Coronavirus, oil and capitalist decline

Rex Dunn explains why he thinks they are all connected.

The capitalist class - helped by its own experts - has allowed a situation to develop in which the spread of the coronavirus is leading to a mixture of incredulity, fear and worry about the future among the masses (no work, no money, etc).

And, of course, there is a negative side to this for the bourgeoisie too. In a dramatic few days, the following happened: on March 8 the oil price dropped like a stone - not because the producers feared a sudden shift to renewable energy, but because Saudi Arabia and Russia decided to produce more oil, which triggered a price war. On March 9 - already dubbed ‘Black Monday 2020’ - global stock markets suffered their biggest crash since 2008. March 11 was budget day for the new British chancellor. He introduced a ‘coronavirus budget’ - instead of an environmentally friendly one - with measures to offset the effects of the former (money set aside to compensate employers and workers for loss of production), plus a pledge to spend £600 billion over the next five years: more private housing, rail and roads. But that will increase oil consumption in the short term. Whether building the HS2 new railway will help to ‘level up the regions’ also remains to be seen. On the same day, the Bank of England announced a cut in interest rates to and all-time low (0.25%) in a bid to kick-start economic growth.

Either the coronavirus will increase the slump in world trade - and possibly trigger the next financial crash - or it is a convenient fig leaf for the bourgeoisie’s fear of another 2008. But its negative effects will make the latter even more likely. So why is the ruling class playing Russian roulette with its own system? It knows that burning fossil fuels - in particular oil - is responsible for what it calls the ‘climate crisis’: except it is much more than that; rather we should call it capitalist ecocide (see below). But it is unwilling to end this dependence, because that would require massive investment in new green technologies, which would take years to produce a profitable return. That is the rub.

But there is another - political - reason why the bourgeoisie does not want to do this. Based on its experience of post-war reconstruction, it also knows that such an undertaking would reinvigorate the class struggle sooner or later. Roughly two decades on from 1945, the événements of May 1968 erupted in France. This boosted a strike wave across western Europe, which lasted until the end of the 1970s. It was only the misleadership of the working class - namely Stalinism and reformism - which prevented the revival of the socialist revolution. All the objective factors were in place, but the subjective factor was missing: ie, building ‘communist consciousness’.1 Today the capitalist class is not prepared to invest in a Green New Deal at anywhere near the level required - albeit, from the standpoint of the needs of humanity and the environment, this is far more important than post-war reconstruction.

As long as the capitalist mode of production continues, we will have the exploitation of human beings by others, unnecessary poverty and suffering, change at the expense of human beings (eg, automation), whilst the spectre of ecological catastrophe will continue to haunt us. A resumption of the world revolution is urgently needed in order to lay the foundation for a communist society. Only the latter can establish the material basis for a society in which “the associated producers” are able to “regulate their interchange with nature rationally, bring it under their common control, instead of being ruled by some blind power”.2

For all its bluster about preventing a coronavirus pandemic, in reality the bourgeoisie refuses to behave in a rational way. This is despite the rise of populist movements across the world: in particular, the left wing of the reformist parties and individual leaders, who are offering the capitalist class a way out: ie, a Green New Deal.


To return to the economic reason why the bourgeoisie does not want to do this, the capitalist system is dominated more and more by the rule of finance capital, which is parasitic upon productive capital - including in its latest form: neoliberalism. Apart from privatisation, globalisation, the outsourcing of capital investment in search of cheap labour, a huge rise in inequalities of wealth and opportunity, neoliberalism also instigated the atomisation of the masses, in both the physical and spiritual sense.

To this end, it was aided and abetted by the ideology of poststructuralism, combined with new technologies: digital platforms on the one side, biotech medicine on the other. As a result, communal ties and collective struggle have been replaced by a return to the old individualism associated with the first industrial revolution: ie, a society based on a war of each against all. Hence we see a rise in identity politics, as individuals struggle to recover their lost individuality in a depersonalised world, which divides the masses even further.

