In the aftermath of a crisis, or as a crisis is unfolding over time, there are two things you can bet will happen. One is that capitalist governments will take advantage of the situation to introduce measures they might not try at other times, fearing that the absence of a crisis will draw too much attention to their machinations. More often than not, these involve expanded police or military powers. And sometimes it’s things the capitalists would like to try out so they have them in their arsenals should a time come later when they’d like to wield these “tools.”
One example is the passage of the Patriot Act in the aftermath of the terrorist attacks in the United States on September 11, 2001. It gave the U.S. government broad powers ostensibly needed to combat what we were told would be continuing attacks of the same sort. Law enforcement agencies were permitted to search homes or businesses without the consent or even knowledge of owners or occupants. Indefinite detention of immigrants was authorized. The FBI won new powers to search phone, email, and financial records without a court order.
Similarly, a few days after the 2013 bombing at the Boston Marathon, state authorities in Massachusetts issued a “shelter in place” order throughout the eastern part of the state despite knowing that the suspects were in a very specific area. Neighborhoods such as mine, clearly in no “danger,” became ghost towns. As I wrote back then, the order was a clear case of the state trying out “martial law.”
A more immediate example comes from Israel, where on March 15 Shin Bet — the country’s internal security service — was given authority to track cell phones without a court order. Officially, the move is so the cops can use location data to send messages ordering self-quarantine to anyone who was in the vicinity of an infected person. But does anyone with even a marginal knowledge of the apartheid state of Israel believe this will be used exclusively to fight coronavirus?
The other thing that happens is that the reasons we are given that capitalism is the “best” economic system are revealed as bullshit.
As the coronavirus pandemic crisis unfolds in the United States, let’s take a look at how just one of these reasons fails to hold up. It’s at the heart of the argument economists make in support of the system we live in: the idea that capitalism is the most efficient system for allocating scarce resources.
Does Capitalism Allocate Resources Efficiently?
To understand this argument, we need to understand what is meant by “efficiency.” The way capitalist economists see it, efficiency is based on “value” determined by people’s preferences. Resources are allocated efficiently when more of a good or service cannot be produced without giving up some other good or service that is valued more highly. In other words, efficient allocation of resources occurs when (and because) capitalism produces the goods and services people most value.
And how is that value discovered? It’s the so-called “invisible hand of the market.” Producers who produce what people value are rewarded, while others are not. The market tells us value because something either sells or it doesn’t.
Capitalist economists love to tout the allocative efficiency of their system. They don’t just point to individual products you and I might buy at the store as proof, but they elevate this concept to encompass a mix of goods and services a society produces for its entire population. They might point, for instance, to a society that values the “production” of education over the production of “healthcare,” perhaps because the average age of members of that society skews younger than in some other society. And they call that allocative efficiency.
Think about that. Education and healthcare, two basic human needs, are essentially pitted against each other as resources between which people ought to choose.
Now here’s where the current coronavirus crisis rips the veil off the horrible, inhuman, amoral bankruptcy of capitalist ideology. On March 3, Jeremy Warner — an editor of Britain’s Daily Telegraph newspaper who is considered one of the country’s leading business and economics commentators — suggested in his column that there might be an allocative efficiency benefit from the pandemic. Bemoaning that the Spanish flu back in 1918 had a “lasting impact on supply” because it killed off “primary bread-winners,” he celebrated that the same outcome is unlikely with coronavirus — because it’s more likely to kill older people. His conclusion: “Not to put too fine a point on it, from an entirely disinterested economic perspective, the COVID-19 might even prove mildly beneficial in the long term by disproportionately culling elderly dependents.”
“Disinterested economic perspective” is capitalist doubletalk here for “market efficiency.” Capitalist economists spew this kind of crap all the time. They say, I’m not “advocating” for this or that horrible thing; I’m just saying it’s the way the market works. Specific to the United Kingdom, Warner’s comments relate to the resource known as the National Health Service (NHS), which is underfunded and under tremendous pressure to cut back on its services to the British people. So, suggests Warner, why not just let the elderly who contract coronavirus die — after all, they’re not “primary breadwinners” — rather than waste our limited resources on prolonging their unproductive lives. Allocative efficiency demands that the limited resources of the NHS be used to treat younger, productive people.
Don’t forget who those “younger, productive people” work for: the capitalists. They are the many who generate the profits, through their labor, that enrich the few.
At least Britain has healthcare provided to everyone by the government, at no direct cost. The U.S. private healthcare system is based on allocating resources to ensure insurance company profits, and the most efficient allocation involves maximizing profits by minimizing the actual provision of care. A detailed explanation of how this works is unnecessary here; every reader will likely have had some direct experience either with being denied care (even though insured, in some cases), having to fork over lots of money to get care (again, even with insurance), or simply having no choice but to choose food on the table as the priority over healthcare.
You don’t have to be a genius to figure out how “inefficient” it is in a pandemic for anyone to avoid seeking medical help because it’s unaffordable.
Human Beings as a Capitalist “Resource”
Under capitalism, human beings are a “resource” whose ability to work can be bought, preferably at the lowest possible cost, just enough to keep them alive to come back to work the next day. Choices can be made about which ones to use and then discard, which ones to nourish, and which ones ought to be culled from the population because they are no longer of use.
