Chapter I: What's in a Name?

This is the first chapter of my new book, The Political Economy of Distributism. As promised (or threatened) I will post the book a chapter at a time as I write it to get feedback for the final edition.


The most important thing, the first thing, in understanding anything is to get the name right. If you and I were to have a conversation on any subject, say horses, and you were to refer to them as “dogs” and I were to call them “cats,” there is a good chance that some misunderstandings might arise, misunderstandings that could never be resolved until we decided to agree on a name for the thing we were talking about. This book is an attempt to make clear certain matters concerning the material relations between men, and to correct what I see as the greatest errors in the field that deals with these matters, the field known as “economics.” But before I could correct anyone else’s errors, I had to correct my own. This book started with an essay that was published in The Distributist Review, an essay entitled “The Economics of Distributism.” But as I searched the text for errors, both theoretical and grammatical, I suddenly realized that I had missed the biggest error of all, and that error was the very title. This book, which grows out of that essay, has a slightly different title, but in that slight difference is a world of difference. I let the title of the essay stand, because economics has become the term under which most men recognize the topic, and because I did not have space to explain the difference within the bounds of the essay. But in a book, even a short book like this one, I may at least make the topic clear, even if I can do nothing else. And my topic is political economy, which is to say, the only kind of economy that actually exists.

Economics vs. Political Economy

Economics is, of course, a discipline which has an enormous amount of power and prestige. But one thing it does not have is a history, or at least not much of a history; the term “economics” is of comparatively recent origin. None of the great political economists of the 19th century were familiar with the term “economics.” For Adam Smith, David Ricardo, Karl Marx, Jean-Baptiste Say, Nassau Senior, John Stuart Mill, etc., their science was political economy. In fact, the 20-volume Oxford English Dictionary, begun in 1878 and completed in 1928 and meant to be the final word on all English words, does not even have an entry for “economics,” neither in the main portion nor in the supplement. Given the recent provenance of the word, it is important to understand how and why it got here. The term, in its modern sense, may have first been suggested by the British Prime Minister Benjamin Disraeli in 1844 as a way of separating the political economy from the pesky topic of morals. It did not gain any currency until 1890 with the publication of A. E. Marshall’s Principles of Economics, which begins, “Political Economy, or Economics, is a study of man's actions in the ordinary business of life….”[1] Note that Marshall uses the old term before the new one and makes them out to be synonyms.

But if they were synonyms, there would be no reason for the change. The difference between the terms is that the political economists saw their science as a humane science firmly embedded in human institutions. The new “economists,” on the other hand, saw their discipline not as a humane science, but as something on the order of the physical sciences, which operate independently of human intentions. They wished to “free” the discipline from all social contexts. Of course, the first casualty of this “freedom” was freedom itself, since the markets were now moved in the same way as were the stars: by inexorable forces whose course no man could alter. It is ironic to hear otherwise intelligent men speak of the “free” market while denying its very freedom.

The problem with the new economists is not so much that they were wrong, but that they were very nearly right. There are certain tendencies in human beings that allow us to make law-like statements. People do tend to buy more of a product when it is cheaper, and they tend to make more of that product when it is dearer; between these two tendencies, we really can posit supply and demand curves, and we can, at least in the abstract, discover the equilibrium point between these tendencies. And while the result of our calculations will not be a “law” in the sense that gravity is a law, in that it cannot be violated, it will be law-like: that is, useful enough for us to give useful descriptions of a particular economy. All of this is true. But the real difficulties in human thought come not so much as an argument between truth and error (pure error is too easy to spot), but between greater truths and lesser truths. Correct thought is a matter of arranging truths in their proper hierarchies, of not allowing a lesser truth to displace a greater, or of not reducing all truths to one truth. This last error is the besetting sin of economists, because to make economics work as physics works, guided by physical measurement and ruled by pure mathematics, they had to reduce man to a physical object in a world of physical objects. They had to reduce man’s labor to a mere commodity, purchased at the lowest value like any commodity; they had to reduce man to an economic calculator, the mythical homo œconomicus. Mostly, they had to divorce the economic question, as Disraeli desired, from any question of ethics. But one cannot found a science on a myth. Nor can one reduce man to something he clearly is not, or at least not completely. Man occupies a moral universe as well as a physical one, and to ignore the place he occupies is to lose the man and hence lose the science. Man, in his relations with other men, is guided by whatever notions of justice he has. Even the man who claims to divorce the questions of morals from the economy will always be attempting to give a moral justification for his actions; the plutocrat who exploits his workers will rationalize it by claiming that in the end the exploitation adds to the commonweal, or that he is just acting under the forces of “economic” nature. But if there is no question of justice, why bother to justify it?

