Economic Update: The Pandemic's Lesson About Capitalism

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On this week's show, Prof. Wolff argues that preparing and coping with the Corona pandemic was inadequate: medical supplies were seriously deficient. It simply was not profitable for firms to produce or stockpile the supplies. Neo-liberal governments were complicit with private profit capitalists rather than compensating for their inadequacies. The lesson: many basic social needs are needed, like public health. We cannot, need not, and should not rely on capitalists to meet them. Alternatives are available.

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Welcome, friends, to another edition of Economic Update, a weekly program devoted to the dimensions of our lives that concern our incomes, our debts, our jobs, those of our children, those coming down the road facing us. And I’m your host, Richard Wolff.

I want to talk today about a lesson, a lesson taught to us by the coronavirus pandemic and one that we want to learn if we want to pull something positive out of all the negatives that were part of that crisis. Here’s what I mean in particular: We know—unless we are really deluded—that there was inadequate preparation and inadequate coping with that pandemic. We didn’t have on hand the tests, the masks, the ventilators, the hospitals, the beds, the gowns and so on that we needed. We didn’t produce them, we didn’t stockpile them, we didn’t distribute them around, we didn’t even have them for the medical personnel and the others on the front lines of dealing with that crisis. And there’s a lesson in the lack of preparedness and the lesson in the lack of coping. I’m not here to point the finger of blame—you all know where that belongs—I’m trying to get a lesson out of this, an economics lesson.

And here it is. It wasn’t profitable to make tests and store them in a warehouse. It wasn’t profitable to buy ventilators around the world and store them in warehouses around the United States, pre-picked so they would be near medical centers, would be near population centers. In other words, it wasn’t profitable for private enterprises to do the things that would have been an adequate preparation for this crisis. Next point: The government in the United States might have—might have—compensated for the failures of the private profit system—capitalism—it might have, but it didn’t. And I don’t think that’s an accident and I don’t think that’s the particular responsibility of this or that politician. That is a systemic problem. Governments in societies usually support, reinforce, and share the same ideology as the people who run the economic system, and the United States is no different. So the government didn’t step in and do what the private sector didn’t find it profitable to do, because it would have cost the government lots of money and so the question would have been raised, which our politicians hate to face, “Where’s the money going to come from?” Tax the people—you’re already taxing them beyond what they can bear. Tax the corporations and the rich—they will make your next election very unpleasant. And so the government didn’t, any more than the private sector. And so we weren’t prepared—that’s the truth. And we didn’t cope really well and we didn’t cope in a timely way—that’s the truth. And an enormous, an enormous loss of life, of health. And here, as an economist, I also have to tell you that the wealth lost by the coronavirus pandemic is many, many, many times larger than what it would have cost to produce and/or stockpile all of the equipment that might have made us ready.

Bottom line: Capitalism is not efficient in dealing with very important matters, for example, public health. There it is. What we needed for public health wasn’t privately profitable to produce and to stockpile—so we didn’t. What that means is: Profit had a higher priority in our society than public health. And that’s unacceptable. That’s not a human community, which ought to put health and safety of its people in the face of a threat to life itself as about the highest value you could put on anything. Capitalism wasn’t efficient in securing public health—it was monumentally insufficient. So what is the lesson that this pandemic of the coronavirus can teach us?—if only we’ll learn it—that there are all kinds of things, fundamental basic things in a society like ours that need not be and should not be handled as private profit enterprise activities, because it doesn’t work out well for us. That’s what we learned just now. So let’s now explore, you and me, what else qualifies as a basic social need where we cannot rely on capitalism to meet that need, because it won’t and it can’t in just the way it failed to do with the coronavirus pandemic.

So let me go through a list. And my point here is not that you agree with each detail of this. It’s the general point, look at how something is being handled and see how we could and should do it better. Our first priority should have been public health. And we could have produced the goods—we Americans know how to make those things, we have the expertise, we have the raw materials, and we have the labor to do it. So it wasn’t the lack of capability—it wasn’t profitable, which is why it didn’t get done and that’s unacceptable.

I’m going to begin with other basics to show you the same lesson. Food. We have in the United States a two-track food system. Here’s what it is: One kind of food is carefully produced with either no pesticides, insecticides, herbicides—you know the drill—we call it “natural”, we call it “organic” and there are big disputes about these and I understand all of that. But here’s what we have. One track of food that is arguably better for you, less likely to make you sick, render you stronger, and another kind of food that is mass-produced, using every kind of chemical fertilizer—you name. I don’t think that’s acceptable. And I invite you to think about it. If it’s healthy to have organic food, that’s the system we ought to have for everybody. Do we care that other people are healthy, not just ourselves? Of course, we do. If not out of decent morality and ethics, well, then we don’t want fellow citizens to get sick, because the sickness may be infectious, mightn’t it? What are we doing? You know what the reason is that organic food is more expensive? Because of the profits involved, not just the costs. Are we going to let profit determine that the mass of people eat food that is not good for you? Come on, you know the answer with me: Food is fundamental, without it we die. Therefore, we ought to have the best food we can as a nation. We know how to make good healthy food. That ought to be the top priority just like public health. And that means we don’t let food be produced, because it’s profitable, because you can make profit by killing off the weeds with a chemical, and the insects with another chemical, and artificially stimulate the growth hormone with another chemical, and so on. Either we put health and healthy food in front of us as a nation as our highest priority or we don’t. We substitute private profit calculations that determine that we will produce another kind of food. Can we mass produce good healthy food? I think so. If we had a commitment across the food industry to do it, I think we’d get it quickly. But you’d have to question profitability, you’d have to stop producing what’s profitable now to do something that may or may not be profitable. But what is our priority? Was it public health or the private profit of the medical companies? Is it proper food or is it the profit of the food companies?

