July 13, 2022 - 4:00pm

Many of those who opposed lockdowns for the pandemic, predicted that the policy — if normalised — could one day be taken advantage of by opportunistic political forces to deal with almost any crisis. It was, as Lord Sumption once suggested, a potential pathway to authoritarianism. “If we confer despotic powers on government to deal with perils, which are an ordinary feature of human existence, we will end up doing it most or all of the time,” he wrote in November 2021.

Well, we are now facing just such a crisis. And there is a not insignificant chance that lockdowns might be revived, not just as a knee-jerk reaction to cope with a prevailing health crisis, but also, troublingly, an economic one. 

The monkeypox health scare may have failed to get traction, but as Covid cases begin to rise again, the slow beat of pro-lockdown messaging is beginning to circle again in the mainstream media. 

For now, the public remains far from receptive. But this could change as soon as energy shortages and supply chain issues begin to bite this winter, which they surely will. The public has already been primed to believe that lockdowns were great for generating energy savings. We saw the evidence of that with our own eyes. Traffic jams disappeared. Oil prices went negative. Air pollution reversed.

In the face of late Soviet-style chaos on the streets, unconstrained inflation, not enough electricity to heat the homes of the vulnerable, the prospect of order emanating from the “temporary” suspension of a market economy might seem appealing.

It’s even easy to predict the messaging that might feel compelling: ‘Stay Home. Don’t queue. Save Energy.’ Or, ‘Bread and energy is cheap if you stay home!’

But here is why we must not fall for this line of logic. Planned economies are what got us into this mess to begin with. Covid, the war in Ukraine and sanctions against Russia may have all added accelerants to the fire, but the smoulders were burning ever since the 2008 global financial crisis nearly brought down the system. It’s just that the consequences of papering over the flaws in the system rather than properly addressing them only became visible in late 2021. 

It took 70 years for the communist system to fall apart under the weight of its own capital misallocation. We’ve managed to achieve it in about 14 years. At the heart of the problem is the poorly thought-out subsidisation of negative-sum business models propelled by excessive cheap money in the system. 

In the communist period, this sort of misdirection was the fault of state bureaucrats who had no idea about what people really wanted. This time it’s been driven by deep-pocketed Western venture capitalists who became convinced that outsized rents from monopoly interests could compensate for short-term non-profitability.

That’s not to say the market economy is perfect or free of its own negative externalities. It definitely needs political guidance and a moral backbone to stay on course. But locking people down is not the answer. This only addresses the symptoms, not the cause. 

Our best path out of this mess is to keep the system as free as possible so that the people themselves can innovate their way out of trouble. Necessity, as they say, is the mother of invention. Allowing human ingenuity to thrive in a free system is our best chance to solve our economic woes.

Izabella Kaminska is the former editor of FT Alphaville and founder of The Blind Spot.