Without understanding the nature of man, we cannot hope to understand the nature of his economic relations. The new “scientists” hoped to trade good justice for better science, but it was a bad bargain; in losing one they lost them both. In losing the ability to properly describe their subject (the human person) they lost the ability to properly describe anything about him, and most especially his economic systems. They ended up not with a science, which could serve as an arbiter of questions disputed under the terms of the science, but as a series of warring ideologies among which there can be no arbitration, indeed no communication, because they have no common terms among them, no common understandings.

I want to be very clear here that I am not denying economic science. Indeed, I am affirming it. But I am denying that it is a physical science; I deny that it can draw its proper methodology from physics or astronomy or chemistry or any other physical science. I affirm that it must be a humane science and use the methods of those sciences. In a later chapter, we will delve more deeply into the implications of this. For the moment, we can say that the humane sciences all rest in some vision of human justice, because justice is the virtue that regulates proper relations between man and man, between a man and his society. And if we lose justice, and most particularly distributive justice, we lose any hope of science; indeed we lose any hope for society. Here then, is the over-riding theme of this book: Economics, or more properly, political economy, cannot be a proper science unless it is a humane science; to be a humane science it must embody some notion of justice, and particularly of distributive justice. Indeed, as a practical matter, as well as a theoretical one, there can be no balance between supply and demand without distributive justice; the moral question and the “economic” question are, in reality, one question. Economic equilibrium cannot be divorced from economic equity, and the attempt to do so will lose both equity and equilibrium; the economy will be unable to balance itself, and so will fall either to ruin, or to ruinous government attempts to redress the balance.

The Failure of the Distributists

Although this book must be a critique of modern economics, it must start with a critique of modern distributists. I say “modern” distributists because distributism itself is nothing more than the rediscovery of an older view of economics. Until the 16th century, there was no real dispute that economics was a colony of ethics, rooted in the political order and dependent on distributive justice. No philosopher or theologian worthy of the name, beginning with Aristotle, was without his economic commentary. He felt it merely part of his natural function to comment on the real affairs of real men, and the economic and political orders were simply part of that commentary. So very nearly the full weight of human opinion, taken as a whole, comes down on the side of the distributists. While distributism adds to modern economics precisely what it lacks to become to a real science—the science of Political Economy—distributists themselves have often been reluctant to put their case in economic terms. They have often argued from moral terms; they have placed their arguments in the necessary connection between free property and free men; they have argued on agrarian terms, on the natural rhythms of life and social order often disrupted by modern capitalism; they have argued from Catholic teaching and the social encyclicals. But on the whole, they have been unwilling or (I’m afraid) unable to enter the economic debate on purely economic terms.

This is not a new problem. G.K. Chesterton and Hilaire Belloc, though they had an intuitive feel for political economy, lacked both the training and the interest to formulate a purely economic theory. Belloc’s The Servile State was a shrewd critique of the economic order of his day, and it has proved prophetic about the decay of that order into a quasi-socialist order, dependent on big government, which is itself dependent on big capital. But even after the The Servile State, neither The Restoration of Property nor Economics for Helen was of sufficient depth, economically, to establish distributism as a separate and distinct economic theory. Likewise, Chesterton’s What’s Wrong with the World and other writings showed great economic insight but little economic theorizing. This is unfortunate because the great opponents of the distributists in Chesterton’s time, the Fabian socialists, insisted on first-class economic research. And although both Chesterton and Belloc were popular figures, and distributism a popular movement, the Fabians were able to carry the day because they could focus the debate on purely economic grounds, grounds the distributists were reluctant to enter.

This is not to deny that some great economists have been guided by the same principles as distributism. John Ryan, Heinrich Pesch, E. F. Schumacher, R. H. Tawney, and many others have made great contributions to our understanding of the political economy. Nor is this to deny that distributist practice has had tremendous successes: the long-standing success of the Mondragón Cooperative Corporation, with its 50-year history and 80,000 worker-owners; the remarkable distributive economy of Emilia-Romagna, where 40% of the GDP is from cooperative firms, and where the standard of living is one of the highest in Europe; the “land to the tiller” program of Taiwan, which lifted that nation from grinding poverty to economic powerhouse in only one generation; the success of so many ESOPs; and the success of micro-lending programs across the world. Indeed, distributist principles go from triumph to triumph, while capitalist societies go from government bailout to government bailout.

Despite these successes in both theory and practice, however, it is too often the case that in any discussion of economics, the distributist is likely to be the least well-versed in the science; he is, too often, the one least able to place his argument in economic terms, and too ready to retreat to moral arguments. This has unfortunate consequences for distributism as a movement. First, we often fail to convince others of the economic soundness of our case. Second, those distributists who have an interest in economics find insufficient sustenance in distributism, and often drift off to Austrianism or Keynesianism or socialism, things which are nearly the opposite of distributism. Finally, we cannot recognize the similarities between our own positions and allied positions like Mutualism and Georgism. And failing to recognize these similarities, we fail to recognize our natural allies. We even fail to recognize, too often, that which is valid and useful in neoclassical and Keynesian theories. All of this gives distributism a parochial cast. We end up marginalizing our own theory, simply because we often have a marginal understanding of the theory.

