Unrestrained badly regulated capitalism kills

By AnthonyLast updated: Thursday, September 18, 2008 • Save & ShareOne Comment

Capitalism kills. There is no better example of that principle than in China. The most recent example in the news tonight is that of contaminated baby milk.

China says it will launch nationwide testing of all dairy products following the deaths of three babies from contaminated milk formula.

More than 6,200 babies have fallen ill after drinking milk tainted with the toxic chemical melamine, officials say.

Tests have shown that 69 batches of formula from 22 companies contained the banned substance.

The Chinese government has described the dairy market as “chaotic” and said its supervision is flawed.

Two of the companies involved have exported their products to Bangladesh, Yemen, Gabon, Burundi, and Burma, although it is not clear if contaminated batches are involved.

The New York Times note that:

Last week, Sanlu ordered a belated recall of its milk powder even though Chinese state media have reported that some parents had been complaining of problems since March.

There are occasional problems with European manufacturers in terms of contaminated product, but the fact the Chinese milk contamination occurs in 22 companies points to severe systemic problems in the Chinese manufacturing sector, and a failure of Chinese regulation. This is not a new issue. China has had several incidents in the past that would have led any other country to take vigorous regulatory action. In China the modus operandi is to pretend nothing is happening, and to attempt to cover-up problems.

In 1995-1996, 109 children were poisoned by a paracetamol syrup produced by a Haitian manufacturer. The product’s glycerin ingredient was contaminated with diethylene glycol. Over 90 died after suffering renal failure, hepatitis, pancreatitis, central nervous system impairment, and coma. The contaminated glycerin was manfactured by a state-owned manufacturer in China. An attempt by the US’s FDA to investigate the background to the tragedy was blocked by deliberate attempts to deny access to the firm, and the destruction of medical records. The Chinese shut the plant down, and deny responsibility.

In 2003-2004 a previous baby milk scandal hit China, with a couple of hundred babies harmed. Thirteen children died. That time the problem was related to baby milk with zero nutritional value. Babies where starved to death, while parents unwittingly “fed” them with milk. Again the problem was widespread and deliberately ignored by authorities.

Investigators blamed illegal manufacturers throughout China for the problem and reported that 45 brands sold in Fuyang and elsewhere were substandard. But as the government-controlled news media hailed Beijing’s response, another fact became known. Reports of the problem had been percolating in Fuyang for almost a year without any significant action being taken. A few parents like Mr. Zhang had even pressed local disease control officials to test packets of formula. His packet contained only 2 percent protein; the national standard is about 12 percent.

However, as the Haitian diethylene glycol case showed, China’s exports in a global market can spread widely.

In 2006 doctors in Panama started to note patients with unusual symptoms, which they intially thought was Guillain-Barré syndrome. But the cases were coming in thick and fast, with a 50% mortality rate. Guillain-Barré is rare, too many cases were arriving. A war room was constructed, patients were segregated in case of a new infectious disease. And then something was noted.

One patient of particular interest to Dr. Sosa came into the hospital with a heart attack, but no Guillain-Barré-type symptoms. While undergoing treatment, the patient received several drugs, including Lisinopril. After a while, he began to exhibit the same neurological distress that was the hallmark of the mystery illness.

“This patient is a major clue,” Dr. Sosa recalled saying. “This is not something environmental, this is not a folk medicine that’s been taken by the patients at home. This patient developed the disease in the hospital, in front of us.”

Soon after, another patient told Dr. Sosa that he, too, developed symptoms after taking Lisinopril, but because the medicine made him cough, he also took cough syrup — the same syrup, it turned out, that had been given to the heart patient.

“I said this has got to be it,” Dr. Sosa recalled. “We need to investigate this cough syrup.”

The cough medicine had not initially aroused much suspicion because many victims did not remember taking it. “Twenty-five percent of those people affected denied that they had taken cough syrup, because it’s a nonevent in their lives,” Dr. Motta said.

The cough medicine was found to contain diethylene glycol – sourced from China. Over 300 people are thought to have died. Perhaps more, because poor people may have died who were not receiving medical treatment.

Given the secretive nature of the Chinese government, one can only imagine the unreported tragedies that have been swept under the carpet, in the absence of a free press.

There have been similar problems with toothpaste. Last year, there were concerns about melamine use in animal feeds produced in China. Melamine is the toxin today’s contaminated milk story. The reaction of the Chinese firm is telling:

However, Kaiyuan Protein Feed’s Wang said his customers either don’t know or aren’t concerned about the melamine.

“We’ve been running the melamine feed business for about 15 years and receiving positive responses from our customers,” Wang told The Associated Press.

China runs an unrestrained capitalist system, akin to the worst form of 18th and 19th century capitalism the West once had – and which ironically, given the Chinese government’s nominal communist tag, led to Marx’s critique of capitalism. Eventually, such practices in Western Europe and the US were controlled and stamped out by government action, and the pressure of public opinion. An open critical society and developed civil society is essential to reign in excessive abuses of capitalism. The famous 1938 Massengill case (105 deaths from diethylene glycol) led to major changes in US drug regulation. China have caused several Massengill’s at home and abroad, and yet nothing has been learned.

It is not clear how a secretive and authoritarian regime such as exists in China can move this forward. Widepread corruption, ruthless profiteers, party members and the bureaucrats are all intermingled. What is left of China’s communism is trapped in a death grip with capitalism, unable to provide sufficient public freedom to criticise. Without such freedoms no safety improvements will be seen.

Of course, globalisation and China’s vast contribution to means that external pressures can be brought to bear. In the current baby feed scandal it was external government pressure that led to action.

Fonterra, the New Zealand conglomerate that owns a 43 percent share in Sanlu, said it first learned last month that the Chinese company was selling contaminated powder. On Monday, New Zealand officials blamed local Chinese officials for failing to take action until the New Zealand government contacted the central authorities in Beijing.

The prime minister of New Zealand, Helen Clark, said Fonterra officials had been “trying for weeks to get official recall, and the local authorities in China would not do it.”

Of course China will do the “right thing”. Noises about arrests are already being made. So far 22 people have been questioned by Police and 6 arrested. Some will be guilty of deliberate contamination for profit. Others will be scape goats. The last head of the Chinese FDA was executed in 2007. I wrote at the time:

China undoubtedly has a problem, which they export. Executing scapegoats is not going to solve it, although it is probably effective at deflecting attention away from the Chinese government and any systematic failings of state regulation.

I expect to see more of the same; but the main treatment should be freedom and openess.

One Response to “Unrestrained badly regulated capitalism kills”

Comment from Ken
Time 18/9/2008 at 12:33 am

Many of the problems in China would have been present before capitalism, just that now the consequences are felt beyond their borders and are observable by the rest of the world. Socialism isn’t the most people friendly system either. In China capitalism is for the benefit of the Chinese communist party.