Neoliberal State Failure Is Slowing Down Vaccine Distribution

Forty years of neoliberal hollowing out of state capacity is what’s responsible for Europe and Canada's great failure to quickly vaccinate people.

Administration of the AstraZeneca vaccine at a hospital in Madrid, Spain, 2021. (Juan Carlos Lucas / NurPhoto via Getty Images)

Here’s something I wouldn’t have predicted this time last year — the United States has delivered more COVID-19 vaccine jabs than any other country and has the fifth best rate of vaccination in the world at over sixty doses administered per hundred people. Meanwhile Canada, land of cuddly, polite, socialist single-payer health care, for once is looking across its southern border with envy. Its measly twenty-five jabs per hundred (a rate that was as low as seven just a couple weeks ago) is one of the lowest rates in the developed world.

In one of various efforts to try to fix the problem, Justin Trudeau’s administration has even elbowed developing nations out of line to access to the COVAX global vaccine procurement program — a move that should bring shame to any Canadian with a moral compass.

Across the pond, Britain’s vaccine rollout was supposed to have been bludgeoned by supply chain holdups resulting from Brexit and its accompanying refusal to participate in the European Union’s multinational approach to vaccine procurement. Yet it has enjoyed the best vaccination rate out of all major economies. As of last week, the country has likely reached herd immunity (an estimated 73.4 percent of the population are immune, combining the effects of both vaccination and previous infection). But most EU member states, as well-regarded on the US left as Canada is for their own variations on the theme of public health care, are performing little better than America’s northern neighbor, provoking the European Commission to threaten a vaccine export ban to the UK before settling on more modest but still spiky export controls.

The couple of EU countries that have done relatively well, Denmark and Hungary, have done so largely because they went their own way. Europe’s vaccine debacle has thus delivered the greatest blow to the bloc’s legitimacy since the eurozone crisis.

China, along with much of the rest of east Asia, had done so well to break the back of its spread last year, yet the country is not performing its vaccination any better than Brazil, where the health system has effectively collapsed. Likewise, the vaccination rate in other outbreak superstars like South Korea, Japan, Taiwan, and Vietnam remains in the low single digits — in the case of the latter two, not even breaking one dose per hundred people.

Israel has outperformed the world, hitting a hundred doses per hundred people in early March. A remarkable achievement with some practical lessons for the world, but also one that due to its dependence on a murky health-data quid pro quo with Pfizer, who offered a bountiful supply of vaccine in return for everyone’s private medical information, could not have been repeated by other nations. And its spiteful, epidemiologically stupid, and probably illegal decision not to vaccinate Palestinians under its occupation just about pips the Trudeau regime in cupidity.

Beating both Canada and Israel in the moral degeneracy sweepstakes, wealthy nations as a group are once again attempting to block language in a World Health Organization resolution that would allow developing countries to overcome patent protection and expand domestic vaccine manufacturing capacity. It is unsurprising therefore that distribution in the very poorest countries is simply not occurring at all. A recent analysis in the New England Journal of Medicine concluded that as a result of vaccine nationalism, some 80 percent of the population in these regions will not receive a vaccine at all this year, and that global herd immunity will not be achieved for another 4.6 years.

What explains these discrepancies in vaccine rollout? On the face of things, success and failure in vaccine rollout do not appear to map at all well to the political spectrum. Those countries with more left-wing governments cannot crow that their supposedly more compassionate approach has achieved superior vaccination outcomes to those nations with more conservative governments that typically favor a more laissez-faire economic framework. Certainly, the UK’s Conservative leader Boris Johnson has used the opportunity of his world-beating vaccine strategy to ventriloquize Wall Street’s Gordon Gecko, declaring: “The reason we have the vaccine success is because of capitalism, because of greed, my friends.”

But Boris is quite wrong. There is a political through-line running right around the world with respect to the vaccine rollout. It is indeed capitalism, or more specifically, forty years of neoliberal hollowing out of state capacity, but this is what is responsible for the great vaccine failure, not success. And where there have been victories, such as in the UK and United States, they have come about precisely to the extent that these governments have, at least partially, temporarily, been able to reverse the course of the ship of state.

That is, the debacle of the emerging Vaccine World War, and indeed the disastrous response to the pandemic more broadly, is primarily a story of neoliberal state failure. As we parse the explanations for the wide variation in vaccine rollout experiences around the world, it becomes clear that there has been a four-decade-long gutting of the Western state that has left governments largely incapable of performing their first, most foundational duty: protection of their citizens. Where there has been success, it is where there has been a partial or temporary reversal of this process of deterioration of state capacity, at least for this sector, or in locations where the fragilization of state capacity never fully took hold.

It is only through a restoration of state capacity, which requires a reestablishment of government authority firmly under the yoke of popular self-government, that we will ensure humanity does not repeat the slaughter, mass disability, economic dislocation, and abrogation of civil liberties we have seen under COVID-19 when the next pandemic arrives, as it surely will.

The Canadian Fiasco

To understand what the United States and UK got so right with their vaccine strategy, we first need to explore what Canada and Europe got so wrong, not least because the example shows how even those countries that have been relatively more resistant to neoliberalism have still suffered decades of neoliberal degeneration of state capacity, and how progressives need to be careful when they hold up countries like Canada or the Scandinavian nations as beacons of competent egalitarian prosperity.

