The Conflicting Economic Lessons of Amazon versus Tesla during the Corona Episode

Collectively, the net worth of the world’s 500 richest people grew about $1.8 trillion last year, according to Bloomberg. Initial reports, in early October 2020, had said they got $813 billion richer. As it turns out, there is a TRILLION dollars more to that. Small potatoes! After all, what’s a trillion dollars in the history of the universe?! In the meantime, the world economy is reeling from recession. Not high-tech and pharmaceutical companies which have literally been gorging themselves on the Covid-19 crisis.

It used to be said that greed promotes economic growth. The Covid-19 episode has shown bluntly that capitalism rewards scavenging and opportunism, whether it promotes economic growth or kills it (speculation bringing down whole industries and national currencies being a case-in-point of the latter).

The truth of the matter is that social distancing restrictions during the plague channeled more retailing into e-commerce. So Amazon’s net worth skyrocketed. The same thing goes for Facebook, pharmaceuticals manufacturing Corona virus vaccines, and so on and so forth.

On the other hand, the exponential surge of Tesla’s stock, the electric-car maker, by a whopping 740% in 2020, is very interesting given the falling prices of gasoline that was exacerbated by the devastating economic impact of Corona virus restrictions.

Elon Musk, a mere 20% of owner of Tesla, added $140 billion to his net worth in 2020, $15 billion of which came, in fact, from his stake in Space X, a space travel company, which witnessed a huge increase in its stock prices this year due a space-driven investment outlook (which was tackled in another piece titled “Mining Outer Space: The Moon is Open for Business”).

Tesla may not be able to preserve its ascendancy in the electric-car business for long given incoming competition. Much of its stock price hikes are most likely due to speculation in the financial market too, since its earnings-to-stock-price-ratio has gone way overboard.

However, Tesla and Space X illustrate a different trend suggesting that capitalism has not yet exhausted its historical ability to develop the means of production, especially on the frontiers of technology, even while the economy is being destroyed. And so long as that is true, it needs to be said that although scavenging remains its dominant model, capitalism still holds the reigns of technological progress, which means that it is still too early to declare it dead in absentia. That is important for anti-imperialists world-wide to know so they won’t underestimate their enemy, as they have frequently done before.

Ibrahim Alloush

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