Gerald Russello reviews our own John Medaille’s primer on distributist economics Toward a Truly Free Market:
Distributism is often misconstrued as a “third way” between capitalism and socialism, taking the best of both but modulating their excesses. This is incorrect. As Médaille shows, distributism is not so much — indeed not at all — a “third way” between different approaches but a different road entirely. This is in part because capitalism and socialism are not themselves separate ways. Marx and Hayek both contended, for example, that should their views be adopted, the state would wither away. Instead, under either communist regimes or capitalist economics, the growth of the state has increased, and with it has come increased reliance on centralized power and a crushing debt burden. That a similar result occurs under putatively “free market” or “socialist” policies derives from the fact that both views rely on a similar view of the human person as only an atomistic, consuming entity.
Dissatisfaction with this distorted view is building. Médaille’s work joins other recent economic thinking that is challenging the very basis of the contemporary economic order, such as Stefano Zamagni’s work on the “altruistic” economy and his critiques of the standard economic models of human behavior. Writers like Timothy Carney have shown in detail how, contrary to accepted nostrums, big government and big business go together, and indeed that business prefers bigger government to keep out competition and increase their access to subsidies and other benefits. Neither supports real economic growth or the protection of liberty.
Similarly, Médaille argues that capitalism and big government must go together. Without government intervention, capitalism is unstable. Since 1953, Medaille argues, the economy has been in recession approximately 15% of the time, as opposed to almost 40% in the preceding century. The dividing line, he argues, is the imposition of consistent Keynesian policies to balance aggregate supply and demands. Greater amounts of government intervention were needed to stabilize the economy over the last five decades. As current events may be bearing out, this situation is untenable. Some other solution is needed.
This might suggest that Médaille is in favor of government intervention, but he is not — at least, not exactly. His bias is always for the smaller and more local, so smaller communities can contain costs, reduce corruption, and not cede their liberty to a larger state. Médaille begins with the community of the family and not, as is typical of modern economic thought, with an atomistic, utilitarian individual. Modern economic theory, Médaille argues, improperly rests on the “stork principle”; that is, economics begins with full grown workers and does not ask how they got there. Despite the protestations of the conservative movement, this makes capitalism fully compatible with a Rawlsian secular liberalism, for whom the adult, rational citizen simply emerges from behind the “veil of ignorance.” Because of this glaring error, economics cannot accurately distinguish production for exchange from production for use. Indeed, “economic theory simply has no way to account for production for use, even though it is actually the whole point of production for exchange.” Most activities within the family are production for use — providing dinner, safety, and education for children for example — and are almost invisible to most economic analyses.
I am not convinced that the Austrian School doesn’t have the better argument, but the distributists bring a vital perspective and there is probably no better place to start hearing it right now than Toward a Truly Free Market.