At the same time, the value form is also in decline. In his book, Essentialism in the thought of Karl Marx, Scott Meikle describes Marx’s treatment of value as follows: It

is at the heart of Capital [which] begins with an essence in embryo, ‘The elementary or accidental form of value’, and proceeds through a series of necessary metamorphoses of the form until it finally universalises itself over the whole of society with the attainment of its final form, capital, where the supply of social labour itself has the value form thrust upon it. The metamorphoses are necessary, not in being inevitable (they cannot be, since accident can frustrate the development), but as the realisations of the potentials inherent in the value form itself.3

From this point on, society can develop in two ways:

1.  As the rule of capital continues, the value form begins to decline, because it is unable to resolve its primary constitutive contradiction - between use value and exchange value. This is the stage which we have now reached. Not only is capitalism unable to function ‘normally’ - ie, continue to expand the value form - but we now have capitalist ecocide, which poses a threat to the system itself and humanity as a whole.

2. The product of social labour gradually ceases to take the commodity or value form, wherein the social plan becomes the economic regulator in its advanced conscious form. Then we can have “Free individuality, based on the universal development of individuals”, whose “communal and social productivity” takes the form of “social wealth”.4 Under a communist organisation of society, the value form is superseded.

As Marx and Engels points out in The German ideology, the rise of capitalism created the possibility for disalienated “universal social connections”. On the one hand, we still have the “domination of material conditions over individuals and the suppression of individuality by chance”. On the other, this sets existing individuals “the task of replacing the domination of circumstances and of chance over individuals by the domination of individuals over chance and circumstances”.5 Hence the subjective factor - the attainment of communist consciousness - is crucial. But the Stalinist counterrevolution led to “the reign of Moscow’s nationalists over the world’s official communist movement: ie, socialism in one country”.6 This is false consciousness. But now, in the face of an existential crisis, the subjective factor assumes greater importance.

After the financial crisis of 2008, trillions and trillions of fictitious dollars were pumped into central banks across the world - just to keep money circulating - whilst the masses had more austerity imposed upon them, because productive labour is needed to foot the bill. But pension funds cannot produce enough capital to do this. Therefore a lot of this fictitious money has to be written off. Meanwhile the self-expansion of capital, which is the lifeblood of the system, remains sluggish. To make matters worse, we now have the coronavirus, which requires governments to borrow more in order to stop it. At the same time, neoliberalism clings to its monetarist policies: ie, government borrowing has to be kept within strict limits. Thus the contradictory rule of capital continues, even though the value form - upon which it is based - is in decline.

Whilst the bourgeoisie (led by the Financial Times) dismissed Jeremy Corbyn’s own version of a Green New Deal, blue-collar workers also rejected it. This has everything to do with the bourgeois division of labour (see below), not just a hostile bourgeois media or a mismanaged roll-out of Corbyn’s manifesto. As a result, Labour lost its ‘red wall’, which it had relied on for over a century in order to form a government, and instead Johnson won a landslide victory in the December 2019 election. This was based on “Let’s get Brexit done” - and the promise that a post-Brexit Britain would end austerity, especially in the north and east of England, by means of large-scale investment. It was part of a dual pledge; firstly, to ‘level up the regions’; secondly to do something about the climate crisis (eg, introduce more electric cars)!

In the United States, a corporate-friendly Joe Biden has replaced the ‘socialist’ Bernie Sanders as the front runner in the race to choose the Democratic Party’s next presidential candidate. On the one side, we have ‘the man without a plan’, who has built his campaign around the claim that only he can beat Donald Trump, but not much else. On the other side, we have ‘the man with a plan’: ie, the billionaire-bashing Bernie Sanders, who is likely to be defeated by Biden. This is despite his promise to reform American capitalism by means of a radical shake-up of Wall Street, free tuition fees, universal healthcare and a Green New Deal.

Of course, the bourgeois media is hostile to the ‘socialist’ candidate. But that is not the only reason why Sanders faces an uphill struggle. In general, most workers - along with the self-employed - cannot see any alternative to bourgeois politics - ie, the need for a socialist solution - because this requires a level of consciousness that goes beyond electoralism (as in the UK). As for internationalism, that is way off their political radar. So we have an eerie echo of the recent British election.


But the absence of communist consciousness, when it is most needed, goes deeper than the bankruptcy of reformism or a hostile bourgeois media. We need to consider the hidden impediments as well. To this end, I offer the following summary:

1. In his early manuscripts, Marx refers to four impediments which the working class has to overcome: alienated labour, private property, commodity fetishism and the hierarchic division of labour.

2. The latter plays a key role. As Marx says, the superstructure of the “centralised state power” is the “systematic and hierarchic division of labour”.7 It is based on instrumental reason (ie, empirically determined means/end mentality), which enables the capitalist class to achieve its aim - the accumulation of capital. At the same time, the worker is reduced to a commodity: ie, he/she is depressed physically and intellectually to the level of a machine (including skilled labour). In addition we have the increasing specialisation of tasks - the fragmentation of labour.

