Via Economic Policy Journal

Noam Chomsky

During an interview with the Greek newspaper Ekathimerini, Noam Chomsky blamed “the logic of capitalism” for the current COVID-19 economic crisis.

“The pandemic derives from deep failures of capitalism exacerbated by the impact of its savage neoliberal version. In 2003, after the SARS epidemic was contained, scientists warned that another coronavirus epidemic was likely and outlined ways to prepare for it. But knowledge is not enough. Someone has to act on it. The obvious choice is Big Pharma, bloated with gifts from the public thanks to the devices of neoliberal globalization. But that is barred by capitalist logic: It is not profitable to prepare for future catastrophes,” Chomsky said.

This is demonstrably false. The entire concept of private sector insurance is to prepare for future catastrophes. And there is nothing in capitalism that prevents an entrepreneur, in anticipation of profit, to prepare for a catastrophe he sees developing.

Indeed, if anything, situations of unforeseen catastrophe lead to massive losses for capitalists, as is the current case with the economic crisis caused by government lockdown orders. Absent government interference, the private sector, that is the capitalists, would have adjusted their production of goods and services to recognize the COVID-19 threat in a manner that was not like the blunt instrument lockdown orders of government central planning.

Further, Chomsky appears to be blaming pharmaceutical companies for not having therapeutics and a vaccine in advance of COVID-19—a virus that took on specific characteristics that could not have been known in advance.

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Indeed, now that the structure of COVID-19 is known, there is a mad race among pharmaceutical companies to develop therapeutics and vaccines.

Chomsky went on to say that:

The business model imposed more wreckage. Hospitals run on this model do not waste resources on spare capacity, like extra beds. That more or less works in normal times, but quickly causes catastrophe in an emergency.

That is the bare beginning. In general, it is quite correct to describe the pandemic as a capitalist catastrophe, exacerbated by neoliberal savagery.

Here Chomsky fails to understand that it is government central planning that prevents hospital expansions.

As Reason magazine notes:

In many places, that shortage of beds is the result of state-level regulations—known as “certificate of need” laws, or CON laws—that artificially limit the supply of medical equipment…

“There have been artificially imposed restrictions on the number of beds, ventilators, and facilities in general that can exist. Some states might find themselves having a real problem,” says Jeffrey Singer, a medical doctor and a senior fellow at the Cato Institute, a libertarian think tank

In other words, Chomsky does this odd thing. He finds some inadequacy or failure and blames capitalism without looking deeper into the situation.

One is almost driven to say that Chomsky’s failure here is because of his adoption of the central planning model that results in what Hayek called a fatal conceit.

RW