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Capitalism is better at meeting wants than needs

Diabetics are dying from rationing insulin in the world’s richest country — but at least we have five-blade razors.

Justin Ward
Oct 2, 2019 · 7 min read

The other day, Benny Johnson, creative director for the rightwing college astroturf group Turning Point USA, posted pictures of his trip to a supermarket in Cuba on Twitter. It was an odd choice of images that went against conservatives’ standard modus operandi. Anti-communists tend to showcase the deprivation that socialism supposedly produces, but Benny’s pics show him grinning dopily in front of shelves fully stocked with food stuffs and consumer goods.

He traveled all the way to Cuba just for this dumb stunt, hoping to find the shelves absolutely barren. When, to his surprise, he found the stores overstocked, Johnson had to improvise a new narrative: Stores under communism have no variety.

The post was skewered by the left.

It speaks volumes about capitalism and its corresponding ideology that Johnson thinks the lack of brand choices in Cuban supermarkets is an equally valid critique of socialism as the lack of food itself.

To someone like Johnson, who has never had to go without the basic necessities, having the freedom to select between Heinz ketchup and Hunt’s catsup seems important. It couldn’t be more trivial to the 40 million Americans (incl. 12 million children) who are currently experiencing food insecurity.

All things considered, Cuba’s doing pretty well despite a stifling 60-year embargo and scarce arable land. Its per capita GDP is roughly one-eighth that of the United States, but it surpasses America in a number of important developmental indicators, including life expectancy (79.74 vs 78.69) and infant mortality rate (5.4 vs. 6.6). The rate of undernourishment in both countries is about the same.

The abundance of consumer choice in Western capitalist countries was a powerful ideological weapon in the Cold War. According to lore, the final nail in the coffin of Soviet Communism was a trip by Boris Yeltsin to a Randall’s supermarket in Houston.

The episode is assigned an outsized significance by conservative Cold Warriors. Typical is a retrospective from the libertarian website The Western Journal titled “Soviet Leader Abandoned Communism After Walking Into a US Grocery Store:”

He further told his fellow comrades who followed him to America for the visit that if the lines of starving men, women and children in Russia were to see the conditions of America’s supermarkets, “there would be a revolution.”

These same motifs have persisted since the “end of history,” as the standard-bearers of capitalist triumphalism attempt to head off any revival of socialism or other challenges to the neoliberal status quo.

In 2015, as the normalization of relations with Cuba proceeded under President Obama, The National Review ran an article titled “A Look at How Cuba’s Working Class Lives.” A reporter went to country and toured the home of an impoverished woman named Indira.

The story features pictures of her home and various appliances with descriptions like “Their electronics station included a DVD, VCR, radio, and television that would not have been found on mainstream retail shelves in the United States in the past 20 years” and “The washing machine that the mother used for business was imported from the Soviet Union and dated to the 1970s, when the countries were united by Communism.”

Why do rightwing ideologues use consumer goods as the metric for the free market’s success and socialism’s failure? In making the case for capitalism, they’re putting its best foot forward while leaving its other necrotic appendage out of sight.

Conservatives have a religious faith in the ability of the free market’s “Hidden Hand” to efficiently distribute goods and services according to the laws of the supply and demand, but the reality doesn’t match this ideal.

When looked at from another perspective, the variety lauded by people like Benny Johnson is actually an example of how capitalism wastes and misallocates resources.

(Screencap/ Google search results)

Firms plow billions of dollars into “product differentiation” in an effort to distinguish their offerings from others that are functionally identical. They have massive R&D departments full of engineers working round the clock to reinvent wheels and build better mousetraps, constantly creating marginal cosmetic improvements to products that work just fine.

Gillette spent $200 million on marketing and another $750 million in updating its production facilities to launch the Mach 3 three-blade razor in 1998. It’s now up to five blades, with swivel heads, gaudy neon rubber grips and other useless features that do little to improve the “shaving experience.” Despite its efforts, Gillette is now losing a significant chunk of its market share to more affordable, no-frills startups like Harry’s Razors and the Dollar Shave Club.

