Caught short? The free market has your back

Anyone else remember the meme at the beginning of lockdown? Panicking consumers bought toilet paper as if it were gold dust. Now, of course, as the public slowly realised that the supply chain had not been interrupted to the extent that they initially feared, there is once more toilet paper in my local supermarket, and in most others across the country. But what did this initial panic tell us about the trust that the public has in the capitalist system?

The most common criticism of a planned economy is that it is a herculean task for a person, or a computer, or even a collection of incredibly intelligent people and several supercomputers, to allocate resources as efficiently as a free market. And even with the initial panic, this crisis seems to have provided evidence to support this assertion - there were perhaps a few days where toilet paper was more difficult to find than normal, before the market and supply chain responded and things returned to something more resembling normal. There are other shortages, currently, due to a lack of international trade as borders are pretty much sealed in order to prevent further infections, but it is difficult to argue that the goods that we do have are not being distributed as efficiently as possible, given the circumstances.

How quickly could a human team, trying to plan the economy, have reacted to the crisis? The quick response of the markets seems to be another reason for us to put more faith in a free-market economy: despite calls for directed labour in the agricultural supply chain, things do not seem to have devolved to that level yet. It seems almost certain that a planned economy could never have responded anywhere near as quickly, or as efficiently, and that the more bureaucracy and regulation involved, the less efficient the response.

However, as shipments of PPE and other medical equipment have been found not to be up to scratch, there is an argument to support some regulation of the market, even as we leave it mostly free to allocate resources independently. Shipments from Turkey were sub-standard, meaning that the NHS was severely undersupplied. Regulation can help with quality control, even if it is impossible to completely plan an efficient market.

The crisis has provided an opportunity to re-evaluate several of the principles that many conservatives hold dear - the efficient free market being a key one. Although there are arguments in support of more regulation, it cannot be argued that any other system would have responded as well as free-market capitalism to the crisis.

This is a particularly interesting insight in light of the unprecedented economic action taken by the government during the crisis, including extended furlough payments until October. Although an argument can quite easily be made for leaving markets free to adjust, the labour market is perhaps more deserving of support than others, given that it has a more direct impact on the welfare of the population. There is toilet paper on the shelves thanks to the free market, but that isn’t going to be any good if you can’t afford to buy it.

Adam James (Secretary, Ex-Political Officer, Ex-Whip) is a second year reading Jurisprudence at Hertford College