3. The surplus value which the capitalist class extracts from the workers provides it (and a middle layer of professional workers) with the money and leisure time for an all-rounded education - which gives them a monopoly of knowledge and creativity, which is denied to the mass of the workers.

4. In the 20th century, as Adorno pointed out, technological developments - namely the mass reproducibility of the sound/image, as well as text - created a fifth impediment: ie, the culture industry or entertainment. The latter was reduced to an industrialised process, whose aim is to sell a maximum number of products in competition with rival companies in the market place (eg, the manufacture of motor cars). Mass culture is homogenised, within which the emphasis is on sensual stimulation, rather than a sense-of-totality experience; attention is drawn towards individual stimuli. By so doing the culture industry fulfils the worker’s need for distraction from the drudgery of wage-labour, etc. In the 21st century, the process has been exacerbated by the rise of the digitalised media.8 Now anyone can access the ‘society of the spectacle’ (news propaganda, advertising, entertainment) at almost any time, anywhere.

5. Neoliberalism (which replaced the Keynesian consensus) brought about the atomisation of the working class, both physically and ideologically. The process was made possible by the post-war reconstruction, wherein the leadership of the working class - social democracy and Stalinism - allowed itself to be incorporated within the structures of capitalist society.

6. All of the above is an aspect of the epoch of capitalist decay (the domination of parasitic finance capital), which revolutionary Marxists must take into account.

7. If overcoming the division of labour is key to overcoming all the other impediments, the struggle for the revolutionary party as a necessary material mediation is the key to the achievement of this end.

Like the alcoholic who ignores the doctor’s warning about liver failure because he is addicted to drinking, capitalism ignores the scientist’s warning about global warming because it is addicted to oil. Global growth depends on cheap energy. But productive capital is ruled by parasitic finance capital, which relies more and more on short-termism. So the energy corporations are stuck on oil. They could choose to invest in green energy, but it would take too long to make a profit.

The situation is borne out by a recent spat between Steven Mnuchin, US secretary of the treasury, and Christine Lagarde, president of the European central bank. As spokesperson for the world hegemon, he “accused [her and the EU] of falling for unworkable policy ideas and argued that access to cheap energy [ie, oil and gas] was more important for global growth than investment in green technologies”.9

Today the world is run by oil: eg, the United Arab Emirates produces three million barrels a day, while the USA is now up to 13 million. Oil accounts for 34% of energy consumption, followed by coal at 27%, and natural gas at 27%. Fossil fuel is also used extensively in other products which make up our daily lives: paint, washing detergents, nail polish, plastics for medical equipment, mattresses, clothing, coatings for TV screens, etc. According to a feature in the Financial Times ‘Life and arts’ magazine,

Even as our thirst for oil seems insatiable, it is becoming politically and environmentally toxic. As the world wakes up to the catastrophic effects of climate change, from rising sea levels and drought to wildfires [another cause of mass extinction of species] and crop failure, scientists have warned of a need to rapidly shift away from fossil fuels. Yet … there is little sign of this happening. Our usage has jumped almost 63% over the course of a few decades … The International Energy Agency (IEA) forecasts that if governments continue with current policies, global demand will reach 121 million barrels a day by 2040 ... The challenge is huge ... to keep global warming below a 2C increase, the IEA says the world would need [to accept] a fall in oil consumption to 67 million barrels per day [by that date].10

Governments are beginning to take action by switching to renewable energy sources for electricity production, but oil still has a stranglehold over the transport sector, and the petro-chemical industry is still a fast-growing consumer of oil refined products. The same source points out:

Cars, trucks and other road vehicles make up 40% of global usage. When you add in aircraft, ships and trains, transport accounts for about 60%. So any attempt to reduce our oil habit hinges on this sector.

Which means that making the internal combustion engine more efficient is merely “tinkering around the edges of the problem”. Burning biofuel makes no difference, because that still produces carbon emissions, and, while “Electric cars are an alternative”, they account for “only 2% of new cars sold”. If people continue to cling to the car culture, “It will take 15 years to get rid of the ‘global car park’”, which now numbers 1.3 billion vehicles. That will be too late to bring down carbon emissions. Besides, “the environmental benefits will only truly be realised if electric cars are powered by renewable electricity … rather than from coal or gas-fired generation”.