For roughly the same price, Americans got a three-blade razor while Cubans built world-class biopharmaceutical research infrastructure.

By the time Gillette rolled out the Mach 3, Cuba had already invested more than a billion dollars over the preceding decade in the Western Scientific Pole of Havana, a cluster of 52 research institutes and biomedical enterprises. As Gillette’s scientists were hard at work reimagining lubricating comfort strips, Cuba’s medical researchers were developing a cheap synthetic vaccine for a disease that has killed millions of children.

In 1999, Cuba began working on its own vaccine for Haemophilus influenzae type B (Hib), the leading cause of bacterial meningitis. Around that time, 371,000 children were dying from the disease annually, according to the World Health Organization. Though highly effective vaccines and treatments had been available for decades, the cost—seven times that of other important vaccines—was prohibitively expensive in the developing world.

Cuba’s Hib vaccine was shown to be close to 100 percent effective in clinical trials and was added to the national vaccination program in 2004. The country boasts a number of other medical achievements that have largely gone unrecognized throughout the world, including vaccines for meningitis B and lung cancer. This is in no small part due to the fact that they are shut out of most of the global market by WTO regulations and the US embargo.

The success of Cuban biopharmaceutical research calls into question a number of assumptions free marketeers use to justify the absurdly high prices of prescription drugs in the United States, the foremost of which is the contention that exorbitant drug profits are a necessary evil to drive innovation.

Photo by on Unsplash

Public funding eats an enormous share of the costs for the basic science research that drug companies rely on. One study found that all 210 drugs put on the market from 2010–2016 used research funded by the National Institutes of Health to the tune of $100 billion. Its estimated public contribution to each first-in-class drug averaged $839 million.

Its ability to offer a variety of choices for the consumer is capitalism’s highest virtue. However, it’s of little comfort to those who lack access to this cornucopia. The wonders of the free market have given us 23 brands of insulin, but none that are affordable to those who need it.

Despite robust competition, which libertarian economists assure us is a panacea, the price of the drug has more than doubled in the past five years, and more people are dying from insulin rationing than in any other country in the developed world. One has to question the infinite genius of the Hidden Hand if people are driving all the way to Tijuana to buy for $70 the same exact branded product that costs nearly $700 in the United States.

In the grand scheme of things, very little of pharmaceutical company revenues actually goes to R&D. Most drug companies invest billions more in marketing than they do in research. Johnson & Johnson spends nearly double. And the lion share of marketing is directed at physicians, creating a perverse incentive structure.

In January, Dr. Peter Bach, head of the Drug Pricing Lab at Sloan Kettering Cancer Center, testified before a Senate hearing on prescription prices. Bach said that his research found that doctors and hospitals consistently prescribe the most profitable, which is to say the most expensive, medicine available when given many options.

The result is that costs often far exceed the real value the drug offers, so Bach recommends a shift toward “value-pricing” that takes into account the benefit to the patient rather than market pricing.

Cuba also belies the conventional wisdom on the usefulness of inequality. The old argument goes that without the massive incomes that comes with getting your M.D., why would anyone go through all that training? It’s not as if healing the sick is its own reward or anything. Cuba graduates roughly three times as many doctors as the United States and it has the lowest patient-doctor ratio in the world.

People like Benny Johnson think it’s clever to mock our island neighbor to the south because its citizens can’t choose from thousands of brands owned by six companies — but maybe they shouldn’t invite the comparison. Despite its poverty, Cuba is able to achieve health outcomes that surpass those of much richer nations, including the United States, which spends four times as much on health care per capita. So much for market efficiency.

What does it say about the American system that people are living longer and healthier lives on average inside a country that, in the conservative mind, is synonymous with failure?

Justin Ward

Written by

Radical journalist. Write about extremism, politics, class, labor, history and media. Bylines at SPLC, The Baffler & ArcDigi.Twitter: @justwardoctrine

Justin Ward

Written by

Radical journalist. Write about extremism, politics, class, labor, history and media. Bylines at SPLC, The Baffler & ArcDigi.Twitter: @justwardoctrine

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