That’s Capitalism: Innovation or extortion?

The World Health Organization warns of a dangerous lack of antibiotics to combat drug-resistant pathogens.  The United Nations estimates that antibiotic-resistant infections could kill 10 million people a year by 2050 and cause an economic slowdown to rival the 2008 crisis.

Luckily, capitalism promotes innovation, right? All that private-sector dynamism and entrepreneurship, all that competition and profit?

Not really. As it turns out, there are very few new antimicrobial drugs in development, and most of them are just tweaks of older ones (a standard procedure to extend the life of patents and prevent cheaper alternatives from coming to market). Start-ups that were working on next-generation antibiotics have gone or are going bankrupt.  Antibiotics—especially those designed to be used rarely, against pathogens resistant to more common drugs—aren’t a big money maker, so investors haven’t stepped up.

That’s already a pretty damning indictment of capitalism: the private sector is unwilling to address a looming crisis because there’s no immediate profit in it. Worse yet, though, are the policies that have been proposed to fix the situation.  As Andrew Jacobs writes,

Among the ideas that have wide backing are increased reimbursements for new antibiotics, federal funding to stockpile drugs effective against resistant germs and financial incentives that would offer much needed aid to start-ups and lure back the pharmaceutical giants. Despite bipartisan support, legislation aimed at addressing the problem has languished in Congress.

The private sector has failed to generate socially beneficial innovation, and the response is . . . to fund research in the public sector? To bring the companies under partial or total state ownership?  To rethink whether a for-profit pharmaceutical sector is compatible with an advanced society?


Instead, it’s corporate welfare payments to make sure that investors can turn a profit—pouring taxpayer money into a failing system to sweeten the pot for hedge funds and venture capitalists. Call it what it is: extortion. We are being told that the only way to obtain necessary drugs is to make sure the capitalist class can profit from it.

But that’s capitalism—so what are we going to do about it?