But if the distributist will only enter the economic lists, he will find weapons to hand and armor enough to stand against any opponent. Our theory is competitive at the intellectual level and thoroughly demonstrated at the practical level; we fill the gaps in the science of political economy that neoclassical economics, and all its variants, cannot. We do not need to stand on the margins, but in the mainstream. And in this particular historical moment, when capitalism itself seems to be in crisis, we need to make our voices heard, and heard in a language the world can understand. This book is not the great tome that distributist political economy deserves; that is a task above my abilities and one that I leave to the next Pesch, or Tawney, or Schumacher. It is intended to give the non-specialist reader the intellectual arms and armor necessary to enter the debate on more equal terms.

30 comments:

Kevin Wednesday, June 4, 2008 at 10:59:00 AM CDT  

Great - looking forward to future chapters.

I wonder, though, in an introduction, whether you shouldn't also give a more complete definition of "distributism" and "distributists" - or are you assuming your audience already knows what those terms mean too?

John Médaille Wednesday, June 4, 2008 at 11:20:00 AM CDT  

Kevin, That's very interesting point. At first glance, that certainly does seem like a serious omission. However, to define it at this time would conflict with another agenda of the book. Belloc would describe it as the proprietary state, the condition of well-divided property. But I have chosen to define it in this chapter as the consideration of distributive justice in the science of political economy.

Why this strategy? Because I think we do ourselves a disservice with the variety of names that we give what is essentially different streams in the same science. Distributism, Georgism, Mutualism, left-libertarianism, etc., are all just different voices in an otherwise unified science. If we can agree on the science, we will have a framework to discuss and appreciate the various strains.

I think that if you start by defining it as well-distributed property, people immediately hear socialism or even Marxism, when it is in fact the opposite of these things. It is simply too early to challenge the rather abstract notion of property that most people have.

Property itself, btw, is merely a means to an end; the end is distributive justice, namely that each man (and woman) gets the just fruits of their labor. Property properly understood leads to this result; property abstracted to an absolute becomes the opposite, a substitute for work. But property is not the only way of getting a just result.

This morning, the powers that be announced yet another increase in worker productivity, just as they have done for the last 30 years. Yet in those same 30 years, the median wage has been flat. Clearly, the worker is not getting his just share of what he produces (or his wage would rise with rising productivity.) This distributive problem is the real issue, and property the prime means of addressing it.

Trevor Wednesday, June 4, 2008 at 3:47:00 PM CDT  

John,

I see you point but agree with Kevin still that something more needs to be said as an explanation of word "Distributism" given that you use the term mutliple times.

If I were to give this book to my coworker who knows nothing of "Distributism" I think their may be confusion upfront. Better you give a definition than to let the word define itself. If the later, people will assume you're a marxist or socialist and that is the very assumption most people will make if a better definition is not given.

Jesse Thursday, June 5, 2008 at 7:03:00 AM CDT  

John, you write, "However, to define it *at this time* would conflict with another agenda of the book."

I take it that you mean to develop the definition as the book progresses, the reason being, "If we can agree on the science, we will have a framework to discuss and appreciate the various strains."

Would it be consistent with the more general approach you wish to take here to give it, even in passing, a general yet distinct description? In other words, to give an anticipatory promise (to perhaps be later exlpored) that doesn't exclude those natural allies like "Georgism, Mutualism, left-libertarianism, etc.", but does the rest? Perhaps some mention of an alternative to Big Business and Big Government via the means of "widespread" ownership of capital? Or something more accurate (I am approaching this as a novice, to be sure) but along those lines?

Trevor Thursday, June 5, 2008 at 11:13:00 AM CDT  

John, what if you defined "Distributism" in somewhat vague "big picture" terms while telling the reader it will be fleshed out further in later chapters?

You might, for example, define distributism mearly as ongoing conversation about economics as it relates to a certain understanding of distributive justice/philosophy/polictics/whatever.

I just think readers need something to grasp onto if you're going to use the term.

Tpolg Thursday, June 5, 2008 at 12:07:00 PM CDT  

Nicely written. But I am a bit confused regarding your distinction between “moral” and “economic”. By “economic” do you mean technical jargon? You talk of economies being “sound” but this would imply that there is some fundamental ought that they are fulfilling, and ought is fundamentally a moral matter.
I al so find your propositions “property” and “distributive justice” interesting, but perhaps you will address these in a later chapter.

Lotar Thursday, June 5, 2008 at 7:19:00 PM CDT  

I have to agree with the others. If the book is meant for a broad audience, then it is probably best to give at least a brief description of Distributism straight away. This is especially true if the first chapter is dedicated to clarifying and defining a common language of terms.

Most people unfamiliar with Distributism will automatically associate distributive justice with Socialist ideas of redistribution of wealth, rather than a widespread distribution of the means of production.

