Reading Neil Irwin’s article this morning in the New York Times really raised my hackles. It is one of those faux-centrist pieces that tries both to applaud and to censure capitalism for its response to the global pandemic. One statement in particular gets my goat. Here he is discussing the “advance purchase agreement” between Pfizer and the Federal government over Covid-19 vaccine research:
But it [the above agreement] speaks to a deeper reality the pandemic has revealed — both what is amazing about capitalism, and how the free market alone comes up short in solving enormous problems.
Irwin is, of course, implying that capitalism and free markets are synonymous. Whether it is an example of naïveté or willful deception is almost besides the point. While he quite correctly describes contemporary government as the “ultimate absorber” of private risk and the “coaxer” of private enterprise, the larger significance of such descriptions is lost on him. The whole premise for a free-market system is that private parties are the ones who undertake risk in expectation of an appropriate reward for doing so; and that private enterprise should require no coaxing because there are ample opportunities to make a buck. If not so, what would be the social interest in the government incentivizing private enterprise to do its thing?
Naturally, the answer is none. Those receiving subsidies or other handouts are, despite frequent rhetoric to the contrary, invariably those least in need. Why keep harping on this point? As long as “free market capitalism” is not widely recognized for the oxymoron that it is, people might be forgiven for assuming that capitalism, for all its faults or even injustices, is a system predicated on freedom, dynamism, and efficiency. Worse, we are likely to remain mired in Maggie Thatcher’s religion of TINA, or “there is no alternative” (to capitalism).
Like them or loathe them, fluid well-functioning markets are good resource allocators. They might not work quite as efficiently as explained in an economics textbook, but one could nevertheless argue that a system of unfettered markets is preferable to the status quo. Before you dismiss such thinking, consider that markets themselves are neutral institutions, and that they have no inherent need to grow. In contrast, the status quo – i.e., capitalism – is a system that manufactures consumer needs in order to sustain the growth that keeps it alive, and that out of necessity props up failing corporations in times of economic distress.
Understanding the growth imperative means understanding the seemingly irrational impatience with “restarting” the economy despite newly skyrocketing Covid-19 rates. Wall Street sees it, which is why it is in such a hurry to pick a “winning” company that produces a viable vaccine. European Central Bank President Christine Lagarde also gets it, although she cautions against vaccine exuberance and instead continues to insist on heavy monetary and fiscal intervention.
Meanwhile, consumer sentiment is falling anew, in no small part due to the Covid-19 revival. Granted that the index of consumer confidence is not itself a measure of economic health; but it is leading indicator of what it to come. For an economy again flirting with deflation, it can only mean more bad news.
But it seems almost quaint to suggest that consumer spending should matter. We need to recognize capitalism for the sclerotic, wasteful, and unequal system that it is. We must understand that contrary to Neil Irwin, government bribes and other forms of corporate welfare have nothing to do with free markets. And we need to acknowledge that, far from offering solutions, the extant system of late or advanced capitalism that is parasitic on ever-escalating rates of resource consumption promises little more than continued disaster. Awareness only comes from dissociating freedom and free markets from capitalism.