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Capitalism and the Crisis

Capitalism—the economic system that manifests in the free market, structural wealth inequalities and the pursuit of economic advancement at all costs—meets crisis—a moment of surging conflict, of irrepressible chaos and change. What could possibly go wrong?

Capitalism—the economic system that manifests in the free market, structural wealth inequalities and the pursuit of economic advancement at all costs—meets crisis—a moment of surging conflict, of irrepressible chaos and change. What could possibly go wrong?

While most have been coming to terms with Russia’s invasion of Ukraine, our corporate friends have been hard at work formulating responses to the crisis which toe the line between intriguing and dystopic. From store closures and donations to the production of merchandise, the willingness of the corporate sphere to signal its political beliefs perhaps seems heart-warming at first glance. However, under the surface, there are some problematic notions at play.

In early March, Nike and Apple were among a number of companies to announce the temporary closure of their Russian stores, citing solidarity with the Ukrainian people. Largely, these store closures were met with commendation by the west—a sign that the corporate sphere was in support of government sanctions. However, it’s worth questioning: do store closures actually take a toll on these businesses?

For Apple, the impact is debatable. Though it has been reported by some that Apple will lose $1 billion over a year in iPhone sales, the move out of the Russian market was arguably inevitable. The company has long had a fraught relationship with Russia due to government mandates requiring the tech giant to instruct Russian users on how to download state-run applications. Thus, the impact of blocking out a market that reportedly only accounted for less than one per cent of its total revenue in 2020 is minimal.

Prior to closing its Russian stores, Nike was already having trouble with its supply chains. The subsequent store closures were perhaps a necessity given the Nike’s inability to deliver stock to Russia, conveniently played off as a humanitarian statement.

Nike was also one of many companies to announce donations in the face of the crisis. Nike promised UNICEF and the International Rescue Committee a donation of USD$1 million: a number which sounds impressive yet pales in comparison to its annual revenue of USD$44.5 billion in 2021. Just to be clear, $1 million is only one 44,500th of Nike’s 2021 revenue. It’s not an exact equivalent, but for the average Australian earning the median annual wage of around AUD$67,500, this is to make a grand donation of AUD$1.50.

Additionally, that relatively-tiny $1 million donation is tax-deductible, according to the USA’s tax rules. This makes Nike’s altruism an even more economically-expedient choice, especially given widespread reporting of its history of federal tax evasion.

The invasion of Ukraine commenced while Milan Fashion Week was underway. Luxury fashion houses altered their shows out of respect for the Ukrainian people. For instance, Giorgio Armani decided to run the Armani show without music. Other major houses such as Balenciaga and Givenchy referenced the crisis in their show notes. Brands such as Gucci offered monetary donations.

In the sphere of fast-fashion, other brands quickly launched clothing with messages of support. For instance, Amazon is retailing an “I stand with Ukraine” t-shirt for USD$17.99. Unlike some other solidarity items on the market, Amazon refrains from promising any donation of the purchase price to Ukrainian charities.

Clearly, the effects of the crisis have taken root in the corporate sphere, prompting these messages of support. But why? Ultimately, many of these corporate signs of solidarity are simply necessary, forming part of the recent trend towards the politically-involved CEO. Traditionally, political neutrality was of central importance for the corporate sphere—not anymore. Jerry Davis attributes this change to social media, whereby a company’s social values are easily identifiable to the general public, and quickly disseminated. Disagreeable social values—like supporting the Russian invasion of Ukraine—are more and more difficult to hide, with campaigns against ‘problematic’ companies increasingly simple to form.

In general, activism and diplomacy are frequently occurring over social media sites like Twitter, with complex negotiations condensed into short tweets. In a tweet in early April, the Ukrainian Red Cross (@RedCrossUkraine) wrote: “Dear Elon Musk @elonmusk, @RedCrossUkraine would greatly appreciate if you could help us with 25 Starlinks.” Asking for assistance from Elon Musk, this tweet indicates the diplomatic role adopted by the modern celebrity or billionaire. It also highlights the immense power of Musk and those in similar positions; the choice to help or refrain from action has life-or-death consequences, and ramifications for the geopolitical sphere. In 2022, it is becoming hard to remember a time where wealthy individuals didn’t have the power to save or condemn entire nations.

Twitter, more broadly, has been central to the Ukrainian invasion. The site offers up-to-date information through general discussion and the Twitter platforms of world leaders. Ukrainians are flocking to President Zelenskyy’s Twitter updates as an immediate and convenient source of information. Twitter’s condensed, regularly-updated account of the crisis can be found as one of its “curated Twitter moments”, a sickly-sweet, sanitised description of real-life human suffering. Though the site is an undeniably rich source of information (and misinformation) for those who need it, the fact that the company has encouraged further sign-ups, and is hence generating profit from the crisis, feels deeply sinister.

Charity in response to crises has long been a point of contention in ethics. Many arguments in favour of individual charity cite the mood benefits of altruistic behaviour, which comes from a social desire to aid others. However, the efficacy of charitable giving has long been questioned: Peter Singer’s philosophical work centres on promoting effective altruism, whereby benefits are maximised through giving to charities where “each dollar goes the furthest”. Singer’s work, however, draws complex ethical questions to the surface. Is donating to charities, which utilise money with apparent decreased efficiency, a bad thing, especially when they seek to aid the lives of individuals with challenging or debilitating circumstances? In other words, should the effective use of money be a benchmark whereby we judge which charities are ‘worth’ donating to?

Effective altruism also encounters another problem: it works within the systems of capitalism, rather than challenging the dominant mode of neoliberal economics. Through positioning the ordinary, well-intentioned citizen as the source of altruism and aid, both governments and corporations are able to side-line their own obligations to donate significant portions of their economic resources. It allows companies like Nike to offer small sums, when they could offer much more. Again, the crisis becomes an instance where capitalism is further entrenched into our culture, and lifestyle politics are promoted as the only way to alleviate these systemic problems.

Ultimately, moments of crisis form opportunities for the capitalist system to dig its claws in further. As Naomi Klein writes in The Shock Doctrine, crises distract the general public, providing the chance for capitalist structures to become further embedded within our social systems without us even recognising it. Often, this is enacted through increased privatization in the aftermath of tragedy, with one example referenced by Klein: the closure of public housing and schools after Hurricane Katrina in 2005. Thus, the local crisis is never actually local, but rather sits within a global web of ideology, with devastation accompanied by the sinister processes of capitalism.

To suggest that there is a simple solution to crisis capitalism would be facetious. It would also be wrong to propose that the current capitalist response of signifying solidarity and raising awareness is entirely ineffective. Clearly, the corporate sphere has succeeded in directing our gaze towards the Ukrainian invasion. But understanding how capitalism functions in times of war, upheaval and suffering is perhaps the first step in finding ways unbound from global economic structures to show our solidarity, both with those in Ukraine and elsewhere.

 
Farrago's magazine cover - Edition Five 2022

EDITION SIX 'RETROFUTURISM' AVAILABLE NOW!

Our last print edition of 2022 is here! This wild, visionary edition is filled with burning nostalgia, glittering hope, and tantalising visions of the future, past, and present.

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