How Covid-19 Has Unmasked an Ignorance of Capitalism
Posted on June 9, 2021
When you do business in the free world, you accept a truth. You’re in a competition to attract the time and money of others, and you agree that both are scarce. You accept that what you manufacture or sell, others can too. You welcome that the time and money you ask for has myriad other places to go.
Success in business then, isn’t guaranteed. Capitalism is the world of laissez-faire where the laws of demand and supply determine whether you earn enough to buy food for your table. Accordingly, capitalist business owners shun governments who interfere with their free market plans through taxes, regulations, and consumer protections. Yet, it amazes me that as soon as a crisis tips that equation to a business’ disadvantage, proprietors fall apart screaming that life is unfair.
They forget that crises are business opportunities for others. They forget that their food is now on someone else’s table while once vice versa. They forget that their customers’ scarce money has now moved where customers feel it is better served. They forget that the definition of freedom in capitalism is a free market.
Too many business owners are not capitalists. That’s why so many of them fail in good times, and bad.
Covid-19 is the 21st Century’s first existential health crisis. A once-in-a-multi-generation event whose modes of transmission and infectiousness have changed the pattern of life we once knew just two years ago.
Human behaviours requiring social contact, close confinement, physical interaction and touch became dangerous. A truth revealed to Australia, among many other countries, when Covid-19 hit its shores en masse via cruise ships disembarking walking communal cargoes in Sydney Harbour.
The world has since learned of Covid-19’s startling reproduction numbers. And we’ve seen how this “disease of the blood” has killed populations, no more starkly than in the USA, the home of free enterprise, where deaths now exceed 600,000 and rising.
We’ve learned then that isolating populations from social interaction, isolating nations from the virus’ import, and isolating the virus in bodies through vaccination where the immune system then “shreds it up” (as Stanford University once eloquently described it) are the world’s only lines of defence.
But this of course means that a swathe of industries and employers have become uncompetitive in its wake. While, indeed, others have found the ability to thrive.
I have sympathy for all business owners who have seen their sources of revenue dry up as a result of population lockdowns against Covid-19.
I have even more for their employees—particularly those on low incomes, those without the safety net of guaranteed contracts of employment like casual workers, and those who for years have seen their wages and superannuation stolen through the greed of their bosses—some huge corporations.
But I have no sympathy for any business owner who claims that Covid-19’s protective measures aren’t fair because they’ve cost them money.
Tourism, accomodation outside quarantine, central business district real estate, vehicles, airlines, cruises, live entertainment, the arts and couture are all examples of industries that have been hit.
They’ve been impacted either by government policies designed to limit human movement—or by customers themselves not seeing their goods and services as necessary, desirable or Covid-safe.
The lessons of capitalism
Yet, this is the very ethos of capitalism.
While it’s particularly hard for small businesses to run multiple income streams, capitalism says you need to diversify to ensure that revenue keeps rolling.
Capitalism also teaches business owners that economic survival means that sometimes you need to close shop and become an employee.
Capitalism says that if you’re short on money, but you have attractive assets to sell, sell them. And if that includes your commercial premises and real estate, so be it.
Capitalism says, don’t ask for handouts particularly from governments you’ve elected because they trumpeted laissez faire. It’s for you now to sink or swim.
Capitalism, truth be told, is a bitch.
But one capitalist still found a way to make money out of that sentiment with the song “Life’s a Bitch”—lyric:
And then you die.
In fact, taken to its basest extent, extreme capitalism says it’s ok to kill others (preferably other businesses) if it keeps you alive: a famous refrain of former Lehman Brothers CEO Dick Fuld (who lost his empire to market turmoil). And this is precisely what calling for the lifting of Covid-19 lockdowns, is asking governments to do.
And the answer to that is, no. Not unless you’re prepared to dress in an SS uniform, hop onto a train platform and tell which people will live or die: Customers to the left (life), others to the right (death). Not unless you’re prepared to run a Covid-19 lottery and face the legal consequences.
It’s equal parts pathos and desperation when you believe you’re a capitalist but discover you’ve had no understanding of capitalism at all. When you call yourself an entrepreneur not understanding risk. When you call yourself a proprietor but never understood diversification.
Still, be kind to yourselves. You are in good company, particularly with many in overpaid C-suites.
Thing is, you know who does understand capitalism really well? They’re the ones who know how to avoid tax and run subsidiaries at a loss to offset liabilities against their larger businesses. They’re the ones who see government handouts as assets to siphon into their own balance sheets. They’re the ones who understand the value of unfair-trade and monopoly.
In fact, do you know who the world’s best capitalists are? The Russians and the Chinese.
It’s not ironic.
Which is all to say, that though the western world has boasted of its capitalist prowess, true capitalism, like communism and socialism, has been a myth.
We’ve never had free enterprise as Adam Smith saw it: competitive actors working through demand and supply for the collective good. Global corporatism is not competition. Neither has OPEC ever been.
Crises like Covid-19—particularly with their propensity to serve as as biological theatres in future wars—therefore, do not merely require fluid business minds, but fluid governmental responses too.
As I wrote over a year ago, our current low interest days are a boon for deploying business and employment support packages, and keeping them on tap until the threats to life and health are over. At present, no nation will be able to guarantee that freedom until at least 2024.
Over that time food still needs to hit tables, rents still need to be paid and bills covered. In this environment honest business people need the encouragement to persist; and the unemployed the encouragement to subsist.
Simultaneous, is the need to future-proof society.
New industries, new technologies, new arts, new sciences. Crisis is a time to unleash the think tanks; to bring ideas to the fore. New passions, new energies, new rewards.
That is the capitalist way.
It’s all doable. All that blocks it are the hoarders of capital and government offices, lacking the motivation for change. Vision in other words. Backbone for want of something better.
In the meantime, the laws of demand and supply chug along in their harsh ways.
If you can’t diversify, you may need to face reality and hop out for a spell. This may just be your better placed competitor’s time.
But with the right ideas and economic leadership behind you, nothing says you can’t bounce back.
© 2021 Adam Parker.
Tagged: Business, Capitalism, Covid-19, Crisis, Demand, Diversification, Economics, Government, Supply