This is particularly important with respect to the American situation, as Ottawa’s dereliction of duty potentially could be used by opponents of public health care in the United States to undermine Medicare for All advocacy. If Canada’s single-payer health care system is so great, they might taunt, why have so few Canadians been vaccinated compared to Americans? It must be stressed straight out of the gate that the fact that health care in Canada is free at the point of service has had nothing to do with the problem.

In summer 2020, Canada was one of the first countries in the world to sign contracts with Pfizer and Moderna, and by the fall, Ottawa had locked down sufficient advance supply agreements and other deals with other companies to deliver some 414 million doses of vaccine. For a population of roughly thirty-seven million, this would have been sufficient to deliver two doses to everyone in the country almost six times over — more vaccines per capita than any other nation in the world (later tallies would put the figure at “merely” four times over). The shopping spree was trumpeted with pride by the government, even as some such as Amnesty International thought it a Canada-first overkill that could limit access to poorer countries.

But in late November, Prime Minister Justin Trudeau had to dampen expectations, warning the nation that other countries would in fact be first in line. “One of the things to remember is Canada no longer has any domestic production capacity for vaccines,” he said during one of his regular COVID-19 press conferences. “We used to have it decades ago, but we no longer have it.”

A publicly owned medical research and therapeutic manufacturing facility, Connaught Labs, was established in 1914 in Toronto. It would go on to be recognized as a world-class vaccine research and development (R&D) and production outfit that passed on much of its output, including insulin, for free, at cost, or near cost. Indeed, when the United States lacked the ability to test and mass produce Jonas Salk’s polio vaccine, it was this Canadian outfit that initially filled that gap.

But in the 1970s, as the neoliberal revolution took hold in Canada as much as it did anywhere else in the Western world, Connaught Labs’ mandate was shifted from public health to profit-making, and in 1986 was privatized by the then-Conservative government of Brian Mulroney.

Unable to compete against larger multinational pharmaceutical giants, it was eventually swallowed up by French firm Merieux (now itself part of Sanofi). A private, Québec-based vaccine manufacturer, IAF BioChem, was no less squeezed and it was purchased by GlaxoSmithKline (GSK) in the 2000s. Sanofi and GSK still make vaccines in Canada, but decision-making about such production rests with their corporate headquarters outside the country.

Indeed, there has been tremendous consolidation in the industry far beyond Canada, and a wholesale retreat from private sector interest in vaccine manufacture and R&D (due to insufficient profitability compared to drugs servicing chronic diseases) over the past four decades. In the 1970s, there were some twenty-five major firms worldwide producing vaccines, but by the mid-2000s this number had declined to just five, according to the US Institute of Medicine.

The threat that the decline in domestic manufacturing capacity posed to vaccine supply in Canada did not go unnoticed in the clinical community. On at least five separate occasions, the federal government was warned by high-level bodies that domestic vaccine supply in the face of future pandemics was fragile.

The HIV/AIDS pandemic prompted the first such worries. In 1993, a Health Canada working group of some forty infectious disease experts meeting at Lac Tremblant in Québec, produced a long list of recommendations including the need for a national strategy for emerging infectious diseases, new public health infrastructure for pandemic monitoring and rapid testing, and a national vaccine strategy. But it was the era of a second wave of swingeing austerity in the country under the then Liberal prime minister Jean Chrétien, whose government cut social program funding by 40 percent compared to the 25 percent cut that had been perpetrated by the Tories.

In 1999, a conference of provincial and federal deputy health ministers warned of concerns over security of vaccine supply, and worked to craft a new vaccine strategy, but were unable to convince Ottawa to fund it. Then in 2002, the social-democratic premier of Saskatchewan, Roy Romanow, headed a major federal commission on the future of health care in the country. In his report, he too recommended a national immunization strategy.

After the 2003 SARS outbreak, caused by the virus SARS-CoV1, the annual conference of federal and provincial health ministers asked the then dean of medicine at the University of Toronto, David Naylor, to produce an assessment of what could be learned from this fresh pandemic. The report, which itself name-checked each of these previous dire warnings, dryly noted with respect to the threat to security of vaccine supply: “A decade later, very similar recommendations are repeated in our report.”

Finally, in 2010, the Canadian biotechnology industry association issued its own series of documents in the wake of the 2001 H1N1 Swine Flu pandemic on the state of the country’s vaccine environment. They similarly warned of the “unique,” “vulnerable,” and “fragile” vaccine supply situation in Canada, recommending that the federal government step in to ensure continued supply and prevent manufacturers from exiting the vaccine market with sufficient subsidies in what is a high-risk, low return on investment commodity.

Crucially, they recommended that the government simply pay for vaccine manufacturing capacity to sit idle, much like a fire department, in order to be able to ramp up in an emergency. (Of course, being private biotech firms, they would like the government to pay them to do the idle sitting around, although it would be more rational and cheaper for Ottawa to just establish a publicly owned vaccine R&D and manufacturing agency directly, a Connaught II.)

The Conservative opposition has decried Trudeau for his “gross incompetence” due to the loss of “vaccine sovereignty.” And it is true that when his Liberals returned to power in 2015, they were content to allow this growing pile of reports gather dust. But Trudeau was the sixth successive prime minister to ignore expert warnings over domestic vaccine supply, including three Tories.

