Coronavirus shouldn't be used as an excuse to expand the state

24 March 2020

2:28 AM

24 March 2020

2:28 AM

Since this is the nearest most of us have ever got to living under the Blitz, I’ve been re-reading George Orwell’s The Lion and the Unicorn. Written in London in 1940, it begins with the famous line: ‘As I write, highly civilised human beings are flying overhead, trying to kill me.’ The first part of the book, titled ‘England Your England’ contains more quotable lines per page than anything not written by Shakespeare. It is here that Orwell explains why he loves Britain, warts and all.

The rest of the book, in which he makes the case for ‘democratic socialism’ is maybe less well known, but is characteristically clear and unambiguous. Socialism, he says, means that ‘the State, representing the whole nation, owns everything, and everyone is a State employee.’ He then offers a classically Marxist explanation for why such a system is superior to capitalism. Capitalist economies over-produce some products, leading to waste, while under-producing others. This problem becomes acute in times of war, says Orwell, when a capitalist country ‘has difficulty in producing all that it needs, because nothing is produced unless someone sees his way of making a profit out of it.’

Under socialism, says Orwell, ‘these problems do not exist. The State simply calculates what goods will be needed and does its best to produce them.’ This sentence, thrown so lightly onto the page, highlights the fallacy of central planning. Orwell uses the word ‘simply’ but there is nothing simple about it. ‘Somehow’ would be a more realistic. As Ludwig von Mises explained way back in 1920, just three years after the Russian Revolution, it is impossible to know how many goods are needed without the price mechanism to act as a guide. You cannot allocate resources efficiently if you do not know what they are worth. And since value is subjective and in constant flux, you cannot hope to avoid over or under-production without prices. History has born this analysis out, often brutally.

Out of necessity, government became much bigger in Britain during the second world war, just as it had in 1914, and many left-wing intellectuals argued that if central planning worked in war-time, it would work in peace-time. It was this that inspired Friedrich Hayek to write The Road to Serfdom in 1944, but he lost the argument and in the post-war years successive governments engaged in nationalisation, price controls and capital controls.

Today, out of necessity, government is growing to deal with the coronavirus, and left-wing intellectuals are again hoping the change will be permanent. Capitalism has failed, they say. It has failed to provide enough hand gel, face masks and ventilators. It has failed to create a safety net in which the population can stay at home for months without running short of money. It has failed to prepare an appropriate public health response; failed to develop a vaccine. For Paul Mason, pandemics will become a regular feature of life because they are ‘a product of a social system called capitalism’. We should therefore accept big government, state ownership, massive debt and capital controls as permanent.

Mason is probably wrong in his diagnosis and surely wrong in his prescription, but at least his argument is coherent. Most of the articles claiming that the coronavirus outbreak shows the need for socialism amount to little more than ‘this happened under capitalism, therefore if we get rid of capitalism it won’t happen again’. That the coronavirus emerged in one of the world’s few remaining one-party communist states is the least of the problems with this notion.

On Twitter, images of scarcity are used to taunt those who support free markets. The observation that capitalist countries enduring a viral pandemic somewhat resemble socialist countries on a good day is not the slam-dunk argument some leftists appear to think it is. If I was doing the PR for socialists I would advise them against posting ‘haha, it’s not just us’ over photos of empty shelves, hoarding, queues and martial law. Similarly, I would advise Extinction Rebellion against celebrating too loudly about the dip in greenhouse gas emissions at a time when people are getting a taste of the kind of ‘lifestyle changes’ needed to make this permanent.

How, exactly, has capitalism failed? With the exception of a small number of viral-related items, such as hand gel, there has been no under-production of consumer goods. People are not consuming more food or toilet paper than they usually do. They are just buying more of it at a time to prepare for self-isolation. Supply chains are holding up and the empty shelves are soon full again. It is difficult to imagine a centrally planned economy doing better.

The healthcare system is under more pressure, but healthcare in Britain, like the military in every country, is already run along socialist lines. Provision is universal. It is paid for with taxes and run by the state. The number of hospital beds and ventilators available comes down to a political decision. Capitalism and market forces have little to nothing to do with it.

Nor do they have anything to do with public health provision which, since 2013, has been the domain of Public Health England. You can certainly argue that the £4 billion it spent on ‘public health’ last year would have been better directed towards face masks and Hazmats than on quixotic projects such as taking sugar out of biscuits but that, again, was a political decision taken by bureaucrats and politicians.

This is not to say that there would be enough critical care beds and ICU ventilators to cope with Covid-19 if healthcare were privatised. Resources are not limitless under any system. Neither the private nor public sector can prepare for everything. Black swan events take everybody off guard. But by the same token, there is no reason to think that supermarket shelves would be overflowing with hand sanitiser and toilet roll if production were controlled by the state.

As the bombs rained down on London, Orwell had reason to wonder why, if socialist planning was the optimal system for waging war, a fascist regime had the upper hand. His explanation was that ‘Germany has a good deal in common with a Socialist state’ and ‘borrows from Socialism just such features as will make it efficient for war purposes’. The same could be said of Britain by that stage of the war.

In the months ahead, the government will be borrowing from socialism just such features as will make it efficient for dealing with a pandemic. But what is necessary in times of war is rarely desirable in peacetime. The debts we will have built up by the time the pandemic is over are too big to think about. It should go without saying that such spending is totally unsustainable beyond a very short window of time.

Restrictions on liberty and interventions in the economy are sometimes needed to deal with an existential threat, but they should be seen as the sacrifices they are and reversed as soon as it is safe to do so.

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