By James Kwak
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”
—Adam Smith, The Wealth of Nations
This is the most famous line from the most famous justification of market capitalism. Smith’s point is that it is individual self-interest that drives the economy. In the next paragraph, he goes on to describe how gains from trade explain the division of labor in a modern economy:
“The certainty of being able to exchange all that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men’s labour as he may have occasion for, encourages every man to apply himself to a particular occupation, and to cultivate and bring to perfection whatever talent or genius he may possess for that particular species of business.”
As I’ve said before, “whenever the butcher, the brewer, the baker, or the invisible hand is invoked, the reader should hear alarm bells going off.” The COVID-19 pandemic provides a particularly stark demonstration of the problems with Smith’s comforting fable and how it is used in contemporary politics.
Market capitalism depends on the happy assumption that everyone has some marketable skills: something that person can do that can be exchanged for money, with which she can then exchange for everything else that she needs to survive. If you believe that premise, then you can criticize poor or unemployed people as lazy good-for-nothings and destroy the social safety net with a clean conscience. This was the philosophical justification behind welfare reform, for example, which placed created work requirements for and imposed lifetime benefit caps on recipients, assuming that all they needed was sufficient incentive to find a job and get to work. Indeed, it is the philosophical justification behind the modern conservative economic platform.
But think about what is happening right now. At this moment, to a reasonable approximation, the only people with any marketable skills are those in health care, manufacturing of drugs and medical supplies, and food production and distribution, and certain critical infrastructure functions (electricity, gasoline, communications, etc.). That’s why tens of millions of people could suddenly be out of work, through no fault of their own.
So what do we do? We help those people. The Federal Housing Finance Agency suspends foreclosures and evictions for homeowners with federally-backed mortgages. States expand and accelerate unemployment benefits. Even the Trump administration proposes sending cash to every person in the country to help them pay the bills. (They also want to create a giant slush fund to help business owners, which I don’t agree with, but that’s not the point here.) We do what we can to make sure that people can stay in their homes, get enough food, and take care of their families.
At any moment in the past decade, there were millions of Americans who couldn’t find work, or couldn’t get enough hours to make ends meet—through no fault of their own. They came from broken households, or poor neighborhoods without good schools, or countries torn apart by war. Or they were disabled fighting in Iraq or Afghanistan, or they suffer chronic medical conditions that limit their ability to work. Or they held full-time jobs that suddenly vanished one day because people in other countries could do those jobs more cheaply. The prevailing attitude to these people—at least judging by the economic policies put in place by the politicians who were popularly elected—was: screw them.
But what happened to them is no different from what happened to most of us in the past week. The only real difference, as far as I can see, is that they were a small enough minority that most people could pretend they didn’t exist, or that their problems were their own fault. Now there are so many of us in the same bucket that we can’t—or don’t want to—say the same thing about ourselves. Sure, I could have become a doctor, which would give me a marketable skill right now, but I don’t think it’s a moral failing that I didn’t.
So the lesson I think we should all take away from this crisis is this: If someone cannot provide for herself and her family in a market capitalist economy, that is not a moral failing on her part. There are always people who struggle to get by, through no fault of their own. Indeed, I strongly suspect that there will be more and more of them in the future, as robots and artificial intelligence get better and better at doing things that were once the sole province of humans. As a society, our duty is to care for the welfare of all of our members—and, yes, that requires action by the government, just as tens of millions of people will soon be relying on government checks.
The problems of market capitalism are always there to see, though many people choose not to look. Perhaps this crisis will open our eyes.
6 thoughts on “COVID-19: The Butcher, the Brewer, and the Baker”
We will shift from the power and domination, capitalist model to a new and different form of economic interaction. It is happening now. We will not have a choice.
We need to start a new conversation, about hope, innovation, fearless decision-making, what is the highest possibility that we can generate, rather than doing what we’ve always done that clearly doesn’t work. Twice in our lifetime the house of cards of capitalism had failed. See Riane Eisler, The Chalice and the Blade.
I’m really happy to see you back and writing.