But why are private vaccine manufacturing facilities easier to establish in the United States, UK, or Europe than in Canada?

The Public Option

We already know that both R&D and manufacture of vaccines, like that for antibiotics, is not substantively profitable compared to therapeutics for chronic diseases. Research into vaccines does happen, but primarily at universities or government labs, from which private start-up vaccine developers are sometimes spun out.

But these relatively small outfits do not have the ability to pay for trials or establish the extremely complex manufacturing facilities to actually make them. Production of a single lot of vaccines can take between one and two years, with up to 70 percent of that period devoted to quality control. Building a new facility typically has a lead time of three to five years, costing $100-600 million.

All this makes vaccine production not especially enticing to investors even in a large market like the United States (331 million people) or the EU (446 million). Canada with its 36 million people is just too small a market. It makes more sense to establish facilities in the United States and supply Canada from there.

Calls for a reestablishment of a public vaccine manufacturer initially met with snark from liberal commentators, suggesting this was an exercise in nationalist nostalgia. They note that the COVID vaccine bets of three of the biggest pharmaceutical giants, GSK, Merck and Sanofi, did not pay off. Pharmaceutical development is always something of a gamble, and so even if Canada had maintained Connaught Labs, there is no guarantee that it would have performed any better. And in fact the Canadian government did initially.

But this conflates the three separate risk-laden challenges of vaccine profitability: R&D, clinical trials, and manufacture. Even if a particular bet does not pay off, the maintenance of idle manufacturing facilities set to go during emergencies would enable (licensed) production of those vaccines whose bets did pay off. It is true that one size of factory does not fit all, so a variety of options would need to be maintained. Even if some amount of retooling were necessary, at least manufacture would not begin from a standing start.

To be fair to the Trudeau government, Ottawa did attempt last May to partner with a Chinese firm, CanSino Biologics, to have Canada’s National Research Council (NRC) run initial clinical trials on their candidate vaccine, Ad5-nCoV, that had been codeveloped with the Chinese military. Then, with $44 million from Ottawa to ensure their Montreal facilities met appropriate manufacturing standards, the NRC would also actually produce the vaccine. That is, Trudeau’s administration recognized, albeit once the horse had bolted, the need for domestic production.

But for some reason, three months later, Chinese State Council, the chief administrative body (headed by Premier Li Keqiang and roughly equivalent to a cabinet), blocked approval of transport of the vaccine candidate to Canada. This occurred at the same time as Chinese vaccine candidates were shipped to other countries, and the rationale remains murky to this day, but it is widely assumed that the decision is linked to diplomatic tensions between the two countries over the arrest of Huawei executive Meng Wanzhou.

Under pressure from Canadians unused to being bottom of the global league tables in anything health-related, Trudeau has since committed to “repatriating” vaccine production. A deal has since been inked with Maryland-based Novavax to manufacture its COVID vaccine domestically at the NRC, which has also received $126 million to upgrade its biomanufacturing capacity. It will start production in July, with the first jabs going into arms in 2022. The government is also throwing cash at the University of Saskatchewan for additional facilities expected to be online at the end of this year, and private firms in Vancouver (to be ready spring 2023), Montreal (late 2023), Winnipeg, and Calgary.

In the meantime, Canada still has to source the bulk of its vaccine doses from Europe, which has stopped short of a US-style export ban but has established export controls. A US-first vaccine policy was first established by Donald Trump and continued under the Biden administration, meaning American facilities just across the border cannot supply Canada. Trudeau has said he has received verbal assurances from the European Commission president that vaccines contracted to be supplied to Canada will continue.

And Trudeau’s discourse regarding “vaccine sovereignty,” rather than an understanding that it is the market that is the more fundamental cause of the problem, will still lead to issues down the road. Many public health experts regard the reestablishment of the Connaught model of a seamless chain of research, development, clinical trials, and production in a single, generously funded, publicly owned enterprise that concentrates best practice in one site as superior to what the Liberal Party has opted for: a dispersed network of companies across the country each performing different, uncoordinated roles. Some engaged in discovery, some in trials, some in product formulation, some in raw material production, some in “fill and finish,” some in packaging, and potentially with manufacturers responsible for their own monitoring of standards.

In addition, by giving small chunks of cash to lots of private firms instead of spending the allotted $1 billion on a single public service endeavor, funds are inefficiently distributed as each link in the chain extracts their own profit margin. And, most dangerously, each private link in this chain remains at risk of exit from production or from the country should greater profits result from such a move, leaving the same loss of domestic capacity to arise in the future.

When challenged by reporters as to whether Trudeau regrets not having adequately prepared the country by building Canadian facilities earlier in the pandemic (or even before the pandemic as so many experts had warned), he parried that there “is always more” that can be done, as if, sure, there will always be things our leaders get wrong. They’re only human.

But Canada’s vaccine debacle is not a one-off mistake that anyone could have made. Instead, the country’s experience is in line with more than four decades of neoliberal hollowing out of state capacity — the ability of governments to do things. It was not just vaccine manufacturing that stalled in Canada: the country had its own Personal Protective Equipment (PPE) crisis, common across the advanced Western states, and its test and trace system has to this day never really gotten off the ground. Vaunted policies were regularly delayed, severely crippled, or ultimately abandoned.