John Médaille Thursday, June 5, 2008 at 7:36:00 PM CDT  

Well, I think I will add a definition of distributism, but one that concentrates on distributive justice rather than on the distribution of property. Even people who don't have property need to DJ.

Thanks to all for the feedback. 2nd chapter in a few days, I hope.

John

papabear Thursday, June 5, 2008 at 8:20:00 PM CDT  

Dr. Médaille:

Property itself, btw, is merely a means to an end; the end is distributive justice, namely that each man (and woman) gets the just fruits of their labor. Property properly understood leads to this result; property abstracted to an absolute becomes the opposite, a substitute for work. But property is not the only way of getting a just result.

Will you be developing this understanding of distributive justice and how it applies to the fruits of labor further in the book? Are there any Thomistic sources that you would recommend on this point?

William Peaden Friday, June 6, 2008 at 3:23:00 AM CDT  

It seems reasonably amusing that already the old Distributist debates are raging. Although, in this case, it seems as though everyone is in the mindset, 'Whatever Dr. Medaille says is'. When Chesterton was editing his Weekly there were a number of discussions attempting to 'Define Distributism'. Chesterton, every so often stepped in, and in his characteristic style shifted through it all, and put everyone to shame for their narrowness.

I think a definition of distributism could be both harmful, and at the same time potentially useful. Precisely because our modern world is in the mindset of scientism, any 'iron law' of Distributism could get stuck, whereas distributism is a fluid doctrine. Our opponents are obsessed with catchphrases as being the ’thing’ they are defining. It may be useful, however, if the definition remains fluid, and not rigid. The distributists were always having to define their dogma against, Capitalism/Communism, because they agreed with aspects of both.

The thing that seems most important, at least in my mind, is that distributism is not seen as some kind of 'law', that can be 'defined' in a few words. It is not some catchphrase, like 'Three acres and a cow', it is not about 'statism' or 'individualism'. It is a moral doctrine, relating to the nature of man. We don't want to end up with 'propertyites' against 'anti-usuryites'. These fragmented ideologies are the domain of our opponents. Chesterton said that there was nothing so universal as a dogma. A dogma represents a universal truth about man as man, a doctrine/definition may be damaging by becoming identified with the dogma as such. Hence, if distributism is defined in moral terms, as a dogma, it should be okay.

As for the chapter, I thought it was most excellent, I hope you expand on the refutation of Scientism in later chapters. This horrid doctrine affects nearly all academic disciplines, including my own, History. Even the scientists, physicists/chemists/biologists/geologists presume to take their ‘method’, their discipline and ‘judge’ all things by it. Hence, they concentrate on the lowest level of ontology, and use that as the measure of all higher levels. I actually find ‘economic’ history to be the most tedious subject there is, because of it own narrowness. Its not about ‘What was the economics like in X?’ it more like, ‘Society in 1600 was defined by this "economic law"’.

Anyway, I look forward to the next chapter.

Tpolg Friday, June 6, 2008 at 7:55:00 AM CDT  

“Although, in this case, it seems as though everyone is in the mindset, 'Whatever Dr. Medaille says is'.”
With all due respect to our host, I am certainly not in such a mindset. Although I am very interested to know what he thinks. I would particularly like to know what he means by “ distributive justice” and “property”.

John Médaille Friday, June 6, 2008 at 9:04:00 AM CDT  

I certainly hope it is not a case of "whatever Dr. Médaille says..." In the first place, I am not a doctor, but a lowly master of the theological and other dark arts. I am sure that were I to get a doctorate, I would become as infallible as all the other learned doctors, but that day is not today. But more importantly, there would be no reason to seek the collective wisdom of this group, and I do seek it.

William, I certainly do intend to go after scientism, mainly because it gets in the way of science. It is my intention to make political economy more scientific than modern economics. I will tackle this problem in Chapter III.

Papabear, Chapter VI will be devoted specifically to Justice, Distributive and Corrective, although every chapter will, in its way, be about this topic. The major sources are, of course, The Nichomachean Ethics and St. Thomas's commentary on the same, as well as the Summa. But it is a case of Philosophy is easy, plumbing is hard. Distributive justice is easy to see and understand philosophically, but its implementation in the real world, its "plumbing" is very hard indeed.

John

Gravedigger,  Saturday, June 7, 2008 at 8:04:00 AM CDT  

"It is intended to give the non-specialist reader the intellectual arms and armor necessary to enter the debate on more equal terms."


Great!

P.M.Lawrence Monday, June 9, 2008 at 2:56:00 AM CDT  

"British Prime Minister Benjamin Disraeli in 1844" - you should rephrase this. He wasn't Prime Minister then.

