Aspects of the pandemic from a lawyer’s vantage point
- On hoarding and gouging
Our political leaders appear daily on television, looking serious and concerned. They are no longer petty politicians trying to hang on to office. They are flanked by scientists. The idea is that we have a common problem. It is a health problem that affects us all and the only way to tackle it is to get health professionals on board and live by their advice. As that advice is that we are all soldiers in this war we must wage on this non-political virus, it follows that this is not the time to play party politics. We are to be informed and present a united front.
The self-neutering by politicians, the show of willingness to suspend the pursuit of self-interest, of adversariness, is to be matched by the rest of us. We are expected to live differently, to think more about our impact on others than we have been taught to do by advertising and by capitalism’s push to have us turn ourselves into winners as we compete with others. Those others are just like us and are motivated to be winners and who also are expected to compete zealously for the same jobs and contracts. We are, then, being asked to behave as if the logic of capitalism no longer applies.
It turns out that it is hard. One of the reasons is that many of the individualistic, greed-satisfying behaviours that constitute the heart of capitalism are enshrined as promoted and strongly defended values in our legal system. The prestige of law means that offensive, even anti-social, capitalist behaviour is laundered and , even when not openly admired, tolerated. This creates contradictions. The pandemic is making these contradictions more and more visible. Two examples will suffice.
Hoarding for personal advantage
- Capitalism’s distinct anti-collective ‘morality’ infects human beings
As soon as it became evident that the virus was going to make business as usual unworkable, a frenzy to hoard was born. Individuals, fearing that others might get all the necessities and keep them for themselves, rushed out to beat those others to the punch. As if they were the minor and vulgar characters in a bad sitcom, people stormed into stores and denuded shelves. The accumulation of toilet rolls became the poster illustration of this manifestation of how, after decades of intensified capitalism, selfishness and mis-trust of ‘others’ has become common and how ugly, how contra other instincts, teachings and experiences it is. Capitalism’s notion of what constitutes ‘moral’ behaviour is coming under the microscope.
What is being seen more clearly is that capitalism requires that individualism, and accompanying notions of primacy self-reliance and selfishness be given primacy by the system. This clashes with the collective way in which people actually live. The relationships forged within families, with loved ones, with friends and neighbours are based on mutuality, respect and a desire to support each other. Sharing, altruism, compassion, are strong impulses. There are, then, two distinct and clashing sets of mores by which people are asked to live. The pandemic has brought this out as the very elites, which usually champion brutish capitalist behaviours are now on the hustings telling people to make sacrifices for each other.The dominant class is confronted by a threat. Its ideas, beliefs and moral values are under scrutiny, something that has not happened so expressly for a long time.
In comes law. It purports to reflect society’s shared values and norms and has great prestige as it is widely seen as being a neutral institution, one above politics. So, the position it takesis ideologically influential. It turns out that law heavily favours the fundamental views and ideas vital to capitalism and its favoured practices. It endorses the morally repugnant stance that the satisfaction of individual greed is next to Godliness.
From the legal perspective, the hoarding of toilet rolls, is a manifestation of free, sovereign individuals doing their own thing, doing what they chose to do. Specifically, when chasing toilet rolls, they are using their property, that is, their money, as they see fit. From the legal perspective, hoarding toilet rolls, while it was loudly decried as risible and anti-social behaviour, is not a legal wrong.
Law, then, supports capitalist morality, a set of principles that promotes the worst instincts in human beings. The reason why the toilet rolls hoarding became such a talking point is that it involved unashamed, crass self-seeking about something which, given the scale of the massive social and public health problems, was so ridiculous. To call it a pursuit of freedom, a manifestation of human aspiration to make whatever choice one lieks, highlights the hollowness of the values that inhere in capitalism. Worse, it became obvious that those with the most discretionary wealth could do it better than others; they could scoop up more of needed commodities (and not just toilet paper). That also is legally permissible because, in a legal system that endorses the capitalist agenda, the pretence is that inequality in wealth does not mean that the poor are less equal in law. So, if the wealthier folk have more toilet rolls than the poorer ones (or more of everything than the poor), this may seem unfair, even unjust, but there is no legal remedy. Legal support and remedies are available, however, in very generous helpings, when it comes to the promotion of individualism and the protection of private property, even when it leads to anti-social behaviour, even when it encourages the worst in human beings.
