By Gerrit Van Wyk.
The Tragedy of the commons.
Garrett Hardin wrote a story called The Tragedy of the Commons. Imagine a shared commons in a medieval village on which everyone can graze their cows. The more cows you have, the better off you are, hence everyone has an incentive to add more cows, which is a positive feedback loop. The shared resource, grazing, is finite and limited to the extent it can grow back. When the number of cows exceeds the capacity of the commons, everybody is worse off.
One can manage this by cooperation, and agreement about how to manage the shared resource, or through regulation. Neo-liberalism is all about competition, so cooperation and agreement is not an option. Hence the resource becomes regulated to benefit those with many cows; let the poor eat potatoes and if the potato blight comes and wipes out the workforce, it’s an unfortunate collateral damage, at least we still have cows.
Thomas Hobbes wrote life is nasty, brutish, and short, because people are constantly at odds with each other. The antidote is consenting to be governed. In doing so, Hobbes makes a big assumption, namely the government will be benevolent, act in the interest of most people, and government knows how to do that. Most governments are a single person or collection of people acting in their own interest, although in democracies they often pretend otherwise, and in practice governments pretend very complex situations are simple, and they can by dint of intellect and willpower steer the course of history in a positive direction. As Bueno De Mesquita and Smith pointed out, the only difference between a dictatorship and democracy is the number of people you keep satisfied to remain in power.
Adam Smith argued the actions of many people acting out of self-interest have unplanned unintended outcomes regulating itself, like an invisible hand. What Smith vaguely saw was complexity, but of course in his time the concept was not understood, hence, it has a serious flaw. The invisible hand does not inevitably result in benefits; unintended can also be unwanted or frankly terrible.
The idea of free markets means the prices of goods and services are determined by supply and demand. In principle, when there is a lot of supply and little demand, price is driven down, and when there is little supply and a lot of demand, it goes up. Competition is good because it drives prices down. Governments are supposed to leave free markets to find its own balance through this mechanism, i.e., Smith’s invisible hand. However, using resources efficiently, like the commons grazing, is a positive feedback loop until the resource runs out.
Resources are turned into products which are consumed. The more products consumed, the more money the producer makes, to make more products, which is the basis of capitalism, which many believe is good. Consuming products is supposed to make us feel good, except it doesn’t, and we are constantly encouraged to consume more through advertising, so more products can be manufactured and more money made. This is another positive feedback spiral.
Neo-liberalism is an academic concept which includes free market competition and hands-off government. Not everyone agrees on what that means. In general, it encourages free enterprise, competition, deregulation, and personal accountability. What it wants from government is minimal control over industry, private sector business and property ownership, lower taxes, less government spending, and fewer labor laws.
There is a saying betwixt lip and cup the milk gets spilled. There is a big gap between the Neo-liberal free market and invisible hand, and Bentham’s government by consent. As there is between Neo-liberalism as a concept that can be described and how the concept is applied in practice in our social world.
One can buy a lot of influence with a lot of money. By funding politicians or lobbying, one can influence political decisions to make conditions more business friendly for accumulating even more resources. In other words, rig the commons to your advantage. In this way the hands of Neo-liberal Leviathan turn government into their clay. We elect a government that becomes clay to be molded by an unelected Neo-liberal authoritarian business autocracy. So much for Hobbes’ ideal.
The free-market evolutionary principle that efficiency leads to survival of the biggest in turn leads to monopolies. Once someone controls all resources, it also controls price, after which the free-market principle becomes irrelevant. The power of monopolies means the ability both to fix price and to influence government to maintain the monopoly. Most monopolies are not the outcome of a natural law, they arise from social political protection.
On the opposite spectrum, the less money you have, the less you can lobby and influence, and the more exposed you become to predatory behavior. If supply and demand drive up wages, Neo-liberal government will regulate the protection you have from unions, and change wage and labor laws, with little recourse. In an interconnected system, becoming richer is good, becoming poorer is a necessary consequence because the commons is not inexhaustible. Ultimately, Neo-liberalism is a feudal system with a new label.
