George Kerevan

George Kerevan

Covid Capitalism: Winners and Losers

Reading Time: 15 minutes

In the second part of his overview of global capitalism’s latest crisis, George Kerevan looks at the winners and losers among the capitalist class, and the possibility of working class resistance.

In the first part of this analysis, I surveyed the global impact of Covid-19 and introduced 7 key political-economic processes that will result from the pandemic.

Watch: George Kerevan discusses the changes to global capitalism

The first, looking at 3 different crisis points in the global system. This second part will explore the winners and losers of the new global crisis, including finance and arms dealers, before looking to class dynamics and the potential for resistance.


Trend 4 covers new market sectors stimulated by the pandemic. The most profitable section of US capitalism is the drugs industry, Big Pharma itself. According to the Journal of the American Medical Association, between 2000 and 2018, the 35 biggest US drug companies earned revenues of $11.5 trillion, with a staggering gross profit of $8.6 trillion. Big Pharma, with its links to the US private medical insurance business, extracts these absurd profits using its monopoly power. According to Kaiser Health News, the price of no less than 4,311 prescription drugs sold in America was increased during 2019 – with the average increase an insane 21%. From this base, Big Pharma intends to use the pandemic to ratchet up profits even more. Industry analysts estimate that sales from a coronavirus vaccine could be up to $20bn in the first year alone. At the same time, the pharmaceutical monopolies want to use the prospect of a vaccine to refashion their public image away from being the most hated companies in America. For example, Johnson & Johnson says it will sell any coronavirus vaccine on a “not-for-profit” basis for “emergency pandemic use.” But ultra-secretive J&J has not revealed how it defines “not for profit” or how long it defines “emergency” lasting. Also, as in a typical war situation, the US federal government is footing the bill for researching, manufacturing and distributing the vaccine – to the tune of $10bn. J&J’s share price is up 15% this year. J&J competitor Pfizer, which is also among the four big drug firms being supported by the US state, has also announced that its vaccine is nearing readiness, causing stock markets to surge.

But the real battle in global markets is for artificial intelligence products – software, applications, analytics, hardware and integrative systems. The market for AI products is currently around $40bn but it is growing at over 40% compound annual growth. Consulting giant Accenture forecasts that AI has the potential to boost average rates of profitability by 38 percentage points and could lead to an economic boost of $14 trillion in additional gross value added (GVA) by 2035. GVA is a good proxy for what Marx called surplus value. World GVA in 2017 was circa $70 trillion. Even allowing for the crudeness of these calculations, Accenture is claiming AI will increase global surplus value by something like 20%. Of course, that leaves out the thorny issue of turning production into sales, and it ignores the impact on realised profits of an intensification of inter-imperialist competition. However, the prospect of such a giant increase in surplus value extraction has the potential to reverse the current global economic downwave. Equally, the battle over such profits could tip the world into a new military conflict.

The issue here is that COVID-19 has accelerated a wave of new AI tech development (data harvesting, medical robots), much of it now funded by governments worried by the pandemic. The immediate problem in this market is not the lack of potential growth (which is guaranteed) but that short-term bottlenecks that have appeared. For starters, given the security implications, there is a reticence to continue with the globalist model of production, especially of AI chipsets (computers on a chip). This will result in entire (and competing) production chains being restructured and localised. At the same time, with skilled developers in desperately short supply, monopolisation of the sector is accelerating. The very biggest players (Amazon, Google, IBM, Microsoft and the Chinese Alibaba) are buying up smaller players or key suppliers. Other niche players are scrambling to join the big boys before it is too late. Last month, the US company Nvidia bought the Cambridge-based ARM company – which designs the mobile chips used in almost every mobile device on the planet – for $40bn. Typically, the Tory Government gave a thumbs up to this raid on British technology. The battle over who controls AI will be between American and Chinese capitalism.

If these developments come to pass, it means a major intensification of the contradictions of 21st century capitalism. Two major frictions are worth pointing out. First, the pandemic is reinforcing the domination of the high-technology monopolies that extract super profits (technological rents) from their proprietary ownership of knowledge. This will only increase frictions with other sectors of capital. The Trump presidency was financed by domestic capital that is in conflict with the globalist ambitions of Big Tech. Of course, US capital as a whole will – in extremis – unite to face down domestic revolt or foreign military and economic threats. But the tensions within American capitalism are more likely to intensify as a result of the pandemic rather than be alleviated. For instance, a major anti-trust suit is in progress against Google, backed by the Republican attorneys-general of 11 American states.