- The capitalist remedy: one dollar, one vote
The law, then, hides behind the argument that it supports the free market. The market is an instrument facilitating capitalist practices. It is credited with bringing two benefits. It permits every individual to determine how to use their talents and resources as they see fit and to decide which of their desires they want to satisfy. Individuals’ focussed and (assumed) natural drive to make the most of this freedom will lead to an efficient allocation of all the talents and resources in the economy. At the same time, the fact that all individuals make autonomous choices means that their liberty is given the greatest scope possible.
This is an idealized version of how markets operate. It is a long way from how they actually operate, as will be seen below. For the moment, let us assume the existence of markets as pictured by the idealized model. They are credited with making capitalism work and supporting liberalism. Their supposed achievement is that they enhance economic efficiency and political freedom. These are the justifications for law to facilitate and to promote the structures needed for markets to operate.
Law maintains the existence of free markets by privileging private property so that each individual can determine what to do with their talents and resources. They can choose what to make, what they will buy and sell. There is thus no need for law to do anything specific to stop hoarding, despite the bad vibes around the practice. If it leads to imbalances, the law assumes that the market will fix things up as demand for a too highly priced good or service dries up. By this ‘leave it to the market’ approach, law is complicit when individuals to engage in conduct that is, on its face, pretty ugly. Hoarding is legally OK because markets will, in due course, inhibit it. This horrifies those who believe they owe an obligation to their fellow citizens. Their parents, teachers, secular and religious, taught them to include others and to share things with them. Their experiences in their neighbourhoods and communities teach them the same thing. The pandemic is forcing the tension between law as a (somewhat shyly hiding) proponent and defender of capitalism and law as a (loudly self-proclaimed) proponent and defender of shared values and morality, into the open.
There is, it is true, some evidence that the market could redress the unfortunate outcomes of hoarding, perhaps off-setting the dangers for capitalism that a closer scrutiny of capitalist morality might entail. Some of the stores which sell much-desired commodities did put a limit on what each consumer can purchase. That is a form of allocation which, in a non-capitalist polity, would be left to a co-ordinating government. Such a government could, if it so decided, engineer allocations which treated its people as equals and which could take special needs into account. This would be part and parcel of any legal system that supported this non-capitalist polity. Law would be used to meet people’s needs, to support an equal sharing of goods and services which would accord with the principles of a cohesive, collectivized society. In contrast, in anti-dirigist, liberal nation states such as Canada, markets are to be the primary allocators of goods and services. Market capitalism is, by definition, anarchic. Some merchants will refuse to sell to hoarders, others will welcome the opportunity. That is the way the capitalist cookie crumbles. Market democracy is dollar-based democracy. It is the opposite of political democracy. It reveres greed and embraces inequality. It is not an attractive political or social system.
Gouging for commercial advantage
On 27 March, Premier Ford was on every local television programme furiously expressing his indignation. A well-respected retailer, Pusateri’s Fine Foods, had charged $29.99 for a Lysol disinfectant wipes. This was way more than it had retailed for in more normal times. Ford thundered that he would not stand for this kind of gouging. Gouging is such a fine word. The Concise English Dictionary defines it:
“ verb, scoop out; force out; noun, chisel with curved cutting edge”.
Not a nice thing.
Pusateri’s apologized, saying that, during all the chaos created for trading during this exceptional period, there had been a failure to see how inappropriate the pricing of the wipes was. By then, however, Ford knew he was on to a good thing.
In a capitalist society, gouging is a way of life. This is why Ford’s anger resonated with the public. Everyone believes that, given any opportunity, capitalists will charge them more than they did 5 minutes ago. Everyone believes this because everyone knows that a capitalist economy has two bed-rock principles. They are:
- There is no such thing as too much
- The principal goal is to take advantage over anything, resources, people, everyone to get more for oneself.