In British Columbia, the provincial administration has this past week given up on attempts at sequencing variants of concern. Governments that lose their ability to enact policy are called fragile states or, in extreme examples, failed states. We may be unused to using such terms when talking about the developed world. Canada is not Somalia; Europe is not Syria. Nevertheless, state failure is the most appropriate term to describe our response to the pandemic.

From Government to Governance

As British international relations scholar Lee Jones and Australian political scientist Shahar Hameiri argue in a recent paper comparing the UK and South Korean pandemic responses, to understand this state failure, we have to recognize how the command-and-control structures of economic planning that developed during wartime, and which were expanded in the postwar period, have been steadily unraveling since the 1970s. It is common enough to talk of the neoliberal revolution of the 1980s undermining social services and breaking the power of trade unions, but less frequently do we recognize quite how neoliberalism has fractured state capacity.

After 1945, state capacity developed through a Keynesian-Fordist political economic framework that positively intervened and directed. This involved nationalization of strategic industries, national development plans, and welfare programs. Many social democrats certainly ideologically endorsed this interventionism, but such planning in the postwar period in the West was embraced across the political spectrum not least because its steady reduction of uneven development and open-ended promise of enhanced living conditions worked extremely well as a bulwark against communism. As British Tory MP Quentin Hogg told the House of Commons at the time: “If you do not give the people reform, they are going to give you revolution.”

But by the 1970s, in addition to the well-known OPEC oil crisis of 1973, decades of steady wage increases and expansion of social programs had resulted in a crisis of profitability for the owners of capital. They had also produced a population-wide attitude of rising expectations that elites realized they now needed to tamp down. Wages restraint and social program cuts were the order of the day, provoking militant industrial action on the part of the trade unions. Elites complained of countries being ungovernable, and an “excess of democracy” that made it difficult to curtail spending and wages.

“Since the malaise afflicting the advanced capitalist societies was understood as unrealistic popular expectations from government and the economy,” argue Jones and Hameiri, “the policy response was to make government less ‘responsive to the people.’”

The story of how organized labour was broken, monetary policy was designed to provoke mass unemployment, and deindustrialization accepted or welcomed is a familiar one, descriptively recounted by scholars such as David Harvey. Trade barriers were removed and capital markets deregulated, allowing production to be shifted to countries with cheaper labor and weaker labor movements. This crushing of the trade unions by a thousand blows is often understood as part of the retreat from the postwar welfare state consensus alongside the austerity imposed on social programs.

Such an analysis is not wrong, but it overlooks other key rationales for the neoliberal revolution. In many jurisdictions, the corporatist institutionalization of trade unions that implicitly or explicitly viewed a successful economy depending on a balance between three equally powerful forces of state, business and labour, was also reversed. Privatization of state-owned industries such as coal, steel, electricity, and aviation was common. Monetary policy was taken out of the hands of elected officials and transferred to independent central banks. Trade agreements established secretive legal tribunals that could overturn democratically decided legislation, and the Bretton Woods system, whose purpose had been to support national economic development (in order to avoid a repeat of World War II), collapsed.

Responsibilities were transferred away from national governments downward to regional or municipal entities and upward to unelected transnational formations, in both cases often without adequate resources. Even as the authority of the central state was weakened, it did not follow that the authority of other layers of governance was enhanced.

The aim of all this was twofold: to solve the “crisis of an excess of democracy” through reducing responsiveness to popular demand through a “depoliticization” of decision-making, and to collapse citizens’ expectations of improvement.

As Jones and Hameiri note, central government retreated from active, command-and-control direct interventions in the economy to a distant, reactive, superintending role, depending more on broad regulations whose purpose was to establish markets as the primary instrument of governance rather than, as had been the postwar norm, planning. Even within what remains of public services, market mechanisms were introduced as purportedly more efficient mechanisms of allocation. They call this a shift from government to governance.

Nowhere has this shift been more pronounced than in the European Union.

Yet Another European Crisis

With a population of 446 million, the EU faces no challenges like Canada does with respect to attracting private vaccine manufacturing facilities and keeping them in its territory. Its internal market is the third largest in the world after China and India. But it still struggles with the same hollowing out of state capacity that Canada does; indeed its very structure has accelerated this process perhaps more than anywhere in the developed world. (The EU does also face the problem of the fundamental unprofitability of vaccines, but this is faced by all jurisdictions, so does not explain the difference between itself and the United States or UK.)

The United States and EU approach drug regulation in very different ways. The US Food and Drug Administration (FDA), formed in 1906, remains very much a product of the era of command and control despite many legitimate concerns over regulatory capture. To this day, drug approval in America relies on a strictly centralized process through a single agency, while the European Commission works to synchronize the regulations of twenty-seven different member states.

As a 2016 comparison of the two systems notes, the FDA was formed in essence as a consumer protection agency, while the purpose of the European Medicine Agency (EMA) is instead to harmonize interstate commercial interests while preserving national autonomy. Thus where the FDA benefits from a single set of rules and centralization, the EU approval process is diffused through a network of decentralized agencies.

The critique of some of the more nationalist Brexit supporters thus makes a significant error in critiquing the EU as a superstate: the EU simultaneously diminishes the authority of national states while not abrogating to itself that same authority. Authority is instead distributed and diffused, both everywhere and nowhere at the same time. The problem is less that the EU wants to be a state than that it doesn’t.