Trend 5 concerns the losers in this new iteration of tooth-and-claw capitalism. World airlines are flying a tenth of the flights they put on before March. The latest stress test on US airlines suggests that five of the largest carriers – American, United, Delta, Southwest and JetBlue – are in danger of default by the end of the year. Air travel is not comfortable at the best of times, but the prospect of mask-wearing become a permanent norm is unlikely to help. The economics of giant airports are now in existential crisis – don’t expect Heathrow’s third runway to materialise. Aircraft manufacturers are clearly in trouble unless (like Boeing) they also build military planes. To keep going, aircraft engine manufacture Rolls Royce has borrowed billions (at a hefty 5% interest) which it promises to repay in 2026. When it says it can’t repay, expect the UK Government to ride to the rescue. And though a vaccine brings some prospect of a fightback against the virus, it does not eliminate the damage caused or all the problems still to come.

Along with the airline business, the entire global tourism market is now in permanent jeopardy. Industry analysts reckon that as a result of the pandemic, the global travel and tourism market will shed 100m jobs this year, with the Asia Pacific region coming off worst. That will have a stunning impact on poverty levels in Asia.

Another loser – often forgotten – will be the global oil industry. Oil prices are dropping again amid concerns that the second wave of covid cases globally will choke demand. Meanwhile, Russia and Saudi Arabia are still planning to increase pumping early 2021, as they are desperate for revenues. Perversely, cheaper oil could make it harder to switch to greener energy as petroleum and gas producers work harder to recover the capital they have sunk in the industry. Also, the big oil producers reacted to the price collapse of recent years by loading up debt to pay dividends and make acquisitions in renewable energy. A further, covid-related drop in price could leave highly-leverage Big Oil facing with fiscal disaster. Private equity investors are already worried. Expect Big Oil to push back against plans to de-carbonise Western economies.


Trend 6 will see a major reordering of global finance and banking capital under the economic hammer blows resulting from the pandemic. To understand the potential repercussions, we first have to understand the differentiations in global finance capital that have emerged in the neoliberal era.

First, traditional bank capital now makes the bulk of its profits mainly from lending for household mortgages and service charges on consumer credit cards. The convergence of retail banking and the housing market reflects the evolution of Western capitalism. Valorisation of capital (turning money invested back into cash) can only take place if there is sufficient consumer demand. With most manufacturing now situated in Asia, and with real wages stagnating in the West, the only way of generating sufficient consumer demand in America and Europe is through debt finance courtesy of the banks. This model would be unsustainable without being underpinned by home ownership and rising property values, to act as collateral for mortgages and consumer debt in general. This is a house of cards as was seen in 2008 when the sub-prime mortgage market folded, and banks had to be rescued from insolvency by state intervention. Perversely, even China has now adopted this rickety model of valorisation.

The major threat from Covid-19 is that the economic disruption caused by repeated lockdowns could lead to mass unemployment and mass defaults on mortgage payments. As in 2008, this could cause bank illiquidity. True, since 2008, Western governments have forced banks to hold more reserve capital while the market in derivatives – essentially a method for banks to insure against failure – is better regulated. However, these safety devices are only designed to protect an individual bank from collapsing. If the whole system of Western bans came under threat simultaneously, we would be back to 2008.

We should note that in America and the UK, the immediate result of the pandemic has been a sharp increase in property purchases. This is explained by people using the various stimulus subsidies that governments have introduced (e.g. the cut to stamp duty in the UK) to buy houses, before such state support disappears in 2021. But what goes up must come down. Normally, a temporary boom in house purchase boosts property values and mortgage costs, leading to an eventual slump in the market. Add in the expected rise in unemployment and we could easily see Covid-19 leading to a new property and banking crisis.

However, high street banking is not the core of the globalised economy. That role is played by the big investment banks and private equity funds – institutions that centralise private capital on a world scale and decide how it is invested. The main investment banks include Goldman Sachs, Morgan Stanley, JPMorgan, Rothschild, Evercore, Credit Suisse, Barclays and UBS. Some of these (e.g. Barclays) operate separate investment and retail arms. Investment banks invest in their own right, offer client services to big industrial firms, and invest other peoples’ funds. Since 2008, the big US investment banks have defeated attempts by their ailing European rivals (Deutsche, UBS, Barclays) to control global capital flows. There is a close relationship between the US investment banks and the big high-tech monopolies, though both sides know that companies like Google and Amazon have their eye on actually breaking into banking.