This is why executives have obscene incomes. They argue that, obviously, their skills are rare and the neutral market values them highly. Their pay is not too much, even though the badly misinformed public think it is. Occasionally, shareholders in the corporations which these executives run get angry, not because workers have been shafted, but because their dividends are low or the corporate profits are not what they expected. Then there is some push-back. But not by law: law accepts the principle that the market should set the price paid for executives. This is so, even though, frequently the executives have rigged the system to get those monstrous pay-packages. They will have caused a corporation to re-purchase its own shares, increasing the value of theirs even as this made the corporation less able to invest in long term profit-making; they may have formed a cozy alliance with remuneration advisory firms that then, gratefully, reward them with generous pay packages; they may have taken vicious actions by dismissing a number of employees which will ensure that the value of the executives’ shares get a quick boost just before they sell them. They often will distort the market to enable them to take advantage of others. They want more, always more.
Gouging everywhere one looks. It is there when a firm in command of a good or service charges extraordinary prices for them.
Shkreli, the man who increased the price of a vital antidote to a deadly parasitic disease by 5000 per cent was looking for more and taking advantage when he did this. What he did was, as we now know is always the case, legal. He was a personification of everything that is wrong with capitalism and with the law which supports it. The government was forced to punish him somehow. It successfully prosecuted him for not reporting his corporation’s affairs accurately. It was a bizarre admission: in the quest to show that the elites disapproved of ‘bad’ capitalists who took eye-popping advantage of a vulnerable pubic, it punished him for cheating other capitalists. Everything is upside down in capitalism.
Another plug ugly case was that of Mylan, a corporation which used its monopoly over the very-cheap-to-produce EpiPen to stick it to the large numbers of people whose lives are threatened by anaphylaxis attacks. While there was much had-wringing over this, it was legal and there were no sanctions. The CEO of Mylan’s salary had increased by 671 per cent since the corporation had initiated its increases in pricing. Shareholders, other capitalists, were happy to reward her for holding people prone to life threatening attacks to ransoms. In capitalism, the virtues are not the ones preached about in holy texts or in books on philosophy or ethics. Capitalism’s core values—‘please gimme more and it doesn’t matter whom I hurt’—are part of our so-called normal lives, the normality to which many crave to return.
Landlords take advantage of housing policies that limit the number of rental places. They charge obscene amounts to be paid by those who cannot afford to purchase a dwelling. Over 50% of renters in Ontario pay more rent than they can afford, according to the affordable housing formulae published by governments. Most of our leading retailing and mining companies take advantage of impoverished countries which need investment. This will get our companies ‘more’ as they are allowed to extract and exploit resources without regard for the environment or established ways of living; they get access to cheap, very cheap, unprotected labour forces that have to accept dangerous, poorly paid-for work. Getting more for the rich and taking advantage of the vulnerable is the modus operandi. The story is well-known because it is told over and over again.
Gouging, or as it is usually called, profiteering, is the life blood of capitalism. It is legally endorsed. It is not considered to be an evil that requires legal prohibition. The conventional view is that, if sellers charge too much, the consumers will stop buying the goods or services or it will spur other producers to supply such goods and services more cheaply. In brief, the law sees the pursuit of greed as a virtue and leaves it to an invisible force, a truly competitive market, to rein it in when necessary.
It does not work because there never has been and likely there never will be a truly competitive market. For instance, in Canada, in the vital food industry, a very few major food firms control a huge amount of the market, including the production of red meat and of food processing; or take retailing: 4 large firms share 72 per cent of the national market; in bread-making and marketing, just 2 firms control 80 per cent of the market. And so it goes: in office supplies, 3 firms account for 78.2per cent of all revenues; in movie theatres, one firm has 74.2 percent of the market; in glasses and contact manufacturing and sales, the 4 largest firms share 74.1 per cent of the market between them; in warehouse clubs and superstores, Costco and Walmart combine for 91 per cent of the industry; in air transport, Air Canada collects 64.6 per cent of all revenues. Positing competitive markets as an effective brake on profiteering is a joke. But there is a need to pretend that competition exists and is favoured. This takes a surprising legal turn.