The same apples to shipping - except it would require an enormous amount of renewable energy to power ocean-going liners - whilst the idea of doing the same for long-haul jets, which rely on electricity, is somewhat utopian. However, buses and trains are preferable to cars - ie, public transport - just as ships are preferable to airliners. And, of course, under communism, there would be more leisure time, which would alleviate the need for fast transport!

Apart from transport, “more than 15% of oil demand goes into non-combusted uses, including petro-chemicals. A hefty chunk of this is for single-use plastics found in packing and drinking straws.”11 Despite a move to recycling, “huge investments are still being made in developing complex plastics and petro-chemical substances”. This leaves two other sectors: heating and cooking. But not enough is being done to insulate people’s homes, especially older ones, which would reduce heating demand.

Immediate tasks

The industrialisation of China, the biggest and quickest in world history, was based on energy provided by burning fossil fuels, especially coal. This is still the case today, although China is developing green energy sources. At the same time, it continues to burn coal and oil, as a source of energy, which contributes to global warming, it also has to try and clean up the mess caused by massive environmental pollution.

But now:

India is set to be the world’s largest growth market for energy by the mid-2020s. BP is not alone in pursuing new oil consumers in developing countries, as demand begins to stagnate elsewhere. France’s Total and the state energy giant, Saudi Aramco, are among the foreign companies seeking a foothold in India, as they bank on the country’s swelling middle classes to drive consumption.12

This creates an immediate dilemma, because already India is suffering from the climate crisis, ie, extreme weather:

The monsoon season in India last year saw … the worst rainfall in decades. Climate change is disrupting seasonal cycles - first bringing heat waves and droughts, then floods and landslides. Hundreds of people died ... [Yet] India’s access to fossil fuels remains a priority for its government. While the country has one of the most aggressive renewable power capacity roll-out programmes worldwide, it also needs cheap oil, gas and coal to meet energy demand that is forecast to more than double by 2020 ... the world’s third-largest oil consumer could be the ‘golden goose’ for big Middle-Eastern producers ...

Recently an oil analyst for the US bank, JP Morgan, [argued that] the reduction of tens of trillions in new investments amid a backlash against fossil fuels could create an “acute shortfall” in supplies and set oil prices on a course to hit $100 dollars per barrel. “The cost of energy will escalate if we can’t replace it with renewables and other non-oil sources quickly enough ... This will hurt western consumers … and, not least, emerging-market countries that can’t function without low-cost energy.13

Capitalism cannot deliver. This is the conclusion that we should draw from the experts: Nick Mabey is the head of a “London-based climate think tank”, which is pushing for capitalist companies to accelerate a “green transition”. He states that the challenge is amplified, because of

the difficulty in displacing oil from its entanglement with major industries, from defence to energy and finance, and its deep links with geopolitics: “A government will need to transition to cleaner fuels, but also maintain arms sales and to keep auto workers [and the working class in general] onside. Unravelling this requires deep structural change.”14

The International Energy Agency defines the challenge as the need to “avoid a temperature rise of more than 2C, while simultaneously guaranteeing widespread access to energy”. This would require “rapid and widespread changes across all parts of the energy system”. In 2015 the leaders of 195 countries signed the Paris agreement which pledges to do that. But at the Davos summit in January 2020, Donald Trump “used his speech to assail environment alarmists”.15

As for investment in renewable energy as a source of electric power, this is under the control of finance capital. So far most of this is being carried out by small investors: eg, those who are willing to put their money into charities working in Africa, etc. But in terms of what is needed, this is akin to using a twig to prod an elephant.

Another idea is that “capital should flow towards solutions to climate change rather than causes”: ie, carbon capture and storage.16 The latter could be used to produce hydrogen as a clean substitute for carbon fuels; hydrogen fuel cells could then be used to create electric power. The problem, however, is not lack of the necessary technology, but an unwillingness of big fund managers to invest in this, because it has to be “deployed economically at scale”, which would be much more expensive. The other alternative is to continue with the nuclear option. But once again, “the key is capital costs”.17

Consider the reality: the way in which parasitic finance capital dominates the finance industry. Yet, because it relies on making a profit out of credit, it is endangering its own stability. Recently the FT ran a supplement under the heading, ‘Private equity debt frenzy reaches $800 billion’, where it was claimed:

Fund managers [are] desperate to build a fee-rich asset class at a time when their traditional businesses are struggling … assets invested in private debt - largely made up of non-bank loans to unlisted companies - reached a record $812 billion in 2019. [But now] a growing chorus of senior figures [within the industry] are voicing fears that the market is looking frothy, as too much capital chases too few deals.

