Austerity and Financialisation

Public policy responses to the COVID-19 crisis and prospects for economic recovery reveal new challenges for a transformative feminist agenda: the restoration of the austerity paradigm, today deeply embedded in national policy-making; the increasing role of private corporations in social provisioning (including vaccine access); the marketisation and financialisation of social policies that have been central to pandemic responses so far. All these factors exacerbate gender and socio-economic inequalities.

Restoring austerity

“Considering the entire economic picture” helps us understand how macroeconomic policies have impacted state capacity during this pandemic period. Although states adopted varying economic relief measures to respond to the crisis, including mobilising resources through heterodox fiscal and monetary policies, austerity measures persisted in many countries. Budget cuts blocked scope to address long-standing structural inequalities rooted in gender, race, and class that affect labour market participation, unemployment, wages, and care responsibilities (which were heightened by the pandemic). Reductions in the name of austerity had a greater impact on women given their over-representation in economic sectors hard hit by the crisis, including notably the informal economy, social and personal services, tourism and hospitality. As a result, austerity-driven cutbacks that threaten recovery have been particularly detrimental for women, whilst also increasing inequality gaps.

This situation is reminiscent of previous crises in which brief episodes of public spending expansion were followed by long periods of austerity (Ortiz and Cummins, 2021). Pressure to adopt austerity-oriented policy is exacerbated due to the conditions imposed by new debt cycles required to finance fiscal deficits. Historical experience has already taught us the social and economic consequences of this dynamic. Recovery becomes more difficult and its costs are spread unequally across society. Macroeconomic dynamics, shaped by the pressures and instability of highly indebted economies, seep into households through multiple distortions on the microeconomic level, including heightened precariousness of jobs, loss of purchasing power (for income from both labour and social transfers), limited access to social goods and services, and deterioration of basic social infrastructure.

Increasing corporate power

The fiscal stress faced by many governments in the Global South is a highly significant factor in the growing influence corporate power exerts on economic dynamics. A vicious circle is triggered: improper behaviour by companies erodes public finances, while weakened states withdraw from provision of essential goods, with that role being assumed by transnational corporations that build on their dominant market positions and find that the crisis constitutes fertile ground to increase their profits and economic power.

The question of Big Pharma and vaccine access during the pandemic is a striking example. The People´s Vaccine Alliance has estimated that the three major pharmaceutical companies behind two of the most frequently used COVID-19 vaccines would notch up pre-tax profits of $34 billion in 2021. In the meantime, the COVAX Facility designed to guarantee access to vaccines for poorer countries has been a huge failure. More recently, calls for a TRIPs waiver for coronavirus-related vaccines, therapeutics and diagnostics have been watered down entirely.

Financialisation of everyday life

In line with the above phenomena, financialisation of everyday life deepened due to pandemic economic responses. Cash transfers were among the first social policy responses governments had in their toolbox. This was to be expected. Despite the unintended negative impact on women’s care burden and autonomy, such transfers tended to be the fastest available policy response in the face of growing unemployment and social distancing measures, accompanied by growing commodification of access to the most basic goods and services (food, water, health, energy). The pandemic also provided an enormous boost to the global financial sector, by increasing households’ indebtedness, in many cases with social benefits serving as collateral to access credit.

Feminist transformative responses

Feminists have been insisting on the need for a truly transformative recovery strategy. Facing each of these challenges is the key to begin unravelling the knots that reproduce inequality. Interlinking the various forms of resistance¹ in which we are involved is essential to address and transform the full picture.

¹ To cite just a few: https://feminists4peoplesvaccine.org/es/; https://www.globaltaxjustice.org/en/action/make-taxes-work-for-women; https://peopleoverprofit.online/; https://www.womenalliance.org/feminists-4-binding-treaty/.