Next example. Housing. Come on, one of the most basic things a society owes to the people who live in it is shelter. Shelter that is warm in the winter. Shelter that keeps you from the rain. Shelter that gives you a place to recoup yourself at the end of your working day, place to raise children—you get it. Those are the most fundamental things in life that go on in that household. Either we let houses be a priority like our public health, like healthy food or we don’t. You know, to have the housing the way it is in this country is to have it held hostage by the housing companies. They only build the houses if it’s profitable. They’ll tell you that. There’s no secret here. Is it acceptable that we have houses not built, because it isn’t profitable, while we have—I don’t know the number and I wouldn’t rely on the statistics in any case—of homeless people who have no place to call home? What are we doing? Putting the priority on what’s profitable and not what we know will not only be the moral and ethical and socially useful thing to do but it’s also what builds community. You don’t build community if some people have six homes and other people have no home at all—that’s tension building, that’s conflictual, that’s explosive, if not now, down the road. What kind of legacy are we leaving to our children?

And then there’s education. Come on. Either we believe our society is better if people are better educated or we don’t. You want to leave education to questions of profit: profit-driven colleges, profit-driven high schools, and elementary schools, and daycare centers? That’s what we have now: a public sector, squeezed and contracted, and a private profit sector. That’s not the basis if you’re committed to education.

We’ve come to the end of the first half of today’s program. Please remember to subscribe to our YouTube channel. Follow us on Facebook, Twitter, and Instagram. Be sure to visit, our website, to learn more about other Democracy at Work shows, our unionized co-op store and the products it offers, and the two books we’ve recently published: “Understanding Marxism” and “Understanding Socialism”. And lastly, a special thanks to our Patreon community whose invaluable support helps make this show possible. We’ll be right back with more on this important topic.

Welcome back, friends, to the second half of today’s Economic Update. I was working my way through examples of basic social needs we have, where we have to put the priority on meeting them and not permit them to be held hostage to private profit, not leave them to the capitalist system, which will subordinate what we need to what is profitable in just the way that happened leading to the lack of preparedness and the lack of a method to cope with the pandemic of the coronavirus.

Education was where I left off. Let me continue. Mass transit. We ought to have as a matter of our national identity a high quality system of airplane travel, train travel, street railway travel, buses, jitneys and even, at the end and of the lowest priority, private automobile to meet our needs, whether we need to go a long distance or a short distance, we should have a mass system of transport available with specialized people making sure that the transport is clean, is safe, is properly insured where the drivers are vetted if we need them etc. We know that. We don’t have that. We have a transportation system mostly driven by profit. And let me tell you what being held hostage to profit means. And let me quote Donald Trump. When he was asked why he wanted workers to go back to work in the middle of the coronavirus pandemic, he said, “Well, you know, it’s a trade-off: Some people would get sick and die. We don’t stop automobile traffic,” Mr. Trump said, “because a lot of people get killed in accidents.” Put aside the grotesque immorality of such a remark. But let’s look at it for a moment, because it teaches us something. Mr. Trump is right: We don’t as a society question, or stop, or limit the private automobile even though it is the largest polluter in our society—air pollution—it wastes and burns fossil fuels way more than any other single industry. It kills more people than, virtually, anything else, and it wounds tens of thousands more, and it fills our junkyards. Wow. Why do we do this? The answer is private profit. The private profit of the automobile industry that has dominated the American economy for the last century. Without the private automobile we wouldn’t have developed the suburb in this country, which depends on it. We would have had, in all likelihood, a mass transit system worthy of the name—some of you have been to other countries that have good quality mass transit. And you know what that can mean. If we wanted to move people, we would have on the edge of every city. What we already have, we now call it a “rent-a-car” place, but it would then become a public utility, you know, like a public park: You go into the public park with a blanket and some food, when you want to have a picnic with your family, and you go to the parking lot on the edge of your community to pick up a car when you need one. And it’s maintained by expert mechanics. It’s owned by the community. It’s a public resource. It’s not a source of private profit. We do kill large numbers of our fellow citizens in our automobiles, because we don’t have a public mass transit system. Imagine one: Beautifully appointed trains—you get them in other countries too—beautifully appointed buses, jitneys, taxis, rental cars. It’s all easy to do—much less polluting, much less unsafe. Profit dominates and so the public service of a good transport system keeps eluding us—but it needn’t, and it shouldn’t.