The failure of the European vaccine rollout compared to that of the UK, what in Germany is being called by the domestic press the “vaccine disaster,” has been cast by European Commission president Ursula von der Leyen and her outriders as a case of perfidious Albion refusing to share its AstraZeneca bounty with Europe now that Britain has left the EU.

In the face of widespread criticism of its vaccine failure, the commission has argued that the delay was also necessary to take the time to ensure that drug manufacturers assumed liability in their contracts; and that the European approval process is more rigorous than elsewhere and thus just takes a bit more time. In the most aggressive version of this claim, the Belgian deputy prime minister, Petra De Sutter, accused the UK of taking fewer precautions than the EU and having lower standards akin to those of Russian and China.

But the reality is that the delays are almost entirely a product of the EU’s post-democratic structure of governance rather than government. The baseless claim that Britain has lower safety drug approval standards only works to undermine confidence in vaccines on a continent that already has some of the  highest rates of vaccine hesitancy in the world.

According to Stephen Evans, a former expert member of the EMA’s drug safety and risk assessment committee, the assessment of lab data from clinical trials is “almost exactly the same” regardless of whether this assessment is done in the EU, the UK, or the United States. That the science is the same across these advanced jurisdictions actually shouldn’t be that surprising. Instead, he told Euronews that it is the additional administrative requirements of the EU that forces the EMA to take longer.

A vaccine has to be approved by representatives of every EU member state (as well as Norway, Liechtenstein, and Iceland, who though not EU countries participate in the EMA) before it can circulate anywhere in the bloc. In the case of COVID-19 vaccines, the bulk of the scientific assessment was performed by Sweden and France, but authorization and advice on authorization has to be shared by all member states.

A rationalization of this process, consolidation of the more than twenty-seven national drug approval systems into one FDA-like agency, would resolve this problem. But drug approval is far from the only object of governmental concern across the bloc for which rational consolidation makes sense. And such consolidation across multiple policy areas really would begin to transform the EU into more of a state, yet without the democratic legitimacy.

Without rehearsing the Brexit-Remain debate, which sharply divided the Left, what both Lexiteers and left Remainers generally agreed upon was that the EU does not meet bourgeois democratic norms. The commission, which initiates legislation, is unelected; the Council is a deliberative legislative body to which there are no direct elections and which conducts its business in secret; neither the European Court of Justice nor the European Central Bank (ECB) can be disciplined by any elected legislature; and the one directly elected European institution, the European Parliament, is essentially neutered, unable to initiate legislation, only able to amend laws for a limited range of fields, and has no genuinely Europe-wide elections.

The primary disagreement between Lexit and left Remain was over what was to be done about this: leave, or remain and reform. This lack of democratic accountability is not an accident but by design: The purpose of the European arrangement is, as per the neoliberal revolution’s core requirements, to insulate decision-making from the popular will by shifting it over to non-majoritarian bodies. Over time, the EU has become ever less majoritarian; in the wake of the eurozone crisis, for example, domestic fiscal policy (in essence, public spending) was now made subject to the veto of unelected officials, in addition to monetary policy (interest rates and money supply) already having been removed from democratic accountability in the eurozone via the existence of the independent ECB.

At the same time, because of this undemocratic structure, its mandate is very weak. It has assumed for itself the negative ability to regulate against, but has not really won the confidence of the European people to positively act for. It has no taxation powers; no substantive powers of fiscal transfer; and its civil service is actually, contrary to UK tabloid myth, pretty threadbare — numbering around thirty thousand staff, a complement normally sufficient for not much more than a mid-sized city. For comparison, the US federal civil service numbers almost three million employees.

In March 2020, a Hobbesian war of all against all broke out across much of the West as states scrambled to source PPE. EU member states closed their borders to each other — a shocking sight in the world’s largest visa-free zone — and went their own way to purchase PPE, ventilators and other medical equipment, oxygen, and therapeutics. France, Germany, Italy, and the Netherlands had formed the Inclusive Vaccine Alliance and locked down contracts worth some four hundred million doses of the Oxford-AstraZeneca jab, and France and Spain were going in together on the Moderna shot. Meanwhile smaller EU nations with substantially less spending clout looked on in horror. What was the purpose of an EU in such circumstances?

This third major threat to the bloc’s existence in a decade (following the eurozone crisis and the loss of its second largest economy, Britain) focused minds and by June, the commission had decided to purchase vaccines on behalf of the entire EU. In principle a noble idea, and a rational one: by clubbing together, all EU member states would be able to strike a better deal.

But the very structure of the EU, its extremely limited own funds, few staff, and neoliberal predilection against public spending drove the commission’s vaccine strategy to play hardball with vaccine manufacturers. Rather than spending whatever it took and worrying about the cost later, Brussels spent months winnowing the price down as if they were ordering photocopier ink cartridges. Further delaying the process, the commission insisted that the firms absorb liability, and so they refused early emergency authorization.

They had little choice with respect to such lethargic penny-pinching: the commission is not just ideologically predisposed to fiscal minimalism, but also sharply constrained by limited funds and a lack of mandate for expansive spending. This obsession over costs for liability from extremely rare side effects at a time when tens of thousands were suffocating in intensive care units also dovetailed with the widespread vaccine hesitancy that Europe suffers from, particularly in leading member state France. French Green MEPs meanwhile were fretting over how some aspects of vaccine development involved genetic engineering, and declaring that the vaccines will “inject GMOs” into you. Finally, the commission is unused to the practice of procurement as it procures very little itself.

