Why the Neoliberal Agenda Is a Failure at Failure at Fighting Coronavirus
Richard D. Wolff
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
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
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
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
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.
Courtesy: Independent Media Institute