers, along with their corrupt, amoral capitalist system, whether they belong, once and for all — the dustbin of history.

About author

Scott Cooper

Scott Cooper

Scott is a writer, editor, and longtime socialist activist who lives in the Boston area.