As a result of these myriad sources of holdup, where the UK signed a research funding agreement with Oxford in February, 2020, and an early licensing agreement with the university as early as last May, the EU did not sign their contract with Oxford-AstraZeneca until August 27. During the spat between Westminster and Brussels over vaccine exports in March 2021, the commission and its defenders made hay of the fact that the British signed their full contract with the Oxford-AstraZeneca consortium on August 28 — actually one day after the Europeans. But the May licensing agreement shows Whitehall had been negotiating many months before Brussels had got started. The UK was also willing to pay almost double per shot what the EU would accept.

And, crucially, unlike the EU, the UK had begun actually working closely with the vaccine producers.

The Soderbergh Gambit

Across the Channel, the UK’s Conservative health secretary, Matt Hancock, had almost lost his job as a result of his country’s own PPE crisis. In an eye-popping example of state failure in the developed world, nurses had been forced to craft protective gowns out of garbage bags, and, in the absence of proper face masks, kludge full-face snorkel masks from diving shops into accepting medical respiratory filters using spur-of-the-moment designed 3D printed connectors.

As Jones and Hameiri note, privatization of key state responsibilities had long ago gutted the medical supply stockpile. In the mid-2010s, the procurement division of the UK’s ostensibly public National Health Service (NHS) had been turned into an arms-length corporatized entity, Supply Chain Coordination Ltd., under the direction of management consultancy Deloitte.

While this quasi-private limited company managed procurement, the actual task of procurement was outsourced still further to private companies via a patchwork of eleven separate contracts. A National Audit Office report found that these contractors themselves tended to just be middlemen, not actual manufacturers.

Similar to the dodgy PPE “broker” market that sprung up in the United States at the same time, where sketchy characters claimed to be able to locate and secure such equipment, these middlemen regularly failed to deliver what they had said they could source. But where the American pathology resulted from the irrationalities of market allocation in an emergency, where commodities are distributed not on the basis of need but on who can outbid the rest, the UK debacle was exacerbated by political scientist George Hoare calls a “Deloitte-ification” of the state.

Various units, divisions, agencies, and even departments of government have increasingly been replaced by a network of consultancies that parasitically absorb state revenues while providing little for their high fees. A minister dials a knob, pulls a lever on the great machine of state, but, like the placebo “close door” buttons on elevators, these knobs and levers are not actually connected to anything. Nothing happens. The placebo state — with its army of revolving door consultant-bureaucrats that move back and forth between civil service and consultant-land — only offers the illusion of control.

Deloitte-ification also explains the apparent paradox of how the neoliberal state can simultaneously reduce social provision while spending more: the fragmentary, opaque consultancy-public-private-partnership industrial complex ironically requires ever more byzantine bureaucracy at greater expense, even as much of this bureaucracy leaks out into the private sector.

As a result of Britain’s March PPE outsourcing disaster, which happened to take place just as government negotiations with Oxford and American pharma firm Merck were kicking off, Hancock reversed course entirely when it came to vaccine strategy. According to Sky News interviews with insiders in his department, he was reportedly struck by the ending of Steven Soderbergh’s pandemic thriller Contagion, where the arrival of a vaccine did not herald the immediate end of the crisis due to insufficient supply and so vaccinations occur on the basis of lottery.

Hancock saw the PPE crisis repeating itself with vaccine rollout and wanted to avoid a Contagion-like ending to his own pandemic tale. And so the ministry instead became very interventionist with respect to the vaccine supply chain.

Petrified that Trump would impose an export ban on vaccines manufactured in the United States, Hancock overruled what was very nearly a partnership between Oxford and Merck. Instead, the university went with the British-Swedish AstraZeneca in May. But much more crucially, Hancock opted for a much more hands-on supervision of the process than had happened with PPE. The department gamed out where there were likely to be issues, from glass vial shortages to logistics, solved such problems in advance of them happening, and then throughout the endeavor ensured that it was made aware of any hiccups with respect to different inputs as soon as they arose, and acted promptly to deal with such issues.

The European Commission would not merely be aghast at such interventionism in the market, even if it wanted to intervene, it would not have the tools to do so. Indeed, this is where the Canadian and European vaccine rollout intertwine: without the state shepherding of vaccine supply chains, European factories have repeatedly failed to meet production targets, and Canada’s vaccine strategy depended upon doses produced in those factories.

Beneath the saber-rattling at the EU level, some member states appear to have paid attention to what made the UK and US vaccine development and rollout process such a success, and are now taking a more interventionist approach. Sanofi has been asked to work with its competitor Pfizer to pump out more doses of the Pfizer-BioNTech vaccine, and BioNTech has taken over a Novartis factory in Marburg.

Meanwhile, the European Commission is pushing the creation of a Health Emergency Preparedness and Response Authority (HERA) by the end of 2021, and the strengthening of the European Center for Disease Prevention and Disease Control (ECDC) and the EMA. A key element of HERA will be the HERA Incubator, something akin to America’s Biomedical Advanced Research and Development Authority (BARDA). These are all welcome developments, but thousands have been unnecessarily infected, and died or been crippled by long COVID in the meantime.