Hadrian’s Wall (an American investment company) said it was

winding down business after warning of “material” losses on investments in two blooming biomass companies. At the same time [money] raised for direct lending, but is not invested, is at a record $112 billion ... The capital-raising frenzy, combined with competition among lenders, is damaging returns and loan competition standards ... problems are building up, as they did in the run-up to the sub-prime mortgage market crisis.18

Shades of 2008!


Trotsky’s Transitional programme (1938) has been criticised by some as ‘catastrophist’ - as well as ‘economistic’. Leaving the latter aside (for now), I shall conclude with a brief reference to his theory of transition. This evolved between 1922 and the late 1930s.

In 1922, after the downturn of the world revolution, he wrote that the idea of transition now applies to a whole historical epoch, wherein socialism is objectively possible - as well as necessary - but it continues to be held back by subjective factors. Meanwhile capitalism continues to decline (even though it might be able to establish an equilibrium for a decade or two). But the productive forces continue to decompose and the space for reform becomes ever more limited.

This scenario was cut short by the onset of the great depression and the rise of fascism, as an excrescence of capitalism. Then came the realisation that Comintern had now passed over to the side of the bourgeois order, and was playing a cynical counterrevolutionary role. Hence Trotsky’s alleged swing towards a ’catastrophist’ position: in the Transitional programme, he argues that “the objective prerequisites for the proletarian revolution have not only ‘ripened’: they have become somewhat rotten … the historical crisis of mankind is reduced to a crisis of revolutionary leadership.” Therefore a new Fourth International is needed, whose strategic task is “overcoming the contradiction between the maturity of the objective revolutionary conditions and the immaturity of the proletariat and its vanguard”.

Of course, he could not have anticipated the level of destruction that was caused by the second imperialist war. In the west this necessitated the long post-war boom. But after this ‘hiccup’ (admittedly a big one!) I would argue that his thesis is now back on track, following the rise of neoliberalism - the ultimate medium for the rule of finance capital. My conclusion is based on Trotsky’s attempt to elaborate his theory of transition. Whilst this must include the objective movement from one form of society to another, he does not do this. Instead he introduces the idea of stalemate, which could lead to the mutual destruction of the contending classes: The unconscious struggle of the working class exacerbates the development of parasitic finance capital, which is divorced ever further from the productive forces. Thus it threatens to bring down the whole system.

Meanwhile society is moving towards barbarism (in terms of both endless war, as well as cultural regression). At the same time capitalism’s unplanned and predatory relationship with the rest of nature poses an existential threat to humanity itself - capitalist ecocide.19 The coronavirus is able to provide a convenient fig-leaf, but only in the short term. What next? 



1. In The German ideology, this is defined as “the consciousness of the necessity for a fundamental revolution”.

2. K Marx Capital Vol 3, Moscow 1966, p820.

3. S Meikle Essentialism in the thought of Karl Marx London 1985, p10.

4. Ibid pp95-96. This includes footnotes, which cite Marx’s Grundrisse pp157-58 (Capital Vol 2, Moscow 1966, pp119-20, 483, 786-77).

5. www.marxists.org/archive/marx/works/1845/german-ideology/ch03o.htm.

6. S Meikle op cit p149. Compare the recent rise of left nationalism within the Corbyn leadership of the Labour Party.

7. K Marx The civil war in France: www.marxists.org/archive/marx/works/1871/civil-war-france/ch05.htm.

8. K Hammermeister The German aesthetic tradition Cambridge 2002, p200.

9. Financial Times January 25-26.

10. ‘Can the world kick its oil habit?: https://app.ft.com/cms/s/dddb57ec-4d2d-11ea-95a0-43d18ec715f5.html?sectionid=markets.

11. Ibid.

12. Ibid.

13. Ibid.

14. Ibid.

15. Ibid.

16. Ibid.

17. Jonathan Ford, ‘The world must look beyond sun and wind for hydrogen’ Financial Times March 2.

18. ‘The big picture’ Financial Times March 2.

19. See David Gorman’s essay, ‘The political economy of defeat: Leon Trotsky and the problems of the transitional epoch’, in The ideas of Leon Trotsky London 1995, pp201-08.