Covid-19 Exposes The Failures of 'The Free Market'

Eduardo Munoz Alvarez / Getty

Duane Townsend

Jacobin - March 26, 2020

If many scientists warned of this kind of pandemic, the spectacular outbreak of the coronavirus has taken the world by surprise. In particular, it has exposed the frailties of the world’s health-care systems after years of austerity — and demonstrated their critical dependence on global supply chains.

Only a few weeks ago, world leaders were describing the threat as “fake news” or minimizing it by encouraging the population to go out as normal. Today, most governments are realizing the catastrophic consequences they face if they don’t respond appropriately. And whether they like it or not, the political perspective is changing — as a pandemic again poses the burning need for collective solutions.

The Spanish Flu

This crisis is showing us how important public health institutions really are — something already highlighted a century ago, when Spanish flu killed tens of millions. Indeed, one of the most notable outcomes of the 1918 pandemic lay in the emergence of a consensus about the need for universal health care and the development of modern epidemiology.

Henceforth, health care could not reasonably be seen as an individual responsibility. Rather, it was shown to be a collective problem, deeply embedded in the way we organize ourselves as a society. As historian François Ewald notes in his pathbreaking study on the French welfare state, the idea of contagious disease, which became dominant after Louis Pasteur’s germ theory, had already begun to change older conceptions of health care based on eugenics and miasma theories.

Writing on the new microbial doctrine, French solidarist thinker Léon Bourgeois noted that “A new notion of humanity could be revealed and passed through the minds.” This new understanding of the social question “proved the deep interdependence which exists between all living beings,” faced with a common “attack on all the organisms in the world.” It thus helped us understand “our mutual duty” of solidarity.

Before the Spanish flu, there had been no serious state health-care policies, while health systems were fragmented, relying on poorly trained doctors without centralized authorities to dispatch them. But by the end of the pandemic, the idea of socialized medicine had gained traction around the world. This new invisible threat, which affected the war itself and was literally unmanageable by decentralized market mechanisms, profoundly influenced the way we conceived public health.

For Vladimir Lenin, writing in 1920, imperialist wars had only given “mankind several million cripples and a number of epidemics.” In response, the young Soviet state established perhaps the world’s first fully socialized health-care system. Only centralized systems with a strong “collaboration between scientists and workers,” Lenin argued, could effectively end “oppressive poverty, disease and dirt” and “put medicine in the hands of the people.”

But this trend went beyond the young Soviet Union. As argued by Laura Spinney, “the lesson health authorities took away from the catastrophe was that it was no longer reasonable to blame an individual for catching an infectious disease, nor to treat him or her in isolation. The 1920s saw many governments embracing the concept of socialized medicine — healthcare for all, delivered free.”

This idea’s final triumph came after World War II, with the implementation of socialized health-care systems in most industrialized countries and the creation, in 1946, of the World Health Organization. Yet the opposition always remained strong, especially among physicians’ associations, pharmaceutical companies, and conservative groups.

The War on Medicare for All

One of the most famous spokespeople for the American Medical Association’s campaign against public health care was Ronald Reagan. “Today, the relationship between patient and doctor in this country is something to be envied any place,” the future president explained in his 1961 vinyl record “against socialized medicine.” “One of the traditional methods of imposing statism or socialism on a people,” he added, “has been by way of medicine.” He deemed the movement toward universal public health care the most “imminent” threat to the American people.

Reagan insisted that the free enterprise system had it all; “the privacy, the care that is given to a person, the right to choose a doctor, the right to go from one doctor to the other.” As Mitt Romney argued decades later, health care should “act more like a consumer market, meaning like the things we deal with every day in our lives: the purchases of tires, of automobiles, of air filters, of all sorts of products. Consumer markets tend to work very well — keep the costs down and the quality up.”

The current chaos provoked by the dramatic shortages of basic medical equipment such as masks, gloves, coronavirus tests, or ventilators illustrates perfectly the wasteful competition engendered by market-driven solutions. Just as Ireland continued to export vast quantities of food to England during the famine of 1845–1849, last week, a supplier in Lombardy exported half a million COVID-19 test kits to the United States — even if Italy may itself need these tests. Even more problematic, the race to find a vaccine is pushing states to aggressively try to buy one another’s pharmaceutical companies and patents for their own use. Donald Trump, who essentially relies on this market-based strategy, recently offered a German company “large sums of money” for exclusive rights to a COVID-19 vaccine. Likewise, he recently told state governors to get ventilators by themselves. “Point of sales, much better, much more direct if you can get it yourself,” he argued — pushing states and hospitals to compete rather than cooperate in the distribution of supplies.

These ideas of “freedom of choice,” “consumer primacy,” or “self-determination” have, however, spread across political boundaries. They have fueled anti-vaxxer movements that could impede future actions against the virus and skepticism toward science and public health recommendations (not to mention radical left critiques of “biopolitics,” depicting public health care essentially as a mechanism of social control). Yet after decades of critique launched at public health care as inefficient, too expensive, and limiting of our individual freedom to choose, this crisis will show how unable decentralized market mechanisms are to produce an optimal allocation of health care resources. ...
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