To be fair to European Commission leaders, it is almost certainly true that had the EU not acted to purchase vaccines on behalf of the whole bloc, smaller nations — the Latvias, Greeces, and Slovenias — would likely have struggled to negotiate with pharmaceutical firms to acquire any faster access than what has occurred. But if Europe wants to match the speed with which the UK and United States have developed, manufactured and rolled out vaccines, its institutions need to develop a great depth of state capacity, including robust funding to enable industrial policy that delivers rapid and innovative vaccine development and manufacture. It follows then that the EU also needs a democratic overhaul, for this truly would be a European state. Such authority requires democratic legitimacy — or, to put it another way, such authority is derived from democratic legitimacy.

And yet, even as Brussels pushes to develop the HERA and its incubator, and boost the powers of the ECDC and EMA, it has also dusted off proposals for a European Health Union, which, if historic example is anything to go by, will likely simultaneously be a site of lobbying efforts for further privatization and Deloitte-ification of what remains of member states’ health care systems.

War Measures

The Trump administration was such an omnishambolic disaster that it feels strange to credit it for anything positive, but Operation Warp Speed (OWS) and allied industrial policy interventions will go down in history as one of the few things Western governments got right when facing down COVID-19. It was Trump’s one heroic act.

Under OWS, research funding and advance purchase orders removed the investment risk from vaccine development, and BARDA was backing research from as early as February 2020 before OWS kicked off. (The EU also spent a total of €3.6 billion on advance purchase agreements, but this is small pommes de terre compared to OWS’s $18 billion.)

This de-risking by BARDA and OWS, and the advance purchase agreements in the case of those firms that did not participate in OWS, was crucial. It, together with the expedited regulatory approval, use of the Defense Production Act (DPA) to prioritize contracts and in effect plan private investment, and operational supervision by military experts in supply chain management, delivered vaccines within months rather than the years that is the norm for vaccine development. And by taking the mRNA vaccine platform from lab bench through to commercialization, industrial policy — not the free market — made this technology viable after years of languishing in university labs while risk-averse investors were nervous about backing an unproven innovation.

Thanks to, well, thanks to Trump, it may soon be possible to use this revolutionary approach to vaccination to finally deliver a vaccine against HIV, or even that holy grail of pandemic preparedness: a universal flu vaccine, capable of defeating any strain of the virus without having to produce a new version each year. As the socialist policy wonk Matt Bruenig cheekily tweeted, from the viewpoint of effective altruism, this single move could make Trump the greatest US president in history.

Vaccine manufacturing. (Flickr)

Of course, the vaccine rollout did initially falter in December as Trump had failed to draft a federal distribution plan while he focused all his energy on overturning the results of a democratic election. But the incoming Biden administration to their great credit listened to logistics experts who had recommended an even more aggressive application of the Korean War–era DPA to supervise production and supply chains.

The DPA gives the executive the power to allocate materials, services, and facilities, and award contracts that take priority over any other contracts, “to promote national defense.” It is a wartime measure that in effect allows the government to appropriate from private decision-makers the right to allocate investment. And we are at war with the virus. Trump invoked the act eighteen times to assist OWS, and Biden has only expanded its use. The new administration has, for example, invoked the act to assist Pfizer acquire equipment to expand production, and to broker (force?) competitors Merck and Johnson & Johnson to work together to expand production of the J&J vaccine.

“This is the type of collaboration between companies we saw in World War Two,” said the president, a reference to the Roosevelt administration’s ordering of rival chemical firms to work together to produce the first antibiotics ready for the D-Day invasion. The DPA has also been invoked to upgrade Merck facilities, to command J&J manufacturing facilities to run 24/7, and to expedite supply of vaccine ingredients and equipment inputs.

The Department of Defense is providing daily logistical support to the same firm. Biden thanked the two companies for “stepping up” and being “good corporate citizens,” but they really didn’t have any choice. On the delivery front, the administration has also helped set up additional vaccination centers and worked to radically expand the use of retail pharmacies as vaccine clinics.

One of Biden’s senior COVID-19 advisers, Andy Slavitt, described the intervention well. “We keep asking the vaccine makers, ‘Do you have enough of this, do you have enough of that?’ Eventually they might say: ‘Actually it turns out that in three weeks’ time we won’t have enough people to do quality checks on packaging,’” he told the Financial Times. “That’s how we have been able to establish a rhythm of anticipating the problems before they occur.”

Britain and the US may have performed egregiously with respect to spread of the virus, testing, tracking, PPE, and a dozen other metrics of pandemic response, but with respect to vaccine development, manufacture, and distribution, one has to concede that the pair have performed very well.

And yet neoliberal hollowing out of state capacity has affected these two nations as much as any other Western country. Indeed, it is precisely this collapse in state capacity in the United States and UK that is primarily responsible for the failure with respect to these other pandemic response metrics. Jones and Hameiri describe in great detail the utter failure of the UK’s test-and-trace system and the decades-long gutting of NHS capacity that resulted in the discharge of some twenty-five thousand elderly people from hospitals, likely seeding the disease in hundreds of senior care homes.

What this contradiction tells us is that the withering away of state capacity is not an inevitability. It can be reversed. A much-reviled Tory health minister and a hard-right, none-too-bright Republican president surprised everyone by pulling off a pair of extremely interventionist vaccine strategies straight out of the wartime and postwar étatiste playbook — an Apollo Program, but for a pandemic.

