Medaille and Manufacturing

By Gerald J. Russello for FRONT PORCH REPUBLIC

This is the second piece in a symposium on John Medaille’s Toward a Truly Free Market.

Want more? Please visit the American Conservative to read Russello’s original review of Medaille’s book. Visit their website to donate or for other articles like this one.

New York, NY. As I mention in my review of John Médaille ‘s excellent book, he has clarified a point that regularly bedevils discussion of distributism. Distributism is not a third way between two alternatives, taking items from capitalist menu A and socialist menu B. It is instead a completely different way of thinking about the human person and therefore about economics.

The book does a great service in dismantling economic shibboleths about trade, money, labor, and markets, and then reconstructing them along different premises that conform with both human happiness and economic efficiency.  I also thought his judicious use of the actual word “distributism” was on the mark. It has become something if a distraction for people.

I’m grateful for the opportunity to join in this conversation about Médaille ‘s book, not least because it allowed me the opportunity to read through it once again; I found the argument even more engaging the second time around. In light of my expressed admiration for Toward a Truly Free Market, though, I would like to use this post to further explore some of Médaille ‘s arguments.

The issue I want to address is one of scale in the context of industrial manufacturing.  This question can be perplexing for distributists, because thinking about the modern economy lends itself to gigantism.  The conventional wisdoms during the financial crisis that there are enterprises ‘too n big to fail” is a reflection of our incorrect assumption that big companies are needed in a modern economy, and that they should share with the government control over the economy.

Médaille devotes a section of his book to the dysfunctions of modern corporate organization, and expertly dissects many parts of its internal structure.  He notes that corporations, internally, are really planned economies with the same inefficiencies and bureaucratism that a planned economy has.  Médaille writes “[a]fter a certain size [the corporation] becomes indistinguishable from a planned economy, and converts what should be a ‘free market’ enterprise into a bureaucratic structure that suffers form all the problems of a socialist state, with none of the benefits.”  Part of this is of course because government power helps the growth of corporations, and the increased power of large corporations assist the growth of a centralized state.  Together, they create economic monopoly and political servility.

However, the next stage of the analysis I would like to see Médaille undertake (perhaps in his next book?) would provide some more detail on the appropriate scale of corporate manufacturing enterprises.  His examples of Mondragon Industrial Corporation and the farms of Emilia-Romagna make the point that distributism can work even in the manufacturing sector and even on a large scale.  But those examples do not exhaust the rage of corporate structures.  His emphasis on general-purpose machinery, “machinery … that the factory can shift easily from product line to product line, as demand dictates, without excessive retooling costs,” may not apply to every enterprise.  I am thinking here of perhaps machines used to make specialized medical devices or unique product lines that do not lend themselves to general purposes.  Does Médaille nevertheless see a role for larger-scale enterprises with such specialized machines?

Behind his argument for general purpose machinery and flexible manufacturing is Médaille’s distinction between supply-push and demand-pull manufacturing.  Supply-push manufacturing relies on advertising to stoke demand, even as it drives down the price of those who work and who are presumably expected to purchase the products churned out.  In a startling image, Medaille describes this system as producing ‘landfill,” racing from consumerist objects to garbage, replaced by the next new thing.  What Médaille proposes instead is demand-pull manufacturing, which relies on smaller-scale distribution networks and a social as much as an economic relationship between producer and consumer.

While these systems may work for some industries, distributists, as an economic matter, may need to address whether there is room for larger-scale manufacturing, even if it does not conform to the supply-push model.  Such larger-scale production does have surface appeal, especially if it is joined to an argument of seeming scientific import.  For example, Médaille would argue for support of local agriculture on economic as well as social grounds, and that large-scale agribusinesses should be discouraged.  That view is now becoming increasingly common even among “green” liberals.

Agribusiness is not without benefits, however. Because of it, people can now enjoy fresh vegetables and fruit all year round. Nevertheless, the economic costs of that enterprise need to be brought to the fore, in terms of both the inefficiencies imposed by the heavy government involvement in agribusiness, as well a the fact that advertising promotes not healthy food produced by agriculture, of whatever size, but endless streams of chemically-engineered foodstuffs.

Toward a Truly Free Market provides some of the tools for answering these questions, and will be a rich source of reflection and further work as we search for a way out of the current economic malaise.

Gerald J. Russello is a Fellow of the Chesterton Institute at Seton Hall University.

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