Mr. Daniel De Haan Wednesday, June 11, 2008 at 2:53:00 AM CDT  

I was recently referred to your blog and it seems fortunate that I discovered it at such a great time. I've been peering though a number of the articles and have greatly enjoyed the depth and clarity of the issues discussed. I study Thomas Aquinas, mostly epistemology and natural philosophy, and will begin my M.A. this fall. Despite it not being my main area of study, discussions about political philosophy with ones peers is unavoidable, and I recently realized my complete ignorance in economics was a hindrance to many of my reflections. Through my casual attempts to explore economics I discovered distributism earlier this spring. So I know very little except that it seems to provide excellent economic solutions within the realms of ethics and political philosophy and fills them out as they need to be. Your summation of this aspect of economics in your first chapter resonates with all my intuitions about what the intimacy of economics with the polis should look like. I am looking forwarding to following this blog as the book progresses, and learning a lot.
(Apologies, I felt some bio was necessary.)

I am curious if you have read Alasdair MacIntyre, "After Virtue," "Whose Justice Which Rationality," et al.? His analysis of human behavior by formal causality and our "metaphysical teleology" could be insightful and seems related to the problems you hope to undertake especially in Chapters III and VI.
MacIntyre was a Marixist converted to a Aristotelian position, and then became Roman Catholic and neo-Thomist.

Regarding your critique in chapter III and the distinction between the mechanism of physical sciences and the higher order causality reflected upon in humane sciences I would encourage, if you are not already familiar with, the writings and critiques produced by Peter Geach. In his short book, "Three Philosophers: Aristotle, Aquinas, Frege" he explores natural teleology and the problems of explaining causality in completely mechanistic and law like manners. He then has any excellent brief glossing of Aquinas's account of volition.

I realize it would be wildly outside the bounds of your chapter to challenge the entire approach of science and its epistemological and ontological foundations, but Geach may offer some insights into why it is absurd to reduce, as William Peaden said, higher order causality, like volition, to lower ontological orders of causality.

Great first chapter.

John Médaille Wednesday, June 11, 2008 at 8:22:00 PM CDT  

@Mr. de Haan, Thank you for your kind words. My work is highly indebted to MacIntyre's understanding of virtue. The second chapter of The Vocation of Business is largely based on MacIntyre's After Virtue.

It is not outside the bounds of my book to challenge the epistemological foundations of "positive" science; in fact, that is what chapter III will be about. Of course, in a book of this nature, I will attempt to make the discussion as non-technical and jargon-free as possible. Let me know whether or not I succeed.

Charles P.,  Monday, June 16, 2008 at 7:41:00 PM CDT  

I have a minor grammatical complaint. Under the heading "Economics vs. Political Economy," in the fourth paragraph, third sentence, you wrote, "...to properly describe..." twice. Those are split infinitives.

That's it. Otherwise, I'm really excited to read the book when it is finished. I'm trying to convince my friends that Distributism is the way, even though I don't know much about it yet.

I enjoy your posts! Thanks!

Anonymous,  Thursday, July 17, 2008 at 9:10:00 PM CDT  

I thought it was excellent. My only little criticism is you were too generous on economics, particularly neoclassical economics.

Even the theories behind as simple concepts in neoclassical economics as supply and demand rest on absurd assupmtions, completely inappropriate analysis methods and even internal logical inconsistencies in the theories themselves (leaving all the assumptions aside for a moment.).

Perhaps though this book is not the right place to talk about that. But to show the massive flaws in so basic theories of most opponents would be very satisfying to many I'm sure :).

John Médaille Thursday, July 17, 2008 at 9:19:00 PM CDT  

Anon: This is the perfect place to talk of such failures. Later on, I will show why even supply and demand curves do not apply to the fictitious commodities of land, labor, and money. But if you have further critiques that you think should be aired, pass them on!

Anonymous,  Monday, July 21, 2008 at 11:25:00 PM CDT  

Well let's see.

Well if one starts with problems with both supply and demand and then moves on to problems specific to each one, one can sketch just how little use the mainstream models are.

Firstly the analysis method is completely inappropriate to a dynamic world in real time. The static equilibrium analysis used is rather useless in a world where everything is changing and where a change in the price or supply or demand for any commodity may in fact change its price, demand or supply.

This is particularly important for analysis of aggregate categories. If you say take a broad definition of an industry like agriculture then this analysis becomes completely useless because any change in the supply or demand for agriculture will greatly effect the economy and hence the demand and supply for agriculture and give you say a different supply curve for every point on the supply curve.

This brings us to the real big problems with this kind of analysis aside from the obvious unrealism of neglecting the dynamic nature of the economy and the fact the economy takes place in real time.

That is multiple equilibrium and the notion of equilibrium itself.

In the above example of broad categories and in various other uses, such as any kind of social rather than individual analysis of demand, it is possible, often likely, for multiple equilibria to exist and these really make the analysis useless for obvious reason(which is the real equilibrium point?).

