Under Capitalism, Long-Range Thinking Stops A Pandemic in Its Tracks

6

March 17, 2020 by Anders Ingemarson

Admin note: Based on recent developments I decided to draft a new section on long-range thinking and natural disasters (of which a pandemic is one) to be included in a discussion of the virtues of capitalism in my new book (“Think Right or Wrong, Not Left or Right: A Voter Guide”). I’m sharing it as a teaser and food for thought hoping that it will draw some attention to the bigger picture. For those interested, the book is progressing according to plan with tentative pre-publication in early summer.

As of writing this, the COVID-19 coronavirus pandemic is in full swing. Most societies around the world were wholly unprepared despite ample evidence and warnings from infectious disease expert for decades that it was only a question of when, not if, a severe pandemic would strike. The response has been panicky and draconian, almost medieval in nature, resulting in massive wealth destruction and coming mass unemployment. Governments around the world are instituting new individual rights violating regulations, decrees and government programs moving us even further in the statist direction on the morally Right to Wrong scale. The great recession of 2008 and its long-term consequences may eventually pale in comparison.

A main reason for the unpreparedness is short-range thinking. Welfare state politicians think in terms of election cycles, not in terms of long-range societal improvements. What’s beyond their 2-, 4- or 6-year term is rarely of interest while they’re in or running for office. Hence, preparations for a pandemic that will most likely not strike on their watch has low priority, and they kick the can down the road from congress to congress and administration to administration. This behavior is systemic under statism both on the political right and left.

Under capitalism this is not the case because there is no can to kick down the road. With politics playing a marginal role in society as we discussed when covering political inequality, pandemic preparedness is left to the marketplace. As a result, corporations and individuals are much less vulnerable to “100-year flood” natural disasters, be they pandemics or any other kind. We are not falsely lulled into thinking that there will be a government bailout or disaster response of any kind.

Under a capitalist socio-economic system, long-range thinking is critical. Corporations in all industries pay attention to the “what ifs” in life, as do individuals. Natural disasters of all kinds are planned for, be they earthquakes, volcanic eruptions, tsunamis, floods, droughts, or pandemics. Mitigating and, over time, avoiding catastrophic events is essential.

For example, pandemics are real threats to health-insurance companies and hospital organizations. Under capitalism, if these institutions are not prepared, they face huge losses or bankruptcy and irreparable damage to their reputation should they not be able to adequately serve their customers—the policy holders and patients—in the event of a pandemic. Consequently, they invest in pandemic preparedness. They have plans in place for quickly increasing hospital capacity and staffing in an emergency, and if need be temporarily delay elective procedures. They stock excess critical medical supplies and devices, and make sure their suppliers have plans in place to quickly ramp up production should the need arise.

But even more importantly, they invest in pandemic prevention. Under a capitalist socio-economic system this becomes the norm. Free of government regulation, health-insurance and healthcare companies work closely with the biotech, diagnostic and pharmaceutical industries on long-range strategies. They constantly scan the globe for new infectious disease threats to not be caught off guard. They work with local communities on modifying cultural habits: “How can we help remove bat and pangolin from your diet?”. They invest in making vaccine development faster and vaccines more efficient. And along the way, they develop rational safety standards without government involvement, because lack thereof is another threat to their reputation and survival.

If capitalism were allowed to flourish, it is entirely probable that in a not too distant future a new virus with pandemic potential would be detected and gene-sequenced, and a vaccine developed, tested and mass-produced in a matter of weeks, not months or years. This may sound like science fiction, but it is just another example of capitalism unleashing the unimagined that we discussed in a previous section. We’ve seen glimpses in the current crisis of what progress is possible in areas where capitalism has been allowed to function in relative freedom: biotech companies identifying the genome of COVID-19, diagnostic companies ramping up the production of tests, and pharmaceutical companies creating early batches of synthetic vaccine in record time. Hopefully, this will also shorten the time-to-market for a new vaccine, currently projected to be 12-18 months out.

Under capitalism, there is a small role for government to play in enforcing quarantine of verified infectious individuals, as allowing them to move around freely pose a threat to the individual rights of others. But with the continuous progress made towards stopping pandemics in their tracks, the government’s role gets even smaller over time.

If the health insurance, healthcare, biotechnology, diagnostic and pharmaceutical industries had been allowed to flourish under a less welfare statist and more capitalist socio-economic system, pandemics would have received a lot more attention over the past 50 years. Yet-to-be experienced advances would already be a reality, and it is very likely that the current pandemic could have been largely avoided. The fact that it wasn’t, is but one price we’re paying for living in a welfare statist society.

6 thoughts on “Under Capitalism, Long-Range Thinking Stops A Pandemic in Its Tracks

  1. zoebrain says:

    Just in time inventory firms will drive more long term thinking firms into bankrupcy.

    Greshams law applies.

  2. Thanks for the perspective. I’m looking forward to your book.

  3. Lee Whelchel says:

    If elected officials are only concerned with their term why are companies not only concerned with their terms; aka quarterly profits?

    • Hi Lee, without long-range thinking there wouldn’t be any sustainable quarterly profits for a company and it would soon go out of business. Politicians don’t have a similar incentive.

  4. Temple Washington says:

    The paragraph on how firms and individuals would think long range in a freer market economy as compared to government would benefit from more analysis and evidence, certainly if for a general lay audience.

    This is the old “problem of the commons” in economics, which has a long history. It’s not so hard to convince others that a statist government and it’s regulatory administrative state would have perverse incentives. The bureaucracy that results from such controls can have additional different but equally destructive incentives.

    It’s harder to demonstrate that there is a viable alternative – how private actors wouldn’t also be subject to perverse incentives. Would too many or most firms avoid the expense up front for an unknown and uncertain crisis and event in the distant future? The change in thinking of private actors not constrained by state controls could mitigate lack of preparation for future events, but the additional costs to prepare can also pt such firms at a disadvantage in the short term. Potentially this could put them out of business before a crisis hit.

    A second issue can be how freedom versus state controls allows for a faster response when un unexpected event occurs, one that wasn’t or couldn’t be predicted.

    State solutions have been the dominant strategy in the past because people couldn’t understand how private, profit concerns would solve the “commons” problems, because there was less of a history with freedom, as well as the desire to control that is rooted in distrust of others as well as fear of one’s own incompetency. The modern “progressive” movement is a pernicious example of this irrationality and how it breeds power lust to control that leads inexorably toward totalitarian extremes.

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