From the capitalist perspective, humans are just another input to capitalist production — like the rubber that goes into making the tires on a city bus.
The logic of capitalism is that there’s really no place for people who cannot produce something for the capitalists. Under this logic, where humans are a production input resource, kids are tolerated only because they can grow up to be “productive” (now that child labor has been legislated away in some parts of the world) — but, seriously, isn’t it really a waste that we have to wait and spend all this money on general education just to keep them busy before they can start working? The capitalist asks, “How is that an efficient allocation of resources? Wouldn’t it be more efficient just to teach them the specific thing they need to do the work we’ll allow them to do? While we’re at it, why do we need to keep retirees alive? And don’t even talk to me about the useless disabled! What have they produced?!”
Every time capitalism is given a chance to do so, it cuts back on what it already under-provides — what economists call goods with positive externalities (meaning their effects on people or the environment are positive), such as education, public transport, and healthcare. There’s no allocative efficiency in those societal expenditures!
The myth of efficient allocation of resources extends well beyond the big societal services to encompass everyday consumer goods. Take hand sanitizer. Good luck finding any in a store right now, as the pandemic widens. You won’t, but not because there wasn’t enough produced. Rather, it’s because people have hoarded it in quantities far in excess of what they individually need. Of course, the more disposable income you have, the more of it you could have bought while it was still available.
Don’t worry, though, the capitalist economist argues. Clearly, the wild sales show that people place a high “value” on hand sanitizer, and so producers have an incentive to make lots more — thus achieving an efficient allocation of that resource. The market cures all, and will solve the shortage.
Meanwhile, while we wait for the market, hospitals are experiencing a severe shortage of hand sanitizer. There’s none at the entrances to buildings still open to the public. People who need it in their homes don’t have any. How efficient an allocation is that? It’s only efficient if the underlying point is to maximize profit.
Under capitalism, each of us supposedly has an incentive to work hard, earn a living, and meet our own needs because that is freedom — a special kind of freedom that fulfills the American dream in the land where the streets are paved with gold (all part of the mythmaking around U.S. capitalism in particular). Here, we pull ourselves up by our own bootstraps, and we are supposedly better off for it. But a shortage of hand sanitizer during a global pandemic is a metaphor for what happens when people are left to look after their own interests rather than coming together to allocate resources in a way that would be truly efficient for all.
In a famous essay, Milton Friedman—the 1976 Nobel Prize winner in Economics and perhaps the most noted proponent of unfettered capitalism ever, wrote:
The great virtue of a free market system is that it does not care what color people are; it does not care what their religion is; it only cares whether they can produce something you want to buy. It is the most effective system we have discovered to enable people who hate one another to deal with one another and help one another.1Milton Friedman, “Why Government is the Problem,” Essays in Public Policy no. 39 (Stanford, CA: Hoover Institution Press, 1993).
Put differently, the free market system — capitalism — cares first and foremost about what you can produce for sale. If you can produce nothing, or not enough, you will be marginalized, regardless of your race or religion. You will be left behind. Society doesn’t need you. Society doesn’t want you. You’re useless.
That is the vision of a society according to which allocative efficiency is a governing principle of its economic system. Contrast that with a system
… after the enslaving subordination of the individual to the division of labor … after labor has become not only a means of life but life’s prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly …2Karl Marx, Critique of the Gotha Programme, I (1875).
The quote is from Karl Marx’s 1875 Critique of the Gotha Programme. He was setting out, among other things, what the production and distribution of “social goods” could look like in a society based on a different model than capitalism. Social goods are those that transcend the means of subsistence — such as food, clothing, and shelter — but that, one might say, make life worth living.
Marx specifically mentions, in Grundrisse, “the worker’s participation in the higher, even cultural satisfactions, the agitation for his own interests, newspaper subscriptions, attending lectures, educating his children, developing his taste etc., his only share of civilization which distinguishes him from the slave …”3Karl Marx, Grundrisse, Notebook II – The Chapter on Capital (1857–61.
And how would the efficient allocation of resources be determined in that system. Marx continues in his Critique of the Gotha Programme with one of his most famous statements. It comes at the end of the quote above: “From each according to his ability, to each according to his needs!”
The coronavirus crisis reveals the inhumanity of capitalism. There can be no other explanation than that for $1.5 trillion invested to shore up the stock market and a small fraction of that set aside to provide paid sick leave for a small percentage of workers. There can be no other explanation for the CEO of Whole Foods asking employees to pool their sick leave to help out their coworkers, while the CEO of the parent company — Jeff Bezos of Amazon — rakes in the equivalent of an entire year’s salary for one of his $15/hour employs every 11.5 seconds!
Watch the pandemic unfold carefully. Pay attention not just to the medical news, but the economic news. Notice how the “efficient allocation of resources” will be used to impoverish tens of millions, destroy jobs, marginalize even larger swaths of the population, shut down unproductive regions of the country, and every other inhumane thing you can imagine.
And then resolve to join the fight to eliminate capitalism from the face of the earth.
|↑1||Milton Friedman, “Why Government is the Problem,” Essays in Public Policy no. 39 (Stanford, CA: Hoover Institution Press, 1993).|
|↑2||Karl Marx, Critique of the Gotha Programme, I (1875).|
|↑3||Karl Marx, Grundrisse, Notebook II – The Chapter on Capital (1857–61.|