One of the benefits of living in the 21st century developed world is that we can look back at why freed markets have succeeded. That is, we can see the invisible hand at work. But convenience and luxury come with trade-offs, one of which is our proclivity to take for granted the results of the productivity of the market. Even those of us who preach from the mountaintops the beauty of the free market forget the marvels of the world in which we live. Because so many of us create things, we have the potential to see all around us the wonders of the capitalist structure of production. Even if we don’t understand it all, we can deeply appreciate it.
One part of the market I do not fully understand is the medical and healthcare industry. Thankfully, I only infrequently visit hospitals, and when I do, the experience is an awkward mixture of awe, wonder, and sadness. Usually, I am visiting because I or somebody I love are in need of care. And yet even under those conditions, I am internally evaluating what I see around me. The technology in modern hospitals is astoundingly sophisticated, and I just can’t help but marvel at them. Despite the industry being heavily regulated and overburdened by government overreach, there is (or was) a strong free market influence in the production of both technology and medicine in the industry. Somebody long before our visit to the hospital saw a problem that needed to be solved. They took huge risks of capital in order to help save lives or to make our lives generally less problematic.
This is no small matter. I have a pitiful amount of knowledge about the production of the equipment that fills the rooms and corridors of our hospitals and operating rooms. What I do know, however, is that incredible risk was taken for something for which there was no guarantee: success. With only profit and loss as the barometer in the marketplace, some forged ahead. There were undoubtedly many failures along the way, yet some of the best equipment and substances emerged for our well-being. Their purveyors were not necessarily even interested in medical devices in the first place. All it took was the skills to make really awesome microchips or perhaps the talent to manage a company of high-functioning people to create software that made procedures more efficient.
Leonard Read’s classic story, I, Pencil was designed to illustrate the results of freedom by showing how millions of people, in small but important ways, contributed willingly but unintentionally to a process or product that improves the lives of strangers. The medical industry is no different, and it is arguably one of the most important areas for innovation. Of course, some individuals do work purposefully toward solving a medical problem or meeting a particular array of needs. But by and large those who cooperated in the process weren’t boasting to their families at dinner about how they contributed to society’s health needs. Yet they were.
Despite the marvels of the marketplace advancement in the health industry, there are two morally attractive but wholly dubious arguments regarding health care that we ought to guard against. The first is that health care is too important to be left up to the free market. I reject this notion. Take a stroll down the hallways of a local hospital and try to convince yourself that all this stuff can be produced through central planning, even if only for a single industry. If universal health care were indeed possible, its advocates take for granted that the marketplace itself provided the myriad luxuries provided in the medical industry. Universal healthcare is a direct result of the wealth created by the entrepreneurial spirit in the medical industry. Have you heard of the push for “universal health care” in the 1850s? No, because that would have been unthinkable.
A second but related complaint is that some people shouldn’t get rich off of other people’s ailments. Never mind the obviousness that whatever wealth is acquired it is in the solving of those ailments! What troubles the anti-market health care enthusiast can be sufficiently blamed on the word “care” in “health care.” The word connotes intentionality or purposefulness or planning. Regardless of our sentimental objections to the term, a patient is a type of consumer who must be cared for by her doctors and nurses. Yet if we consider the economics of the doctor-patient relationship, we realize that the success of the doctor depends on the quality of care they provide, both medically and emotionally. It’s an enormous asset to have a genuinely caring physician. What’s more important is competence and honesty, something a market is equipped to facilitate. Imagine if who you had as a doctor were regulated the same way where your kids must go to school (based on your location). It would be an outrage!
Should we even care whether the producers in the medical industry (or any other industry for that matter) are driven by rampant greed or Christlike charity and good intentions for humanity? While it’s nice to think that laborers in factories, the CEOs of companies, and all who cooperated to bring those final goods into service are caring individuals, the market channels all the labor and energy from all parties of every motive into an end result: quality equipment and substances with a decreasing failure rate. In the abstract, we want the CEO of an innovative medical company to be altruistic. But in the operating room, nobody cares if the CEO is a greedy corporatist if my life is saved. The equipment and medicine must work as designed.
To be sure, if somebody is getting wealthy because other people are being duped, defrauded, or misled, of course we take great issue with that (in any industry). But ask any woman in labor if she’s concerned that the inventor of the epidural was motived by greed, you will regret doing so.
Our world is full of truly caring entrepreneurs who want to discover and create solutions that save people’s lives. For that we must be grateful, and they can never receive enough praise. They saw a need and—regardless of motive—are working toward a solution. But we should neither forget nor discount the progress that occurs in the marketplace because any incentive whatsoever has helped produce a quality and desirable outcome.