Harnessing the power of the free market is key to defeating COVID-19
BY MATTHEW LESH
Just moments ago I received a call from Lake District Farmers informing me that my meat hamper would be arriving on Wednesday. Lake District Farmers are normally an invitation-only wholesale meat distributor to fine dining restaurants.
But after orders dried up last week they began retooling their production and distribution directly to the general public. They will be one of many thousands of business-to-business food companies pivoting.
In recent days we have witnessed a lot of Disaster Socialism: ideologues seeking to exploit this crisis for their usual left-wing ends and claiming this is the end of free market economics. With no sense of irony, they fail to realise that their ‘command economy’ ideas are only justifiable during a crisis, and even then, only to a very limited extent as an emergency response to keep the productive economy on life support till it recovers.
Meanwhile, life on the ground could not be more different to what some commentators are suggesting. We are now more dependent than ever on the spontaneous order of the market, on the tinkerers and fixers who bring us innovative products, on the entrepreneurs who are developing tools to help us combat the challenges we now face.
The United Kingdom is a mixed market economy with a large state sector. The free market alone cannot and will not solve this crisis here. The NHS will need to treat patients and increase testing; struggling businesses and individuals will need to be supported; draconian steps limiting personal liberties are needed to limit the spread of this disease.
Classical liberals and libertarians do not deny a big role for the state during an emergency. The state’s primary role is to ensure the safety of its citizens; public health in the face of a pandemic is a sufficient and necessary reason to allow interventions of this type at this time. Further, the reason to get your financial house in order during the boom years is precisely so you can splurge when the inevitable next crisis arrived – albeit few predicted a pandemic would be it.
Those on the other side of the political debate, however, have been less willing to appreciate how markets are helping address the challenges we now face.
Let’s start with a modern miracle: supermarkets continue to provide plentiful food despite extraordinary pressure. Not only has an extra £1 billion been spent in recent weeks as people buy extra items; people genuinely need more food than previously as they spend more meals at home. While generations brought up expecting everything at their fingertips may be frustrated, the average supermarket still has thousands of items in stock. Most aisles and shelves are restocked at least daily. We still have more food choices than imaginable for almost all of human history. The system is not on the verge of collapse. They continue to lean on complex global supply chains involving millions of people, organising without a central dictator.
A true socialist economic system, in which the state directs quantity produced of different goods, would struggle to quickly ramp up deliveries and production in a time of need. This is very unlike in a capitalist system where producers are incentivised to meet demand — and they are.
Matthew Lesh is Head of Research at The ASI and Adjunct Fellow at The IPA. Follow him on twitter: @matthewlesh