While there is no legal restraint on how much a capitalist may charge for goods and services, it is a crime to charge too little! It is called predatory pricing. The fear is that, if one business firm has the power to absorb losses and charge much less than all others, that firm will finish up with a monopoly and, then, its insatiable drive to get more will lead to serious gouging. Now, as seen in the concentration of the Canadian economy outcomes noted above, the ceaseless drive to accumulate leads to competitors eliminating each other. There is a natural tendency toward oligopoly or to absolute monopoly. The crime of predatory pricing aims to avert monopolies because that would unquestionably signify an uncompetitive market. In this way, the argument that competition is a ‘good’ and must exist is being made. It bolsters the belief that competition will inhibit excessive profiteering. But, as stressed, the tendency toward the creation of oligopolies is not inhibited in any serious way. This permits a disturbing amount of profit-taking which is not disciplined by a truly free market competitive environment. This being the real state of things, it is easy for entrepreneurs to satisfy their drive for more, to take advantage of others. Law’s abstinence, its refusal to say when a lot is too much or to do more to create a truly competitive market, has made such rapaciousness a norm.
Manifestly, when Pusateri’s charged more for wipes because it could, its behaviour fitted within the normally tolerated genre of profiteering. The worst one could say about Pusateri’s was that it wanted more and that it had taken advantage of its virus-created position. Yet, it was perceived differently. The ‘virus’ was the difference.
In the context of an existential emergency, squeezing people who are desperate to meet their most fundamental needs is, apparently, one step too far. It is unacceptable gouging, not routine profiteering. How nuanced can capitalist reasoning be?! Gouging is not different in nature to profiteering. Indeed, it might be argued that, as during a crisis, the demand for, say, PPE, is greater than the suppliers can deliver, the higher price demanded by suppliers makes market sense. It is not outrageous profiteering at all. Yet, that is not the way it is characterized. It is seen as embarrassing. It is so because it throws light on how deeply anti-social, how profoundly anti-human, capitalists are when they are allowed to follow their lust for money and how little they care about people’s real needs. This is why, in such times, governments forbid some of the usually tolerated profiteering, re-classifying it as wicked gouging. But there is no logic supporting the distinction being drawn. The proof is already in the uneaten pudding.
Both the British Columbia and Ontario governments are using their emergency powers to forbid gouging. They make it possible for aggrieved people to bring forward complaints. If found to have “fixed prices, charged unconscionable prices for necessary goods, services and resources”, the guilty persons will face penalties ranging from $750 to $100,000, to a year in jail. If they are directors of managers of a corporation the fine might be $500,000 and jail and the corporation might be fined $10 million. It is plain: the conduct is to be stigmatized. Yet, profiteering which might amount to gouging has not gone out of fashion.
On 20 April, British Columbia reported that its offices had received 800 complaints about alleged gouging; Ontario, on 28 April, had received 20,000 such complaints. Both governments said they are investigating. No charges or settlements, or any other kind of positive response have been announced. This lack of real action on the ground does not accord too well with the vigorous, vehement expression of disgust and anger that led to the passing of the legislation.
It could not be otherwise. The fact is that profiteering which is to be defended by capitalism-favouring governments is not conceptually distinct from gouging. This was revealed in an interview with Mike Farnsworth, BC’s Minister of Public Safety and Solicitor-General. When asked about the nature of the anti-gouging project, he acknowledged that he did not oppose price rises. That is not what the legislation was all about, he noted. It was about any wrongful price rise which is, “one of those things: you know it when you see it”. What this denotes is that politicians know full well that any generic denunciation of profiteering would undermine the way our species of capitalism is practised. So, it is good politics to thunder at the easy-to-hate profiteers, people like the ugly or tone-deaf Shkreli’s, Mylan’s, Pusateri’s, but not actually to attack conduct crucial to capitalism. Private accumulation must retain its sacred place, even if some anarchic and peculiarly venal capitalists sully the project.
In the end, the pandemic has made some things about capitalist relations of production clearer than they were:
- It pushes individuals to act on their worst instincts. Some pursue their own interests by hoarding what their fellow citizens may need; law frowns on this kind of selfishness but leaves it to private actors to discourage it;
- It is a quantitative system, valuing more over less, regardless of the social impact;
- It is a system that claims that there is no need for legal restraint on the drive to maximize profits as a competitive market will set everything right. These claims are made even as it is obvious that capitalists have successfully ensured the non-existence of competitive markets; law plays a vital supporting role in the maintenance of this shell game;
- It does not require that for-profit actors bear any responsibility to provide for people’s basic needs; law makes no such demands.
Everyone should remember these lessons when the time to re-think our social relations of production arises.
Harry Glasbeek
29 April, 2020.