Paul Constant is right. Flaunting economic theory to hurricane victims is callous
As a non-American, I have been astounded, perplexed and disturbed by the intensity of ideological fundamentalism that exists in the US, whether it is in politics or economics. Paul Constant’s post on price- gouging during Hurricane Harvey evoked frenzied and insensitive responses from free market fundamentalists (Hurricane Harvey and the Failure of the Free Market).
Many readers justified the exploitation of the victims as a natural and inevitable part of free market economics.
The value of a scarce commodity has to go up, so the argument goes. Those with the money will buy and fatten the profits of the water merchants. Those with no money will have to die, or will have to depend on private charity if they are lucky.
Water, like the air we breathe, is a common natural resource that belongs to all people, rich or poor. It is what they call public commons. So the very idea of companies extracting it and selling it to make profits is repugnant, to say the least.
Who gets to decide who can use how much of water in a free market society? It is the cash rich companies and their accomplices in the government and the media.
In fact, in emergencies, the government should commandeer private stocks of water and supply it to the neediest people. This is not socialism, but humanitarianism.
Governments are inefficient and corrupt, but our societies will collapse without governments. We need somebody to enforce order. Even free markets will not work by themselves.
Government interventions are not always bad. Let me cite an example from my own country, India which is a democracy and has a mixed economy- the public and private sectors coexist. India has characteristics of a capitalist society. In Kerala, the state in which I live, the people celebrate a festivel called ‘Onam’ which usually falls in August-September every year. Like Christmas in the US, this festival has been captured by the market forces. People go on a shopping spree during this season. But the problem is not with electronic gadgets, or luxury items. It is about the prices of vegetables, fruits, etc which are in great demand during this season. Till about two decades ago, the prices of vegetables and fruits used to shoot up about 200 %. This was price-gouging of Indian variety. The government then decided to procure vegetables and fruits in bulk well before the season and sell them at reasonable prices. The private sector lost some customers but not all because only the poor and lower middle classes thronged the government stall to buy subsidises vegetables and fruits. The middle classes and the rich still went to the private shops to buy. The private shops could not however increase prices as they liked. They still made profits, but not super profits at the expense of the people.
This strange beast called “the free market’ is a myth. Markets cannot exist independently of the social, political, cultural and economic ecosystems of any nation. No market can be truly free or independent. No market can organize or regulate itself. Please read the book” 23 things they don’t tell you about capitalism” by Ha-Joon Chang
Is America really a free market? By its own logic, the free market should be hostile to monopolies. But this is not happening. Is there any competition to Google or Facebook? A few technology companies control the Internet.
The real world does not operate as per the laws of economics. The Homo sapiens is an irrational animal and emotional too. Human actions and motives are not always dictated by the cold logic of economics.
A criticism of free market fundamentalism is not necessarily a defence of socialism. This is a cardinal mistake that free market advocates make. It is not an either or situation in real life. There are immense possibilities between socialism and free market capitalism. Let’s take the best options that will secure prosperity for all or at least the majority and also justice which is a dirty word in capitalist discourses. Without justice, we will face violent revolutions. Even the capitalists want peace and order so that they can survive and flourish.
Individualism is a worthy concept, but it has been turned into an ideology, a fanatical religion or cult that brooks no criticism of it. Individuals should be free to pursue their legitimate interests without being hindered by the state, but there are limits to unconstrained freedom to do anything even at the expense of the well- being of the majority.