And then of course there is the idea of equilibrium itself, what use is it in a dyanmic, complex and interdependent economy? How do we know it exists except for the rather circular notion of saying any price, demand, supply and quantity that exists is an equilibrium one.

Then we can turn to the unrealistic, often absurd assumptions underlying both models. I'm sure youare familiar with alot of these. Perfect knowledge, perfect competition - which mathematically is a continuum of firms, not simply alot of little firms, lack of real time, Walras' auctioneer, the list goes on and on.

These alone make the neoclassical/marginalist analysis as ably shown by many, particularly institutionalist and post-keynesian economists like Piero Sraffa and Veblen. In fact it was Clarence Aryes who went straight to the heart of marginalism and its flaws particularly its treasured theory of value and idea of marginal utility, adjusted for scarcity, determining price et al:

...the concept of utility is peculiarly open to criticism on the grounds of tautology.....It is all very well to say that utility is the want- satisfying quality, whatever wants may be. But if we have no way of knowing, let alone measuring, wants, how can we know utility- let alone measure it? It is all very well to say that price is the measure of utility. But if we have no independent measure of utility(and we have none.), that only means we have equated price and utility by definition. Such being the case, nothing can be inferred from the correspondance.


I can show you the problems unique to each model if you like?

I really recommend the work of Steve Keen as well. He is excellent in explaining the devastating flaws in neoclassical economics.

http://www.debunkingeconomics.com/

Also there's an unrelated question I've got for you. I'm a radical decentralist and I'm interested and quite well read on mutualism, syndicalism, distributism, guild socialism and the like. And although I find the distributists quite eloquent and convincing on most things I find them rather vauge on exactly which policies, political and social, they would pursue to bring about a distributive state.

Do you have any links or info which specifically or in detail deal with the aspect of how to bring about the distributive state?

Anonymous,  Monday, July 21, 2008 at 11:44:00 PM CDT  

Obviously more can be said on the assumptions at great length. I could have talked about the assumptions of homo economicus which revolves around the idea of rational utility maximisers and largely ignores the crucial place of society and social institutions and relationships in shaping individual and organisational behaviour. And of course the complete lack of the notion of power from most, and certainly the core, textbook level, theories.

But I think you get the picture, most people familiar with even basic critiques of neoclassical economics usually know all about the absurd assumptions.

John Médaille Tuesday, July 22, 2008 at 12:38:00 AM CDT  

Anon, one can have all the theoretical arguments one likes about equilibrium or the lack thereof, but the only test is reality. And in in reality, markets tend to clear. Indeed, if markets didn't tend to clear, no one would invest, or at least no one would invest at anything but the bare minimum level. They would wait for better times. The thesis of this book is that capitalism has never been able to clear the markets, and always relies on gov't support.

The charge of static models is a red herring. You could make the same charge against the physicists working with particle interactions. If you look at their charts, they are not all that different from those the economists use. You could say, "look! They're STATIC!" No, they are just a snapshot of a particular moment, that's all.

I agree that the assumptions of the neoclassicists do not match reality, but that is not the real problem. The assumptions could still be valid as paradigms IF one was constantly measuring the difference between the theoretical paradigm and the actual reality. But they never do. They state their assumptions but never measure the difference with actual conditions. If they did, the neoclassicist would be the first to protest oligopolies like the oil companies or virtual monopsonies, like Wal-Mart, both of which violate the "vast number of firms" assumptions. But they never protest, never take note. Again, the same thing happens in physics, but the physicists don't make the same mistakes because they are always aware of the differences between the model and the reality. For example, objects in near-earth orbit fall at a rate of 32/second (squared). But that only happens in a vacuum, and nature abhors a vacuum. When actually using the equation, you make an adjustment for air pressure, which serves as the precise measure between the ideal and the real. Economists don't do this.

I will be doing some borrowing from the institutionalists, although I think they don't go far enough. I will also be using syndicalist, mutualist, pre-Misean libertarian, and Georgist sources.

I agree with you that Distributists are often vague on their proposals. That's why I am writing the book. Or at least one sort of Distributist is vague. Another sort actually goes out and gets things done, things like Mondragon, but they write less than the other kind.

I hope you get a chance to read some more chapters, and offer your suggestions.

Anonymous,  Tuesday, July 22, 2008 at 7:03:00 PM CDT  

"Anon, one can have all the theoretical arguments one likes about equilibrium or the lack thereof, but the only test is reality. And in in reality, markets tend to clear. Indeed, if markets didn't tend to clear, no one would invest, or at least no one would invest at anything but the bare minimum level. They would wait for better times. The thesis of this book is that capitalism has never been able to clear the markets, and always relies on gov't support."

There is certainly truth in this but it doesn't prove an equilibrium as in a unique, natural market clearing price exists. Or what use that equilibrium is to analysis.

There is also no proof that if an equilibrium, or more likely equilibria exist, that the market will move towards it. That is what Walras' godlike auctioneer was for.

