In the early days of COVID-19, some responded with denial – denial that anything much needed to change, denial that there was good reason for our gatherings and lives to be disrupted, denial that people pursuing their status-quo self-interest could possibly fail to serve the social interest. Soon enough, the crisis that is COVID-19 became difficult to deny. As the denials dissipated, social distancing and shut-downs (voluntary and involuntary) emerged. The thing of it is, social distancing and shutdowns are hard on people—really hard. Perhaps not surprisingly then, a kind of anti-denial quickly emerged. We are now told we can’t let the cure be worse than the disease. We are now told we can’t deny there’s a trade-off between public health and the economy. To be clear, those drawing attention to the tradeoff aren’t agnostic about which of the two—public health or the economy—is the better play. They’re on the side of the economy. Indeed, they’ve already formed the “Council to Re-Open America.”
Here’s the rub: as economists have repeatedly emphasized (see here, here, here, here, and here), the supposed trade-off between public health and the economy is false. Calls to trade off life and health for the sake of the economy constitute a false and dangerous “theology” of scarcity. At best, such calls reflect a failure to understand economics and the economy. At worst, they’re the calls of cronyists who seek to enrich themselves at the expense of others under the guise of fallacious pragmatism.
If claims of a trade-off between public health and the economy are false, what is the true nature of the problem? To properly grasp the problem of COVID-19 from an economic perspective, it is important to be able to answer three questions: What is economics? What is the economy? What does a robust economy require?
What is economics? Economics is the study of a pervasive human activity—cooperation. It is the study of exchange relationship. As Adam Smith observed, an important part of what it means to be human is to possess a propensity to “truck, barter, and exchange one thing for another.” This propensity is an expression of our human sociality, an expression of an evolved commitment to propriety and fair play in conduct, an expression of a natural disposition to cooperate. This propensity is the means via which we take care of and provide for ourselves and our loved ones. It is an important way that we all contribute.
What is an economy? In turn, and again as observed by Adam Smith, the economy “is not the effect of any human wisdom.” The economy is simply the instantiation, the by-product, of our human propensity to “truck, barter, and exchange.” The economy is not a machine. No “Council” can flip a switch, turn it on, sprinkle magic fairy dust, and “re-open” it. The economy is a natural system, much more like a brain than any kind of engineered construction. The brain is an enormous system of interconnected cells—a vast, dynamic, and complex network of neurons that interact with each other. Likewise, the economy is an enormous system of interconnected individuals—a vast, dynamic, and complex network of human persons engaged with one another in relationship.
What does a robust economy require? A robust economy requires commutative justice. The primordial soup out of which the vast, dynamic, and complex network of relationships that constitutes a robust economy emerges and develops is trust: trust in the willingness and ability of all to abide just rules of conduct. As Adam Smith put it, “Society cannot subsist among those who are at all times ready to hurt and injure one another…If there is any society among robbers and murderers, they must at least…abstain from robbing and murdering one another.”
What does all this have to do with COVID-19? COVID-19 has the potential to turn each of us—unwittingly, unknowingly—into robbers and thieves of the lives and health of those with whom we come into contact, directly and indirectly. Because of the danger we potentially pose to one another, we have been unwilling and unable to engage in the relationships that constitute the economy. Prudently and appropriately, we have withdrawn ourselves from the network. The economy, in turn, has fallen into a coma. From an economic perspective, what we are all experiencing is as simple as it is painful: what we are experiencing is the voluntary and forced breaking down of the relationships we rely on to flourish as social creatures.
How can we repair those relationships? We cannot repair them, per se. The economy, remember, is not simply a machine with broken parts that need swapping out for new ones. What we need to do is address the underlying problem that has destroyed our ability to trust ourselves and others—COVID-19. Once we understand COVID-19, it will no longer have its current power to turn us into unwitting robbers and thieves. We can and will then return to what comes naturally to us—trucking, bartering, and exchanging. The economy will then begin to emerge from its coma. Because we have been slow to address the underlying problem, some bits of the network will likely have suffered such damage that they will not revive. In other words, through no fault of their own, some people will have lost the relationships they invested in and worked hard to develop. Other bits of the network will take time to “heal” and begin functioning again.
There’s one more Smithian lesson that seems to me important as we consider the crisis of COVID-19 from an economic perspective. Contrary to conventional wisdom, Adam Smith did not believe human motivation is based on self-interest. Adam Smith believed that what we desire as human persons is to be loved and to be lovely, to be praised and to be praiseworthy, to not be blamed and to not be blameworthy. On top of the financial pain that COVID-19 has wrought for so many, herein lies what is perhaps its greatest heist. Unless and until we understand COVID-19, we cannot encounter one another without exposing ourselves to blame and blameworthiness – for the damage we might inflict on others if we are ourselves shedders of the virus. Unless and until we understand COVID-19, it will remain difficult for many of us to encounter one another and engage in ways that make us praiseworthy. If Adam Smith had it right at all, such a state of affairs is very bad for us as human persons.
If Adam Smith had it right at all, one of the most important contributions we can each make in this world is to do everything we can to ensure that others have real opportunities and encouragement to be lovely. Right now, that means doing all we can to diminish and understand the threat to human flourishing that is COVID-19.
Share this post with your friends!