The reversibility of neoliberal state failure is most clear with respect to East Asia, which has experienced the greatest success in suppressing the virus.

Neoliberalism and the East Asian States

China’s vaccine rollout appears to be much slower than even that of Europe, as does that of other East Asian nations, but this is largely the product of how effective these states were at containing the spread of SARS-CoV2. China suffered its biggest outbreak in two months at the start of April: a mere fifteen cases, in a city on the border of Myanmar. Otherwise, life has pretty much returned to normal.

With no urgency to vaccinate, this gives Beijing the freedom both to focus on accessing vaccines more cheaply, and to use its stock of domestically developed jabs for vaccine diplomacy. Almost as many doses of Chinese vaccines have been distributed outside the country to places such as Brazil, Chile, and Indonesia, as internally. Indeed, thanks primarily to China’s Sinovac vaccines, Chile has not just led Latin America in vaccinations, but sits in the global top ten.

Many commentators have credited authoritarianism in the region with East Asia’s COVID-19 suppression victories, arguing that we Westerners with our open societies could never suffer such infringements of civil liberties. The immediate response to this is that of course civil liberties, in particular freedom of association and freedom of movement, have been eviscerated across the West via the spectrum of lockdown measures anyway.

This is not to defend such authoritarianism, but to note that it cannot explain East Asia’s success if we Westerners have repeatedly placed our societies under house arrest yet have not suppressed the virus. In addition, while the People’s Republic of China is undoubtedly an authoritarian, panoptical surveillance-happy, one-party regime without a free press, freedom of expression, free trade unions and so on, we cannot say this is true of South Korea or Taiwan.

Instead, we should look to these countries’ maintenance and even enhancement of state capacity to explain their success. Despite the increased market orientation of China since 1978, no one can doubt its state’s powerful capability to act. It famously built out two fifteen hundred–bed hospitals in two weeks in Wuhan last February.

And Jones and Hameiri note how South Korea, Singapore, and Taiwan have an extensive history of being developmental states that despite moves toward neoliberalism, especially since the 1997–98 Asian financial crisis, retained strong central agencies with substantive infrastructural power and capability of quickly mobilizing resources and manpower at will, in part due to the need to maintain such ability to act in the face of military threats from China or North Korea.

They note how South Korea’s command-and-control capabilities worked well to locally suppress the 2003 SARS pandemic but then following a fragmentation and privatization of essential elements of its health system in the 2000s, the country suffered the world’s second worst response to the MERS coronavirus outbreak in 2015.

In response, the government reversed these neoliberal reforms, recentralized its health authority, enhanced the powers of the Korean Centers for Disease and Control, and created two powerful new agencies responsible for outbreak investigation and response. The country ramped up funding for hospitals, laboratories, and isolation facilities; hired a raft of new infectious disease experts and associated staff; stockpiled PPE; and intervened to maintain a domestic PPE manufacturing base. State supports had also backed development of molecular diagnostics, permitting the mass production of COVID-19 testing kits for domestic use in clear contrast to how often Western testing systems barely functioned. So successful was this policy that by April, South Korea was supplying the world with COVID tests.

The two scholars make a strong argument that it is not authoritarian states that have performed best amid the pandemic, but authoritative states: “those best able to mobilise people and resources thanks to strong political and institutional relationships with the societies they govern, and the associated retention of substantive state capacities.”

The venerable liberal Hegelian herald of the End of History (turned something of a social democrat), Francis Fukuyama, likewise has argued that the pandemic has reminded us that “it takes a state,” and that those countries that will prosper moving forward are those that retain strong state capacity and those with weak state capacity are likely to stagnate.

The Type of State We Need

There is something of a sting in the tail here for the Left, however. If the disaster has been a failure of state not a failure of particular governments or parties, then it follows that if the Left had been in power, due to that hollowing out of state capacity, it would have been in much the same situation in the absence of being willing to rebuild that capacity.

Trump, Hancock, and Biden show that this is feasible, but even here, their success was ad hoc, partial, and a temporary measure only applicable in an emergency. There was no underlying analysis that government needed to be rebuilt after four decades of being “drowned in a bathtub.” And the Left hasn’t yet made many arguments about state capacity either. The Left must once again get comfortable not merely with discourse of social program expansion and expansion of unionization, both of which are essential, but also with conversations about state capacity, the developmental state, economic planning and innovation, and industrial and technology policy.

Fukuyama also emphasizes the importance of citizen trust in their leaders. There is something here too, but it misunderstands the causal link. Jones and Hameiri’s stress on the strong institutional relationships with society understands it better. If the collapse in state capacity over the past four decades across much of the West is the product of a conscious effort on the part of elites to solve the 1970s “crisis of rising expectations” by steadily removing great swathes of decision-making from democratic accountability, then the restoration of state capacity has to pass through a restoration of democracy.

A fully democratic state is one in which the government stands not over and separate from the people, but is simply the creature of the people. Indeed, at this point, the distinction between the people and the state would begin to disappear. This is what should be understood as the old Marxist prediction that the state will wither away under socialism: not that there will cease to be government — authoritative, complex organization of material and human resources — but that a distinction between governor and governed would no longer have meaning.

The fight for state capacity and an end to neoliberal state failure thus is not a call for a renewed statism, but rather a rallying cry for a new, global movement for real democracy.