Samweg Kandel

Market is self-regulating and should be set free. Private sectors, which earn their market share after Darwinian natural selection, deliver goods and services most efficiently. There was a time when this thinking was a radical one. During the 1970s and 1980s, this thinking started garnering traction and Conservatives like Ronald Reagan in the USA and Margaret Thatcher in the UK adopted these once-radical ideas from Hayek and Friedman. Soon, their political rivals, like Bill Clinton and Tony Blair, adapted them too and these ideas almost became accepted as a law of nature. However, now, after around four decades of unimpeded reign, the era of neoliberalism is unfolding. This, of course, is happening only after tremendous consequences it has inflicted upon the society.
This idea’s predominance meant that almost all sectors of the economy were privatised. This was taken to extreme in the USA where essential services like healthcare, education to even prison systems were in the grip of private businesses. All companies have to be profit-motivated to survive. The best way to garner more profit is by selling more of your products. The best way to sell your products more is by being such an efficient producer that the consumers are enchanted to your products.

Hapless consumers
However, if your product has an inelastic demand by virtue of being essential, that product will be consumed by hapless consumers even if it costs an arm and a leg. You cannot negotiate or start searching around for an alternative. This is why health costs are so exorbitant in the USA. Without a government collectively negotiating in lieu of all the citizens for bringing down healthcare costs, these individuals have little or no power to negotiate. When college costs start ballooning, you will still get a loan to pay for it in the hopes of earning more later so that you can pay back that loan and have a better life as well. The privatisation of essential services like health and education have been one of the most important tools for extracting wealth from the lower economic classes. Patients and students are saddled with a lifetime of debts to acquire those essential services.
Even in non-essential sectors, competition is mostly a facade. Most of the food and beverage we consume come from just 10 companies. Almost all of our popular media are owned by six companies! They are not so self-regulating after all. Small companies will find it really hard to compete against big guns with established brand recognition and retail links. The entire market is now still in the grips of a handful of companies. And oligopoly is not something that wins prizes for fostering competition, the very premise of capitalism. When prices do not fall sufficiently due to lack of competition, it is easier for that handful of companies to essentially extract wealth by charging higher prices.
This is not where the story ends. It is merely the beginning. Political and economic powers have historically, always been intertwined. After a certain industrial sector becomes sufficiently powerful, it can lobby in order to have less regulations and policies that favour their businesses. At times, even lobbying is not required. Domination of media and information means you can indoctrinate the general public to a viewpoint favorable to yourself.
Expenses for ordinary citizens are horrendous. Their wages have been relatively stagnant, adjusted to inflation. The middle class has been shrinking, inequality is exacerbating, people’s will is not being represented by their leaders, faith in their democracy and their institutions is plummeting while populists have taken over or are rattling the established political forces. Absence of education or accumulated debt while acquiring it, lack of security of a well-paying job and healthcare means potential innovators busy with these burdens don’t take risks, thus stifling productivity.
And of course, there is a looming environmental crisis, borne out of unsustainable consumption and exploitation of natural resources in the absence of proper regulations, which will derail our future in ways we cannot comprehend. The burden of dealing with that will be on the next generation of taxpayers as well.

Liquidity crunch
If all that was not enough, TNT dropped on this already quivering camel’s back. The vast concentration of wealth caused an unreasonable amount of money to flow into the housing market, resulting in the housing bubble that inevitably burst. This, and enormous banks formed due to the absence of regulations which collapsed after the liquidity crunch brought by this housing bubble burst were the chief contributors of the financial crisis in 2008. Because these banks were so big, they had to be bailed out, or else they’d suck the liquidity out of the entire economy if they collapsed. Well, guess who had to bail them out? Those poor taxpayers.
Just look at the wonderful system that has been created: a bunch of corporations benefit from a rigged system where they are able to directly extract wealth from the middle class. They can use this very wealth to lobby and hold further grip on this system. And when a crisis descends, these big businesses and banks, which are so huge because of this rigged system that they are too big to fail, need to be bailed out by the money paid by taxpayers. The very taxpayers the rigged system is extracting wealth from!
So, it isn't surprising at all that the world around us was getting increasingly unstable even before the coronavirus vividly showed us its fault lines. This era is now at its last legs and it is up to us to design a more humane system that puts people before profits.

(The author is an A Level graduate from Rato Bangala School. samweg28ea@gmail.com)