The utter failure of private capitalism to prepare for the coronavirus should have surprised no one. Private capitalism, as business school graduates repeat, focuses on profit. The “profit incentive,” they learn, makes private capitalism the superior, “most efficient” economic system available. That is its “bottom line” and “chief goal.” The problem is that to produce adequate numbers of testing components, masks, gloves, ventilators, hospital beds, etc., and then to store, secure, monitor, maintain and demographically stockpile them were not and are not privately profitable businesses.
A private capitalist producer of those goods would have to wait, perhaps a long time, for them to become marketable. The risk is great, the future price unknowable, and profitability hard to count on. So private capitalists looked and found elsewhere to invest. They did not produce or stockpile the items needed to secure the public’s health by preventing or minimizing a viral pandemic.
Of course, private capitalism’s failures could have been offset if governments compensated for them. Governments might have purchased the necessary medical supplies from private capitalists as they emerged from production at prices yielding them good profits. Governments could then have stored, monitored, replenished, and stockpiled them, and absorbed the costs and risks involved. Indeed, governments in many countries did that. But few maintained stockpiles sufficient for “abnormal” or “serious” viral threats. Most stockpiled only smaller “normal flu” levels of the needed medical supplies.
Ideas and practices of government compensating for private capitalism’s failures and flaws are old. Business cycle downturns have brought repeated government economic interventions. They do so now. Another pertinent example is government intervention to procure military supplies. It is privately unprofitable to produce, store, secure, monitor, and strategically stockpile tanks, missiles, guns, airplanes, etc., needed for war or “defense.” Private capitalists would not likely produce or import them given the risks and uncertainties of future military conflict. So governments contract to buy them as they are produced at prices profitable for private producers of military supplies. Governments cover the costs and risks of storing, securing, and stockpiling. These immense government subsidies to private capitalists get justified as requirements of national security.
What governments do to prepare for military security they do not do (or do inadequately) for health security from, for example, dangerous microbes. Yet viruses have threatened human beings at least as long as military conflict has. Many more Americans were killed by the 1918 influenza pandemic than died in the 1914-1918 world war. Coronavirus has already killed many more Americans than died in the Vietnam War.
Why then do governments compensate for private capitalism’s failures in the military but compensate so much less in the medical industries? And when governments do compensate in the latter, why so differently, varying from much in some countries to little to almost nothing in others?
Neoliberalism’s ideological power, varying from country to country, provides an answer. Where it is strong, governments minimize economic interventions. They cultivate blindness to private capitalism’s failures and often simply deny them. Officials thus cannot publicly and explicitly undertake to “compensate for failures” in, say, the private medical industries. Trump expressed his neoliberalism by dissolving Obama’s White House pandemic preparedness organization.
Neoliberalism argues for laissez-faire. Private enterprises left alone to produce and market without governmental taxation, regulation, etc., will outperform systems where governments intervene. Neoliberalism celebrates the private over the governmental nearly everywhere. It is a kind of fundamentalism in economics: God is private, while the devil is government. The exceptions—the military, police, and judiciary—prove the rule: all other social institutions must be private to work best. Markets, like enterprises, should be “free,” i.e., not subject to government.
Neoliberal politicians decline to organize, endorse, or support governmental production, import, storage, securing, or stockpiling of virtually anything that private capitalists are or could be doing instead. Private profit, not bureaucratic fiat, should be the guiding goal of the production and distribution of all goods and services (more or less excepting military, police, and judiciary). Libertarianism is a more extreme version of neoliberalism.
Where neoliberalism is strong, governmental preparations for and copings with coronavirus were weak, too late, and too little: as in the U.S., the UK, and Italy, among others. In societies where neoliberalism is relatively weak, government is accorded considerable respect and deference. Its anti-viral initiatives and policies including economic interventions were welcomed or at least expected to play positive roles. Examples include China, South Korea, and New Zealand, among others. Where neoliberalism is weak, government economic interventions can receive ad hoc criticisms and oppositions, but they are not opposed in principle. Where neoliberalism is strong, opponents define government as always and necessarily an inefficient intruder into what private enterprise, if left alone, would do better.
Neoliberalism is a preferred ideology of private capitalist employers. This “special interest”—a very small social minority—embraces neoliberalism in self-interest. Its neoliberalism proclaims private capitalists’ utter superiority to any other social group that threatens or might threaten its economic dominance. It thus excoriates labor unions and government bureaucracies and, sometimes, the monopolization of big businesses for interfering in and distorting free markets.
Neoliberalism views some government economic interventions as distorting intrusions into private capitalism; it views others as comprising an evil alternative to private capitalism. The label “socialism” serves neoliberals nicely to capture both horrors. On the one hand, it designates government meddling in free-market capitalism. On the other, it signifies government-owned and operated enterprises and government-planned distribution of resources and products. As private capitalism’s chief theoretical champion, neoliberalism seeks to vanquish the enemy theories of Marx and Keynes.
Whatever we think of the theoretical jousting, coronavirus has sharply clarified neoliberalism’s profound social costs. Millions are sick and many thousands dead because of governments’ delayed and inadequate compensations for private capitalism’s failures to prepare for or cope with the virus. Dangerous viruses have attacked human society many times throughout history. Preparing for the next attack—thereby securing public health—has long been a basic duty of all social systems. Feudalism failed in that duty when many millions of Europeans succumbed to the Black Death in the 14th century. That failure weakened European feudalism. Capitalism is failing in that duty now with coronavirus, in part because of neoliberalism.
As that lesson sinks into contemporary consciousness, major challenges confront and will likely also weaken both neoliberalism and capitalism.
This article was produced by Economy for All, a project of the Independent Media Institute.
Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff’s weekly show, “Economic Update,” is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His two recent books with Democracy at Work are Understanding Marxism and Understanding Socialism, both available at democracyatwork.info.