Would everyone have access to a COVID-19 vaccine by now with a global gift economy?
Amidst this global health crisis we are currently witnessing market mechanisms working to alleviate a dire situation. The market economy and gift economy each have driving forces. Those forces are profit and need, respectively. This article is a comparative thought experiment about those forces and their invisible hand guiding the economy to create a COVID-19 vaccine. The question I pose is, would the vaccine be created faster and be more accessible in a market or gift economy?
Firstly let’s examine how the market works beginning with its main motivator, profit. All in all, the profit incentive is quite efficient in adapting and directing resources towards solving important problems. Big problems equal big opportunities for businesses as long as people are willing to pay. In the case of the vaccine, big money was to be made for pharmaceutical companies that could solve this issue and therefore they got straight to work creating the vaccine.
Profit is created by scarcity which creates competition. In general, the more rare something is, the higher the price it can command in an exchange for any given level of demand. If you create the vaccine first and are the only option in the market, then you can fetch a higher price and earn greater profit than if there were many options. This is why each firm worked in parallel racing to get an early mover advantage, closely guarding their information from their competitors. Scarcity is even government guaranteed through patents, which are protection from competition for novel innovations. This means that for a number of years from invention the company, and only that company, can sell the solution they created. The purpose of the patent is to establish the innovative firm as a monopoly, meaning the sole producer of the good, to create scarcity, driving up profit and incentivizing innovation. This implies, however, that the life saving recipe for the vaccine can be used by that one firm only who controls the supply to maximize profit.
When we look at the incentives of the firm and their employees we see the need for profit is a constraint. If the firm’s incentive is to earn profit, we can assume that the employee is motivated by earning a salary. The firm makes investments that require returns and the employees have contracts that are expensive to break. The firm’s resources, its hiring and investing capacity is constrained by a budget built around a need for profit.
On the whole the pursuit of profit has yielded quite incredible results, however, there are many problems lying under the surface. First of all, the purpose of the pharmaceutical company isn’t to keep people healthy. As Milton Friedman advocated the concept to near universal acceptance, the purpose of the firm is to make a profit for their shareholders. An extreme example of this in reality is by Martin Shkreli, CEO at Turing Pharmaceuticals, who acquired a drug vital to people’s well being and then increased the price of it by a factor of 56 from $13.50 USD to $750 USD leaving people to suffer but helping the shareholders pad their wallets. The vaccine is being distributed in a way that generates the most profit, not the way that helps the people the most. Even if they were capable of flooding the market with a vaccine for everyone today, it would be more profitable to release it slowly to the highest bidders first.
Before we delve into the hypothetical, I’d like to take us to the 1920’s when Sir Frederick Banting, a medical researcher at the University of Toronto followed a hunch that led to the discovery of insulin followed by wildly effective clinical trials in treating patients with diabetes. His work took a disease that was once a death sentence and, while not a cure, made life manageable for people. If he wanted to, he could easily have made millions with his patented technology that a sizable amount of people depended on for their lives. He, however, decided to sell his patent to the university for $1. He was motivated by a need. He actually wanted to help people and the profit system wasn’t the best way for him to do that. So he gifted his invention to the university, science, and the world.
Now let’s move on to the thought experiment to gain some insight as to how society might have organized to create and distribute a COVID-19 vaccine in a theoretical world where the gift economy reigns.
The dominant force in a gift economy is need rather than profit. It is built on cooperation rather than competition and abundance as opposed to scarcity. In this world people get what they need through a network of communal gift giving and reciprocity rather than exchange so money is less of a factor. Reputation is important as it is the true currency. Gifts tend to flow to those who need them most or to have strong reputations of contributions to the community. If there is a pressing need, people would be motivated to solve the actual problem, rather than being motivated by profiting from that problem.
If you had the knowledge or experience and the opportunity to help create the vaccine would you be willing to contribute time, skill, and energy to an initiative? Let’s assume money isn’t an issue because you already support your daily living comfortably within the gift economy. Despite not earning money, this is considered a major contribution and it would certainly increase your status as an important contributor to society. Also, maybe you simply want the pandemic to end? Perhaps it’s important to you that you and your family, friends, and community can stop living in fear. Would that be enough for you to decide to contribute your time? An initiative’s resources are only constrained by people’s motivations to contribute, rather than a budget based on profit. If enough people want it, then it will happen. In the case of the vaccine, I’d assume abundant motivation therefore abundant resources.
The initiatives that can garner enough community support to justify their attempt wouldn’t be doing it alone. Because they aren’t competing for profit for their shareholders than the motivation is to actually solve the problem, cooperation would be the norm. Each initiative would be a part of a global network of initiatives all working for the same cause, sharing ideas, insights, and data. Any initiative’s advancement is the whole world’s advancement and it would be recognized accordingly.
If one of the initiatives managed to achieve the miraculous feat and created an effective vaccine, then there would be little holding back the mass roll out. Instead of patents that create a one firm producer artificial scarcity, the vaccine recipe would be open source for anyone to use all over the world. Only the motivation of people to manufacture and distribute the vaccine would be the limit to the abundant supply that could be produced.
Distribution of the vaccine would likely be heavily biased towards the communities geographically close to where it is being produced as we assume people look out for their own needs first and the surplus is likely to go to either where it is needed the most or to communities that are the largest contributors.
So I go back to the original question, which is would the vaccine be created faster and with greater supply in the market or in a gift economy? Although this can’t be answered definitively because a global gift economy is not an observable reality, but I hope I have given you food for thought to at least wonder if the market forces of profit, scarcity, and competition are serving us better than potential gift forces of need, cooperation, abundance. As founder of Lokali Community is building the online and offline infrastructure to try and make this thought experiment a reality and I’d love it if you joined us.