Then there are the private equity funds (PEFs) such as such as Apollo, Blackstone, Carlyle, KKR, Apax, Bain, TPG and CVC. The emphasis here is in the “private”. These organisations are the true hub of global capital investment and the centre of US imperialism. Of the 20 top private equity groups, 16 are American, two are British, and Luxembourg and Sweden have one each. Investment funds (individual capitalists pooling their money capital to spread risk) go back to Scotland in the 19th century but their contemporary form is unique both in scale and activity. The total funds under management by private equity groups are reckoned in excess of $4 trillion in 2019, compared to a global GDP of around $88 trillion.

Typically, PEFs seek to buy control of existing firms, reorganise management and activity quickly, and sell out at vast profit within five years. This is a different modus operandi than the asset strippers of the 1980s, which were simple buy and break-up operations, i.e. a trading speculation. Instead, the PEFs are seeking to remodel companies in a way that valorises the capital locked up in them. The neoliberal era is one in which the opportunities for new investment at above average rates of profit are outstripped by the availability of money capital. Hence the appearance of specialised PEFs to make super returns not by selling exchange values but by unlocking unvalorised capital at a greater rate than the initial purchase price. This can be achieved by changing a sleepy management or supporting a management buy-out. Or by buying private, high-tech start-ups, funding their R&D, then launching them on the stock exchange through an Initial Public Offering (IPO).

The strategic importance of PEFs has been much enhanced in the past decade with the quantitative easing (QE) programmes of Western central banks. QE has created a stock market asset bubble which makes it easier for the equity funds to sell restructured companies at a premium. Originally, QE was introduced in 2008 to prop up bank shares but the pandemic has led to a new round of QE as a way of maintaining market confidence. The US Federal reserve has added a staggering $3 trillion in QE since March 2020. As a result (despite an initial wobble) the US stock market index is higher than it was in February 2020, at the start of the pandemic. This has allowed PEFs to continue to function in their tasks of valorising capital and (in the case of US imperialism) continuing to fund big high-tech companies like Tesla in their bid to maintain America’s stranglehold on monopoly super profits.

There is a case for saying that the pandemic actually saved the equity funds and (by extension) their model of valorisation. The year before the pandemic, 2019, global investors poured $894 billion into private capital funds of all kinds – a record figure. Of this, $361 billion was earmarked for buying up existing companies – yet another high-water mark. However, global economic growth slowed in 2020 as a result of Trump’s trade wars and a faltering German export economy. Capitalism found itself in a classic contradiction whereby a lack of expected profits was blocking the use of available resources to meet human needs. One estimate suggests that PEFs had a total of $2.5 trillion available in December 2019 for investment but a narrowing range of opportunities in how to use it to generate above average returns. And then came the pandemic and an avalanche of QE plus a massive injection of subsidies directly into industry and consumer markets by Western governments.

It is still too early to fully understand how the pandemic is impacting on the PEFs. More than 80% of all PEFs in a recent Investec survey say they don’t expect to make a portfolio exit over the next 12 months. In other words, they are holding on to companies till they see how the global economy and share prices respond. The second wave of the virus that emerged in September 2020 may increase this caution. However, the whole purpose of the PEFs is to package firms so they can be resold at a higher value, so pressure will certainly mount by the end of 2021 for a sell-off. That could provoke a stock market crash in the autumn of next year. QE has created an equity price bubble which the PEFs have used to their advantage. But equally, if that bubble bursts it will plunge global capitalism into a crisis.

The final element in the new architecture of finance capital are the hedge funds. Like the PEFs, the hedge funds get their capital from private investors. However, the activity of hedge funds is pure financial speculation. They use short trading (selling borrowed shares) to bet on market price falls. Of course, the very act of selling shares cheaply (‘shorting’) is usually a self-fulfilling prophecy – one that destroys companies and value. However, hedge funds also lay-off their financial bets by activities in the derivatives markets. This is a fancy form of insurance that can go spectacularly wrong – as it did in 2008 – if the whole market bets in the wrong direction. In 2008, it nearly destroyed the whole financial system.