Humans evolved to cooperate, which is the opposite of Neo-liberal dogma. We are born immature and require protection to grow up, we are weaker than many of our natural predators, and we have large energy needs, which are easier to overcome by cooperating. Socially, we evolved to contain competition, be altruistic, and keep free loaders in check.
The thread through Hobbes, the invisible hand, and free market, is the assumption we are fundamentally competitive and compete rationally. Instead, governments reward and protect predators from their prey, and ensure the prey remains weak, easy to catch, and there is an ample supply. Hobbes was right, for prey, life is indeed nasty, brutish, and short, but instead of government ordering things with our consent, it creates disorder economically and socially for many.
Traditionally, governments supply unprofitable goods and services in addition to its core responsibility; providing security, a transport network, education, and health care. Neo-liberalism encourages government to sell off these services, including health care, so they can be turned into profitable enterprises.
The values of Neo-liberalism are competition, profit, and consumption. It opposes values of cooperation, altruism, fairness, freedom, and equality. More competition, profit, and consumption in health care is a positive feedback spiral driving up costs infinitely. It also means with more money you can afford the best, most technologically advanced care, but if you are poor, you are not profitable, hence that care is not available to you. For proof, look at what happens in the US. If you sell off the health care commons; there is grazing for the rich and the poor must eat health care potatoes. The biggest cause of bankruptcy in the US is unpaid health bills.
The push for US-style private health care, based on Neo-liberal dogma, in Canada simply won’t go away. What would health care look like if it is freed to become a market, ruled by Smith’s invisible hand? To begin with, everyone who want a medical education or be a nurse can have or become one. In principle, larger numbers of students will drive down the cost of education, which will make it more affordable. Anyone who wants to build a hospital will be allowed to do so, without any rules determining what it should look like or what services it may offer, and there will be no set fees for consultations and treatments, it will be determined by market forces. Physicians and hospitals will compete and advertise their services online and in print, only provide profitable services, and patients will choose who to go to based on what they want and can afford. Governments will be freed to collect taxes on health care profits, and not send it back to health care, which will fill its coffers.
The strange thing is, this is not how things work in the most vocal proponent of free market health care, the United States, where in actual fact, health care is driven by a number of monopolies. The idea that is a free market is patent nonsense. The situation was similar in Canada in the 1960’s until Saskatchewan implemented its health act, which became a template for tax-funded health care for the rest of the country. The change was noticeable for the doctors’ strike against the act which attracted international attention. What proponents of privatized health care in Canada wants is to turn the wheel back to how things were long ago, and there is no reason to think what was broken then will not be the same now.
Humans are not rational, and to the extent they are, it is driven by a social world normally hidden from us. It’s that world that destroyed the Neo-liberal ideal. It’s rational if you are rich to protect your riches at the expense of everyone else, but like the commons, that rationality has consequences for other people, which you can only tolerate if you are morally and ethically autistic.
Had Hobbes’ prescription followed the Goldilocks Rule, not too much, not too little, just right, things may have worked out differently. There is a natural affinity between conservatism and Neo-liberalism, which gives a nasty edge to it, and a natural animosity between socialism and Neo-liberalism. Hobbes’ government should have been somewhere in the middle, creating guardrails so we neither fall of the cliff of an unfettered market, nor the one of misguided regulation.
In nature, positive feedback loops are balanced by negative ones; if predators eat too much prey they die, and if there are not enough predators, too much prey result in starvation and death. Government ought to be the negative feedback loop to balance an unopposed free market positive feedback loop, but, sadly, it isn’t, instead it’s Neo-liberal clay in the hands of profiteers.
The reality is Neo-liberalism reshaped our social world to the extent that changing it is almost unthinkable. The cats won and the mice are cowering in a corner waiting to become part of a witches’ stew. Everyone, the cats, mice, and those who govern us, unquestioningly accept this as real and unchangeable. Except it isn’t.