What Coronavirus Reveals About the Economic Model That Shapes Our Lives
by Cengiz Salman and Anna Watkins Fisher
The US is often imagined as a nation of abundance, even excess. However, mere days into the coronavirus crisis, reports emerged of abrupt shortages: shelves without toilet paper, bread, or flour. More concerning still was the lack of disinfectants, sanitizers, and necessary medical equipment such as masks, gloves, gowns, and ventilators — and, we would learn, state and local governments and health systems were being forced to compete for medical and personal protective equipment, even relying on private donations to fill the gap between need and supply.
For many, the country’s ill preparedness to deal with our current crisis has come as a great shock.
It feels as though we live in a system of abundance — after all, we can order something on Amazon and have it appear on our doorsteps within a couple of hours. But the shortages that have taken Americans by surprise are in fact being produced by the same economic model that makes Amazon possible — and unimaginably profitable.
This model, known as lean production, is at the core of the business models of monopolies like Amazon, known as lean platforms, which (as the name implies) hinge on policies and practices not of abundance but of depletion. In lean production, reserves — of commodities, of expertise, of workers — are understood as hostile to economic growth; lean production relies instead on the minimal yet rapid flow of commodities and labor as they are needed — a model known as “just-in-time” supply.
The principles of lean production are not unique to the business world. In fact, they have increasingly been used to erode public infrastructure. We must understand lean production and the beliefs that underpin it in order to make sense of the Trump administration’s disastrous response to the coronavirus crisis — particularly given its radical proposal to cut the budgets of institutions, such as the US Center for Disease Control, National Institutes of Health, and the World Health Organization, designed to protect citizens from disasters such as pandemics in 2021. But President Trump, whose entire campaign platform was centered around his plan to run the country like a business, continues to frame these cuts as good business. At a White House briefing in late February, he defended his decision to dismantle the National Security Council’s pandemic response team: “Some of the people we cut, they haven’t been used for many, many years …. and rather than spending the money — and I’m a business person, I don’t like having thousands of people around when you don’t need them — when we need them, we can get them back very quickly.”
The idea of “reserve” is anathema to the model of lean production, for reserves are signs of a crisis of overproduction. Businesspeople are phobic of warehouses full of commodities that may not immediately sell, of employees whose productivity is not immediately realizable, and of surplus populations who are not immediately productive. Nothing can be abundant, stored, or idle.
The fear of overproduction that spawned the lean ideology in the US grew out of the Oil Crises of the late-1960s and early-1970s, the energy crisis of 1979, and the early 1980s recession, as cycles of overproduction — in automobile industries in particular — alerted manufacturers to the economic threat of waste that haunted the continuous mass production of commodities. In times of economic growth, mass production meant mass profits, for increases in productivity could be met with increased consumer demand. However, the periods of zero or negative growth that disrupted the global economy in the 1970s–90s (in other words, times when supply exceeded demand) made it clear that constant production could not sustainably maximize profits.
The adoption of the lean model in the US is often traced to transformations in the auto industry, the canary in the coalmine of US manufacturing. In 1979, there was a crisis of automobile overproduction: as oil prices went up, consumers drove less, and as the recession tightened spending, they bought fewer large consumer goods. In response, researchers at MIT created the International Motor Vehicle Program (IMVP) to develop more efficient production systems and policies for US auto manufacturers. These researchers turned to the Toyota Production System, developed by Japanese businessman Taichii Ohno in the mid-twentieth century, as a model for transforming American manufacturing to allow it to generate profit, even in times of slow economic growth. Toyota’s new philosophy of business management sought to make the production process more “efficient” — meaning efficient at reducing costs.
The Toyota model was grounded in two core principles. First, it promoted “just-in-time” manufacturing: manufacturers should only produce as much as they could sell on the market at any given time. Predictions of future demand, based on the analysis of historic sales data, determined the number of parts to produce and workers to employ; this would eliminate waste, avoid overproduction, and guarantee a more efficient return on investment. Second, the Toyota model greatly reduced the labor time required for mass production, in part through the use of machines that would either autonomously adjust their performance for quality control or stop producing defective products before humans were able to detect an error in these machines’ performance. Rebranded “lean production” by the IMVP, the Toyota Production System led to what David Harvey has characterized as a sea change in capitalism that fundamentally transformed global production and supply chains.
Lean production finds its most extreme expression in twenty-first century big tech monopolies. The gig economy, as digital economist Nick Srnicek has argued, is built on maximizing efficiency by eliminating all possible costs. The sole asset of lean platforms like Uber and Airbnb is the software they use to mediate the work of independent contractors, who own their cars and homes and pay for the cost of their maintenance. Although most customers do not realize it, even companies like Walmart follow this platform model. Like Uber’s software, Walmart’s stores simply mediate between vendor and consumer: Walmart does not buy its vendors’ products but rents shelf space to them. Vendors remain responsible for any unsold items, so Walmart does not lose money for what it does not sell. Amazon also follows this model by keeping a limited quantity of certain commodities on hand at a given time and purchasing more of this item only to fulfill new orders.
Not only does this model eliminate companies’ need to own and store the commodities that they are selling, but hiring independent contractors that do not need to receive benefits like health insurance or overtime pay also reduces labor costs by nearly 30% and prevents laborers from organizing to demand better working conditions.
Most vulnerable to this efficiency model are the undervalued and overextended workers, gig and service sector employees who are disproportionately women, migrants, indigenous people, and racial, ethnic, and sexual minorities and who are systematically treated as disposable, despite being essential.
According to Pew Research Center data, workers who are at higher risk of job loss due to Covid-19 are low-wage workers who work in transportation, retail trade, accommodation, cleaning and child care industries. This research shows that women, black and hispanic workers, and young people disproportionately make up the workers in higher risk industries in the US and will be hardest hit by virus-related layoffs.
These workers’ disproportionate vulnerability to layoffs reflects the broader picture of health inequality exposed by the virus. Compounding histories of economic, political, and environmental racism means the coronavirus is disproportionately affecting Black and indigenous communities. We write from Michigan, where (according to a report on April 3rd) African Americans make up 14% of the population but represent 40% of cases and 35% of deaths from coronavirus. Similarly, a historical lack of US federal investment in Indian Health Services and the fact that the federal government does not guarantee distribution of medical supplies to indigenous communities has left tribes with a severely circumscribed ability to respond to the pandemic.
Coronavirus is revealing our national dependence on lean businesses, and the lean political and governmental institutions modeled on them. It exposes an infrastructure, run on depletion, that is hanging on by a string — jobs lost without warning, small businesses underwater in mere weeks, lives lived paycheck-to-paycheck unable to absorb any financial disruption. In only the past two weeks, approximately 10 million US workers have filed for state unemployment insurance benefits and the Fed recently estimated that the current pandemic could lead to a 32% unemployment rate, meaning that 47 million people might be forced to live without a secure income.
This crisis is making visible the fragile social relations that have until now invisibly underwritten the new American way of life. But in this moment of recognition there is the promise for turning away from this model of depletion and toward policies and practices that recognize the necessity of reserves without resorting back to overproduction. What is needed, now more than ever, is an equitable and sustainable system of production.
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First published on Medium on April 8, 2020; cross-posted with permission.