Hedge funds are the pirates of neoliberalism. Hedge fund managers have been key supporters of both Donald Trump and Boris Johnson. Hedge funds are essentially a form of super speculation using exotic financial models to cream off super profits. They represent the supreme irrationality and uselessness of a neoliberal order that prefers gambling to making things or meeting human needs. One mark of this insanity is that the pandemic has proved a boom time for hedge funds.

For the first time in more than two years, more money is flowing into hedge funds than is being pulled out of them, as cynical investors try to take advantage of the chaos caused by Covid-19. The third quarter of 2020 saw net inflows of $13 billion for the global hedge fund industry, marking the first time since the first quarter of 2018 that asset managers attracted more cash from investors than they lost, according to analysts at Hedge Fund Research. In fact, more hedge funds have closed than have opened in the past five years, cutting the industry by half. Now the very uncertainties caused by the pandemic have reversed this trend. Or more accurately, cynical finance capital is betting on the pandemic to generate super profits by shorting companies in trouble. Between June and August of 2020, the bigger hedge funds netted $11.2 billion in new investment.


Trend 7 is a new arms race stimulated by increasing inter-imperialist rivalries. Such an arms race is already underway. Between 2007 and 2017, global arms exports rose 65% – from $119bn to $195bn, according to the US State Department (who should know). If the pandemic lingers there will be a general rise in global tensions caused by economic dislocation and an intensification of regional conflicts while the West is distracted. For instance, the spread of Covid-19 in Afghanistan has caused severe food shortages, undermining the pro-US regime and stimulating a new Taleban offensive. In occupied Kashmir, the Indian army has used the Covid-19 lockdown to force the locals to stay put while they install more artillery close to the ceasefire line with Pakistan. The West’s distraction has also allowed Erdogan’s authoritarian regime in Turkey to pursue its regional ambitions with a war against Armenia, using Azerbaijan as a proxy. Erdogan has defied the US by purchasing advanced S-400 anti-aircraft missiles from Russia – a test-firing took place this month despite a threat of sanctions from Trump himself. India too has spent $5bn on S-400s. Meanwhile, Beijing is furious that America is selling next generation, long-range air-to-ground missiles and anti-ship weapons to Taiwan. Proxy conflicts can rapidly escalate to more global and serious clashes. A Biden administration has shown no inclination to relax tensions with China.


During the height of the early lockdown, an estimated 40% of all workers in Organisation for Economic Co-operation and Development (OECD) industrialised countries continued to work from home. The pre-pandemic norm is nearer a quarter for job categories deemed low or medium-skilled. Some increase in home working via the internet will become permanent. One recent survey of chief financial officers found that 74% of companies intend to keep some proportion of their workforce on a permanent “remote status”.

This longer term change has only be accelerated by the pandemic. Global capitalism has discovered that home working is an effective tool to reduce costs and increase worker exploitation. Traditionally, Facebook used free cafeterias and free dry-cleaning services to keep staff from going home – a “human face” of neoliberalism. But the cost and human control options of the new home working have now changed founder Mark Zuckerberg’s mind. In May, Facebook announced it was abandoning its traditional campus-style organisation in favour of having at least a half of its 48,000 employees working from home.

In Europe call-centre companies are leading the charge towards isolated home working. French-based Teleperformance, the world’s biggest call-centre company, says that around 150,000 of its global employees will not return to a collective worksite. Teleperformance has call-centres in Glasgow and Airdrie. Also, the rate of bank branch closures has accelerated since the first lockdown. Job processes are being routinised in banking and insurance, with machine learning algorithms doing bulk tasks (e.g. screening claims or applications) and any remaining direct contact with customers handled by workers at home using a phone.

Covid-19 has accelerated all these developments. The gain to capitalist firms is enormous. There is a huge saving in fixed investment in the physical housing, heating, and feeding of staff, never mind in security costs and relevant insurance. Workers have suddenly become financially responsible for huge company overheads. There are additional benefits to companies: isolating the vast bulk of their workforce at home will limit trade union organisation both physically and psychologically. The path is then open to a vast extension of the gig economy into white collar professions, as home working starts to centre on piece work policed by remote surveillance of worker activity – down to measuring the number of individual key strokes per hour. This is a classic “wartime” raising of the rate of exploitation and reducing the individual worker to a cypher.

