Cooking the Books

Profiting from the pandemic

After the first Covid-19 vaccines were announced in November, Mark Littlewood, the director general of the free-marketeer Institute of Economic Affairs, lauded the profit motive for achieving this (Times, 16 November), even liking the suggestion that ‘it might be appropriate for us all to stand on our doorsteps at 8pm each Thursday and give a round of applause to big, profit-making pharmaceutical companies’.

Capitalist companies, as Littlewood well knows since it’s his job to justify this, only respond to the prospect of profit. The past record of pharma companies in particular shows this. They give priority to the medicines that bring in the most profit and neglect research into treatments and cures for conditions that are not so profitable, such as tropical diseases. This has been described as a typical example of ‘market failure’, i.e. of the failure of the market mechanism to meet human needs.

There is a huge market for a vaccine against Covid-19 in North America and Europe. This has been created by the state borrowing money to buy the vaccine. So, far from being independent of the state, the ‘big, profit-making pharmaceutical companies’ that Littlewood wants us to cheer for are hugely dependent on the market that states provide for their products. So much, then, for ‘free’ enterprise.

Littlewood mentioned that AstraZeneca (the one which bungled their tests and then tried to fiddle the results before having to do more tests) has agreed to sell its vaccine on a not-for-profit basis, commenting that this was ‘a welcome reminder that major companies have myriad humanitarian and reputational considerations rather than always and forever focusing on the immediate, financial bottom line.’

He forgot to mention that this commitment only holds for the duration of the pandemic. AstraZeneca is anticipating (even hoping for and banking on) the Covid-19 virus surviving the pandemic and requiring annual vaccinations like the flu jab to keep it at bay, a demand they will be free to meet at a price that brings them a normal profit.

Littlewood also ignores that, far from there being ‘myriad’ humanitarian considerations for not going for an ‘immediate’ profit, the directors of a company are legally banned from taking into account humanitarian considerations. They cannot act as a charity as they have a legal duty to get the best return they can for the company’s shareholders. Not only is there no such thing as a free lunch, it is not permitted under company law.

‘Reputational considerations’ are another matter as a bad reputation – such as Big Pharma has – can affect sales, and so forgoing an immediate profit to counter this and going for a longer-term profit can be justified in terms of shareholder interest. As can other apparently humanitarian actions such as paying higher wages than others (to attract the best workers) or providing health care and other benefits (to develop a contented and more productive workforce).

What the rapid development of a Covid-19 vaccine does show is that society has the scientific knowledge and the technological capacity to solve a problem if enough resources are mobilised. This is the exception under capitalism (and normally only for military purposes), precisely because ‘no profit, no production’ (sometimes misleadingly called the ‘profit motive’) applies. In socialism mobilising resources to meet a need would be the rule as the common ownership of productive resources by society will allow the motive for production to become the natural one of directly satisfying people’s needs.

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