"The charge of static models is a red herring. You could make the same charge against the physicists working with particle interactions. If you look at their charts, they are not all that different from those the economists use. You could say, "look! They're STATIC!" No, they are just a snapshot of a particular moment, that's all."

Actually they are very much different. The economists one's are unrealistic beyond anything contemplated by physicists.

Neoclassical economics lacks real dynamic analysis, it simply tends to move from one static analysis to another without incorporating real time or any kind of dynamic analysis. There are ways this analysis could be done but it is rarely contemplated by them.

"I agree that the assumptions of the neoclassicists do not match reality, but that is not the real problem. The assumptions could still be valid as paradigms IF one was constantly measuring the difference between the theoretical paradigm and the actual reality. But they never do. They state their assumptions but never measure the difference with actual conditions. If they did, the neoclassicist would be the first to protest oligopolies like the oil companies or virtual monopsonies, like Wal-Mart, both of which violate the "vast number of firms" assumptions. But they never protest, never take note. Again, the same thing happens in physics, but the physicists don't make the same mistakes because they are always aware of the differences between the model and the reality. For example, objects in near-earth orbit fall at a rate of 32/second (squared). But that only happens in a vacuum, and nature abhors a vacuum. When actually using the equation, you make an adjustment for air pressure, which serves as the precise measure between the ideal and the real. Economists don't do this."

Yes and No. The assumptions of neoclassical economics are so absurd and unrealistc and seemingly unneeded for any real analysis of the economy that they are rather different to physics.

For instance are you are aware that the neoclassical theory of social demand actually requries there to be only one commodity(or many of the exact same commodity) and only one individual(or many exist clones of him), in existence to avoid multiple equilibria and demand curves which, though they would generally slope negatively, could do anything?

Hence it doesn't really have a theory of social or market demand. Aside from the absurd assumptions and silly analysis methods however the individual model of demand is sound enough. Although if you really want to see how absurd some of these assumptions are I recommend this little powerpoint by post-keynesian economist Steve Keen.

http://www.debunkingeconomics.com/Talks/dimensionality.ppt

Supply is different, the analysis falls on both the individual and social level as shown by the great Piero Sraffa and by empirical research. I'll post that later.

Here is some good info on it though from Sraffa and Steve Keen. Including empirical data.

http://www.debunking-economics.com/Maths/Present_for_Sraffa.htm

http://cepa.newschool.edu/het/texts/sraffa/sraffa26.htm

http://www.debunkingeconomics.com/Value/Actual/Index.htm

"I agree with you that Distributists are often vague on their proposals. That's why I am writing the book. Or at least one sort of Distributist is vague. Another sort actually goes out and gets things done, things like Mondragon, but they write less than the other kind.

I hope you get a chance to read some more chapters, and offer your suggestions."

Mondragon is interesting, it is so many people's example on the decentralist front and for good reason. Everyone from market socialists to anarcho-communists to you guys uses it. I'd like to think it showed the closeness and intertwinned nature of the decentralist movements.

However I was more talking about political polices.

I don't think distributism is vague, no more than most decentralist ideologies. I simply think it is vague about the policies it intends touse. With Mutualism you know they are going to use usufruct real property rights and mutual banking etc, and with syndicalism you know some of the proposals that have been forwarded etc but with distributism I'm far less certain.

One can understand Miseoids thinking distributists must want to simply use the centralised state to use expansive legalisation and constant intervention to get it done.

This is of course less understandable when you have actually read some of the works of Chesterton et al and I hope few distributists wish to use those methods but I'm not sure which ones they do aside from the obvious non-political ones like Mondragon. I don't however believe that real change can be brought about without some kind of political change to the economic sphere.

John Médaille Tuesday, July 22, 2008 at 9:28:00 PM CDT  

Anon, I can't really be sure if you are arguing against the fact of equilibrium, or merely against some theory of equilibrium. If the later, I would agree with you; if the former, I would ask, "How does one argue with a fact?" I would agree with you that the marginalist theories have never provided a basis for equilibrium, and I would agree with Sraffa on the theory of value. But I could not agree that equilibrium is the desirable condition of the economy and one of the standards by which we judge an economy. If the economy fails to attain equilibrium, that is, if it is in constant boom and bust cycles, then we may judge that something is wrong.

I must confess that I do not understand why so many of the opponents of neoclassicism argue so virulently against equilibrium theory. I do understand it on the part of the Austrians, where the argument is ideological and the "impossibility" of equilibrium means that there is never any possible policy prescription. But the reasons others would argue against it is not so clear to me. I think they may be attacking neoclassicism on the wrong grounds, and risk challenging the mere facts when they do so.

I think the distributists need to adopt the mutualist position on property and the georgist position on taxes to be a complete theory. All of these things can use Mondragon as an example, because that is what a functioning distributism/mutualism looks like. The same reality supports a variety of theories, because all theories fall short of a complete description of reality.