This new ‘home capitalism’ raises specific gender issues. Women with young families working from home will be under intense pressure. An apologetic media will defend the new home working regime as liberating and good for the ‘life-work’ balance. Local authorities will be free to make cuts to spending on nurseries. The result will be a vast erosion of previous employment protection and equal pay gains for women. The impact of this rabbit-hutch economy on mental health is likely to be frightening. A recent study conducted by London City University found that 27% of people in the UK experienced clinically significant levels of psychological distress during April, compared with 19% cent before the pandemic. Women and young people showed the worst symptoms. The youth are particularly affected by the new, post-Covid order. In the US, those aged 16-29 accounted for a third of the rise in the unemployment rate between February and April 2020, despite representing less than a quarter of the workforce. As of June, some 28% of 16-24-year-olds were neither working nor in education – more than double pre-pandemic levels. A majority of US 18-29-year-olds are now living with their parents. The situation is the same in the UK. As many as 60% cent of redundancies since March have hit the under-25s.

The rise in youth unemployment, taken together with the collapse of much of the hospitality sector, is creating a new industrial reserve army. The reappearance of permanently high unemployment could be the lasting legacy of the pandemic throughout the Western industrial economies. This is precisely the shift required by global capitalism to put downward pressure on wages, in order to raise the average rate of profit. It is still too early to find concrete evidence of this prediction but the latest UK Office for National Statistics data shows that – in real terms – total pay growth for June to August 2020 was a negative 0.8%, when inflation is taken into account. Removing pay growth in the public sector yields a worse result. Negative pay growth in the construction sector was minus 5.3%; in the retail, hotel and restaurant sector it was minus 2%; and in manufacturing it was minus 1%. Extend this trend over the next five years, and real wages will be under deep threat.

At a broader level, the pandemic is also facilitating and legitimising the surveillance powers of the state to control working class and youth dissent, on an unprecedented scale. We can see examples from the Polish app that requires Covid-19 patients to take selfies to prove they are indoors, to China’s colour-coded smartphone health-rating programme, which tracks who can leave home. Governments have turned to companies such as Google and Apple to provide “privacy-preserving” (sic) tracing solutions.


The key lesson of this analysis is that the Covid-19 pandemic is not a temporary interruption of globalism but a significant rupture in the international imperialist system. Some of the trends described – increasing capitalist rivalries, a shift to local trading blocs, replacement of living labour by artificial intelligence systems as a method of extracting relative surplus value – were already visible before the medical emergency. But the overall impact of Covid-19 is to accelerate these tendencies at breakneck speed.

How should the left respond? The crying need in this pandemic era is for the creation of a new, mass anti-capitalist international of workers’ parties, trades unions and peasant organisations. I am not talking about some modest rassemblement of the far left, Marxist organisations though that has its place. Given the extraordinary weakness of the international anti-capitalist movement, we need to start at the most basic level when it comes to international organisation.

We urgently need an organising centre that serves three basic functions: (1) to provide a platform for international debate and socialist education, including an international workers’ and peasants’ university; (2) to provide a mechanism for exchanging information, especially about struggles that are ignored by the corrupt Western media or totalitarian censorship; and above all (3) to act as a centre to mobilise global solidarity actions. This framework would leave significant latitude for ideological differences, much as did the Second International.

The advent of Covid-19 has exposed – if it were needed – all the contradictions of the dying capitalist system. In October 2020, the World Bank warned that by 2021, an extra 88-115 million people will have been pushed into extreme poverty by the pandemic – defined as surviving (sic) on a daily income of $1.90 a day. That would mean nearly 10% of the human race were destitute. At the same time, the rich have gained from the crisis. A report by Swiss bank UBS found that global billionaires increased their wealth by more than a quarter between April and July 2020, benefited from betting on the recovery of global stock markets after the lockdowns. UBS said billionaire wealth had hit “a new high, surpassing the previous peak of $8.9tn reached at the end of 2017”. There are only 2,189 billionaires on the planet today, but they are collectively richer than all the tens of millions of human beings living in extreme poverty.

We began by drawing an analogy between the impact of war on the imperialist system and the way the pandemic is playing out. Both WW1 and WW2 ended with revolutionary challenges to global capitalism. Let us hope that our crisis produces the same result.

Enjoy reading this article?
Join our mailing list
Subscribe now