The care for elderly, that’s insufferable in this country. We have thousands of nursing homes, all the age facilities, that are run as profitable enterprises. The stories are so horrific that millions of Americans will not put their elderly in such an institution, because they know what the profit drive does to how they are cared for. We really do know—don’t we?—what I’m talking about. You want elderly people after a lifetime of work and raising a family to be treated decently, elegantly as they deserve, then you cannot leave it in the hands of private profiteers that doesn’t work out well. You know, like not preparing well for the pandemic.

Energy. Everything depends on energy: oil, gas, sun—all of it. It should be organized to meet our needs for energy without destroying our planet. That task can’t be left in the hands of private profiteers who have done everything to cut corners, to postpone the anti-pollution activities, to postpone the criticism of fossil fuel dependence, and on, and on, and on. The big oil companies that have polluted Alaska, the Gulf—you all know the stories. If we don’t want energy to be a threat to our survival it has to be handled in a collective direct way, not held hostage to private profiteering.

And my last example is kind of an example chosen to tell you about something which is already handled this way. We have a military and we have a police in the domestic area. We don’t have different police profiteers competing for us to pay them to protect us. And we don’t have different armies competing for us to pay them to protect us. We’re getting there with the private armies, but we’re not there yet. We kind of understand: We want security to be the number one priority, not to be held hostage to what’s profitable, but to be what is needed to keep us safe.

It’s a reasonable demand, but it applies to our food, and our housing, and our transport, and all the rest. Public health was the lesson that the pandemic around the coronavirus showed us: You cannot leave these things in the hands of private profiteers. As the private companies will tell you, “Profit is our bottom line.” That’s what the system rewards them for producing. And the system punishes them for doing what may be socially useful but is not privately profitable. That’s the way the system works. So we have to take the things that are more important to us than private profit like our public health, like our housing, like our schools, like our transport system and so on, and free them from being hostage to private profit—that’s the lesson. We learn that lesson, then the pandemic around the coronavirus will have left us a legacy that’s positive, not just a remembrance of how hard it was, how deadly it was, and so on. It’s really the same message that we would have if we went to a first-rate public transportation system rather than relying on the polluting deadly private automobile.

I want to conclude by asking you to think with me about what an economy might look like if it took this seriously. It would take these prioritized areas: housing, food, public health, transportation, energy, education, and so on. And those wouldn’t be capitalist enterprises. Just like we don’t allow the local park in our community to be a private enterprise where you pay a little bit more to put your blanket on that lawn rather than that one where you have to pay a fee and a ticket to get in. No, we want something that’s good for the community, that gives us a recreation space, that brings us together in a relaxed friendly community-building way. Well, let’s do that. Let’s make a whole bunch of things priorities that we as a community are going to produce and make available to us as a community.

And how would it be organized if not as a private profit? Here we go. Here’s another function worker co-ops can play. Worker co-ops should produce all of these things: schools, transport facilities, housing. And the worker co-ops would make decisions, but not alone. They’d have to make decisions together with the customers they serve and the communities in which they carry out the production. Three partners make the decision: those who do the work, those who consume the output, and those who live in and around where the production takes place and who, therefore, have to live with the consequences that the production takes place there. Three partners—all with real concrete interests that must be represented so that the best decision for all. No place for the private profiteer—the person who comes in serving a tiny number of owners or major shareholders who want profit out of it. No, no. You’re gone from these basics. Well, would there be a room for capitalists elsewhere? Sure. On the things where we don’t have the high priority on what’s important—it’s not a basic need. Let me give you an example. A restaurant, personal services, luxuries—all kinds of things, which we can say, “Okay, you are the profiteers. You produce those things. And let us use our dollars to reward some of you and punish others of you.” Those are not the basic course of what a community wants and needs. And you know, what this would give us if we do work it out this way? It would give Americans the freedom of choice they don’t have now: We would see how worker co-ops work in the basic industries of our society, and we would watch how capitalist enterprise works in the other less basic areas of our society. We would see how they work differently, we would see how it feels to work in them as a worker differently, and we would see what the quality and quantity of output is. And that would make us an informed community that could decide in the future on how to adjust this: If we want more capitalism, we can do that, if we want less, we can do that, because we have an alternative that’s all around us working on our basic needs without them being held hostage to profits. That would be a society that could choose, knowledgeably informed choice, about the different economic systems we want to make use of to produce the goods and services that a modern advanced society wants, needs, deserves, and can actually do. That’s a way forward.

But to return to what opened today’s program: Let’s learn from the failures made in the coronavirus pandemic, let’s handle the basic needs we have as a society in a way that will be successful and will not be interfered with by a capitalist system that puts the priority somewhere else—namely on profit. Profit is not our number one objective always. To think that is to be an economic fundamentalist in the worst possible way.

This is Richard Wolff for Democracy at Work. And I look forward to speaking with you again next week.


Transcript by Aleh Haiko
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