It is not from malevolence of the banker, the lawyer and the CEO that we expect our ration of subsistence, but from their regard to their own (self) interest. Absolute or comparative advantages are game theory and ignores the constraints , barriers to entry and outright exclusivity of market closures, reality enclosure and the capture of means and ends for the purpose of leveraging and harnessing social rank and file engagement. what is being demonstrated in this lock down is that the service economy has a baseline servant economy that it totally depends upon to survive. You can’t eat money. What is clear is that many of our highest paid parasites and predators (and our legitimate contributing operators) have no means of survival without the restaurants, transportation, and other essential demands that create a ‘mutual interest’ society. We are now learning that the ideological narrative of the more abusive privileged class is one of blaming the victims and projecting distractions; and they hide behind the white bread and vanilla institutionalism of true believers. But more fundamentally we are learning that the so called private sector is not a tragedy of the commons, but a sad comedy of errors that divide us, and thrives upon division and dividing us competitively exploiting survival. As such it is not surplus production being exchanged out of good faith reciprocating mutual interests that has emerged as the real system of marketing capitalism; not capital distribution but a capitalized redistribution process that is path dependently zealous about acquiring private power. And there is no benevolence in their actions; only self interest, greed, position and lust for more economic, social and political power ; wherever and however it can be gained over others. The world is often divided between what ought to be, and what is. And in our world, ‘what is’ …is more of an ‘after market’ reality. Do we still call that capitalism…? Or is that a blanket cover to excuse something else derived from the abuse of capitalism? .
Disaster Capital (Shock doctrine):
(Excerpted lines …edited for sequence)
All extracted from:
The Republican Plot to Save the Rich
The GOP’s coronavirus response has one goal: to preserve America’s economic hierarchy.
By Alex Pareene
March 24, 2020
(original full article)> https://newrepublic.com/article/157044/republican-plot-save-rich
There’s more at work here than pure ideology.
American leaders now barely seem to understand the concept of a “real economy.”
The GOP is not trying to rescue what we quaintly refer to as the real economy so much as it is desperately working to preserve an economic hierarchy. Conservatives want to ensure that no one important has to take a haircut.
In a sense, the Republican response to the crisis is a cogent form of disaster response,…
Senate Majority Leader Mitch McConnell, a man singularly unsuited to the moment, roused himself last week to craft an economic rescue package.
The result was, effectively, a $500 billion slush fund designed to be doled out at the sole discretion of Treasury Secretary Steven Mnuchin, with no independent oversight, state aid, or way of disclosing who had received corporate aid for six months.
Friends following along since the repeal of Glass-Stegall at wallstreetonparade website have been keeping track of just-the-facts, ma’am “economy” diligently – fiat money in the trillions has been flowing since September 2019 – please take a minute to catch up to the info on the site….it matters.
Las Vegas NV put up $800 million – yes million – of TAXES to build the Allegiant Airlines stadium set to open this Autumn for the Raiders football team. This morning, CNBC is reporting on how hedge funds have been waiting with over a trillion cash they amassed since 2008 to swoop in and buy “distressed” businesses.
My friend sent me a photo last week of the empty shelves where she works which were once stacked with bullets.- easily thousands were sold and went out the door….you gotta ask, who are they building up defenses against…no?
I have my doubts that guys with clipboards are going to have the same kind of experiences representing “banks” and dudes like Carl Icahn this time around when they come to toss people out on the street. When you read the Declaration of Independence and the abuses King George was heaping on the “working poor” in the Colonies, his 18th century shenanigans were almost quaint compared to stuff the 1% ers are dreaming up now.
one percent…and no one likes them….especially when they come out laughing after weeks of wrangling about how low can you go…..you know they went too low….
In the Helter-skelter of White House leadership and the Republican crony bedfellows that benefit from Trump’s procurative destruction, we find a President that is playing 52 card Pick-up with the States and its citizens in the midst of a pandemic crisis.
One can argue whether the private medical market bidding war for essential life sustaining supplies is authentic market capitalism; since it reeks to high heaven of some form of inverted domestic imperialism with more than a hint of corporate mercantilism expanding power bases. But if it is some perverted form of colonizing capitalism, it is one that appears to be on the brink of a Mutiny on the Bounty search for justice.. Captain Bligh and his Lieutenant ‘Christian’ counterpart seem to be in a parallel relationship much like our President and the governors he manipulates with his abusive of power, While the revolt was all over the commanding control of a cargo of bread-fruit from Tahiti in the infamous epic open sea saga, the authoritarian demand of loyalty from Bligh is all too much a Trump character trait as well. .
As the plot thickens, in our situation we find ourselves deprived of essential provisions much as Bleigh denied his crew. , While the governors attempt to procure scarce resources for their citizens, Trump pits them them against each other while competitive prices created indirectly or directly by the actions or inaction of Trump escalate the fight to a precarious stand-off.
And yet there is one stillborn question left unanswered: Why did Trump and the FDA refuse the global testing kits? Was this the darker side of profiteering on the backs of citizens in a pandemic?
Meanwhile As Coronavirus Deepens Inequality, Inequality Worsens Its Spread
The pandemic is widening social and economic divisions that also make the virus deadlier, a self-reinforcing cycle that experts warn could have consequences for years to come.
By Max Fisher and Emma Bubola
Whatever the case; While Trump may claim the title of the Great Divider; we have seen our governors rise to the occasion, and our New York Governor may well be representing the Christian ethic we all seek as well.
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