John Médaille Tuesday, July 22, 2008 at 9:31:00 PM CDT  

Annon.

Whoops! That sentence should read, "But I could not agree that equilibrium is not the desirable condition of the economy..."

That's what I get for trying to speak in double negatives.

Anonymous,  Wednesday, July 23, 2008 at 2:01:00 AM CDT  

"Anon, I can't really be sure if you are arguing against the fact of equilibrium, or merely against some theory of equilibrium. If the later, I would agree with you; if the former, I would ask, "How does one argue with a fact?" I would agree with you that the marginalist theories have never provided a basis for equilibrium, and I would agree with Sraffa on the theory of value. But I could not agree that equilibrium is the desirable condition of the economy and one of the standards by which we judge an economy. If the economy fails to attain equilibrium, that is, if it is in constant boom and bust cycles, then we may judge that something is wrong.

I must confess that I do not understand why so many of the opponents of neoclassicism argue so virulently against equilibrium theory. I do understand it on the part of the Austrians, where the argument is ideological and the "impossibility" of equilibrium means that there is never any possible policy prescription. But the reasons others would argue against it is not so clear to me. I think they may be attacking neoclassicism on the wrong grounds, and risk challenging the mere facts when they do so. "

I was more talking about the equilibrium price for any one particular good. The idea there is a natural, unique equilibrium price for any good and that any changes which aren't completely economic -in the neoclassical and capitalist sense of the word - will lead to excess or deficient supply or demand and necessarily cause great problems for the economy.

The obvious example is arguments over minimum wage laws. The usual neoclassical argument based on static, equilibrium analysis is they must cause unemployment, but without proof of an unique equilibrium price and using dynamic analysis their claims are far less certain.

That is not to say that if greatly distorting price controls are used they might not have an effect. There is perhaps a quite dynamic equilibrium sphere but no natural, unique point.

You are talking about a more macroeconomic and social equilibrium which is a different thing and I largely agree.

Anonymous,  Wednesday, July 23, 2008 at 2:12:00 AM CDT  

"I think the distributists need to adopt the mutualist position on property and the georgist position on taxes to be a complete theory. All of these things can use Mondragon as an example, because that is what a functioning distributism/mutualism looks like. The same reality supports a variety of theories, because all theories fall short of a complete description of reality."

Oh yes. I was not criticising its use. I'm not really in any succinct category of decentralism and I like to draw inspiration from all sorts of different branches.

I think those positions, the mutualist and georgist ones, support distributism very well.

John Médaille Wednesday, July 23, 2008 at 7:58:00 AM CDT  

Anon, I completely agree about labor not being subject to S&D calculations, for the simple reason that it is not a commodity. The chapter on labor is already posted. Neoclassicism depended on "commodifying" everything. But there are three things which are essential to an economy but which are not commodities, and these are land, labor, and money.

The health of the economy depends on adequate wages. There must be enough purchasing power in the mass of men to clear the markets. When wages are too low, then profits are too high, and the markets cannot be cleared without gov't help or usury.

Dave,  Thursday, November 20, 2008 at 4:24:00 PM CST  

"Anon, I can't really be sure if you are arguing against the fact of equilibrium, or merely against some theory of equilibrium. If the later, I would agree with you; if the former, I would ask, "How does one argue with a fact?" I would agree with you that the marginalist theories have never provided a basis for equilibrium, and I would agree with Sraffa on the theory of value. But I could not agree that equilibrium is NOT the desirable condition of the economy and one of the standards by which we judge an economy. If the economy fails to attain equilibrium, that is, if it is in constant boom and bust cycles, then we may judge that something is wrong.

John, equilibrium as you use it here seems to represent a monetary equilibrium, which is both single valued and doesn't necessary represent what other people would consider desirable aspects of the economy, like being able to survive nature's "boom and bust" cycles (good and bad harvests), times to work hard and times to enjoy a holiday etc. Things need to change because we get tired, bored and complacent if they don't (another instance of the principle of "requisite variety"); that is why modern economics is so dependent on fashion. What I would say is the desirable condition of economics is to be able to produce and distribute more than we need as and when we need it, with time enough left over to enjoy and maintain it.

I must confess that I do not understand why so many of the opponents of neoclassicism argue so virulently against equilibrium theory. I do understand it on the part of the Austrians, where the argument is ideological and the "impossibility" of equilibrium means that there is never any possible policy prescription. But the reasons others would argue against it is not so clear to me. I think they may be attacking neoclassicism on the wrong grounds, and risk challenging the mere facts when they do so. "

Why should economics lead to policy prescriptions if it is already working properly? The fact is that it isn't, and the marginalists are making the same mistake with their equilibrium theory as aeronautics made until the beginning of the 20th century, when it was realised that without a two-valued disequilibrium flight would get nowhere: to maintain equilibrium in height there has to be a disequilibrium between thrust and friction etc to create lift.

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