Exceptional Ignorance... of Distributism.

It was but only a short time ago that I stumbled upon a Catholic blog that happened to be discussing the most recent papal encyclical. Most all the gang was there. Libertarians! Neocons! Distributists! Oh, my! Each and every one of them making their claims and placing their stakes in the war-torn wastelands of public discourse typically surrounding the discussion of Catholic Social Teaching. Very little productivity, but plenty of huff-puffery.

For most of the readers here, nothing I have described is all that peculiar. In fact, it is relatively run-of-the-mill. What made this particular battle significant, though, was a question asked by very popular Catholic who presides over a rather popular organization that published a not-so popular book written by an undeservingly popular Catholic attempting to put a halt to the ever-increasing popularity of distributism. Then again, it wasn't so much the question as it was the fact that it was asked by this particular fellow, and with what he insists to be the most sincere of motives.

The question, in sum, was how distributists believe their view of the State and the political economy differs from that advocated by adherents to National Socialism.

Let's ignore for a moment that this question has been answered by a myriad of distributist thinkers much brighter than me. Let's also brush aside the fact that a handful of these answers are readily accessible to anyone willing to take a moment utilizing a search engine. Instead, let us focus our attention on the fact that this man, who has dedicated so much time, effort, and money into convincing Catholics (and non-Catholics) to move "beyond distributism" lacks what could in all fairness be consider a functional literacy of distributism.

To deem this as merely unfortunate would be an understatement. What it does for us, though, is reveal the heart and soul of what may be the biggest problem distributists have yet to overcome: general ignorance. Think for a moment. If this particular theologian/economist is ignorant of what differentiates distributists from fascists and socialists, then where does that leave the mass of people unfamiliar with the ins-and-outs of all things CST? Not fearing redundancy, to deem this as merely unfortunate would be an understatement.

So what may be done? Plenty. In fact, plenty is already being done. Distributism has made great strides in recent years. It has found itself being discussed on blogs, YouTube, Facebook, Twitter, talk radio, podcasts, as well as in books, magazines and newspapers. Distributist apologists have also found a place at the table of public debate along with the socialists and neoconservatives who have for so long dominated the CST scene. Furthermore, for all the chatter pertaining to the so-called "non-relevance" of distributism, enemies of the school of thought have dedicated decent sums of time and money combating it. They may be of the type that spends gobs of energy beating dead horses, but I'm not of the type that would believe such things.

Having said this leads me to conclude that it's not so much the lack of material that has led to this general ignorance (though an ever-increasing amount of material wouldn't hurt) as it is the fact that most distributists are distributists in the abstract. In other words, we talk the talk, but very few walk the walk.

None of this is meant to be demeaning, as I am the guiltiest of the guilty on this count. Instead, this is meant to be a simple reminder of a simple maxim: actions speak louder than words.

Take the Amish for example. I would bet that most of us have read very little about the Amish. Few delve into studies concerning their history, theology, philosophy, and traditions. But most of us are well aware of their being thoroughly agrarian and, giving Arthur Penty a run for his money, extraordinarily skeptical of machinery. Most of us have seen their clothing, their buggies, their working on farms or on houses, and many of us may even have some of their woodwork in our homes. The point here, though, is that while we may be largely ignorant of the Amish life, our seeing them put their beliefs into practice (and in such an open and consistent manner) gives us a decent idea as to who they are, where they are, what they believe, and why they do what they do. Better yet, for those who have bought food from their stands or furniture from their shops, we see the standard of excellence they strive to achieve.

In final analysis, it would do us well to have more than Madragon to talk about. How wonderful would it be to talk of the achievements and lifestyle of distributists and Catholic Worker communities nationwide? More importantly, what impact would seeing such achievements and communities have on the public? At bare minimum, it may provide an image that would give them some degree of functional literacy regarding distributism. Then maybe, just maybe, we wouldn't have so many well-studied men asking such elementary questions concerning who we are and what we believe. That, in and of itself, may be worth the effort.

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Capitalism as an Unnatrual System

Ever since capitalism made its appearance in the late Middle Ages and came to dominate both production and politics in the late 18^th century, there has been a vigorous debate on just what the nature of capitalism is. Central to these debates has been the question of capitalism's relationship to the state, and particularly the question of whether capitalism was an enemy or a child of the state. There have been no shortage of great names in this debate: Smith, Marx, Mill, Mises and many other great minds weighed-in with weighty tomes on the topic. Yet I do believe that the honor of formulating the question in the most succinct and elegant terms possible must go to Sorin Cucerai in his brief but powerful essay, “The Fear of Capitalism and One of its Sources,” in the May issue of Idei in Dialog. Mr. Cucerai is a libertarian philosopher in Romania, and his article is important because it is the most candid look at capitalism I have ever seen from an Austrian libertarian. [Note: the article is in Romanian, but for anyone who wants to read an English translation, please email me.] In but a few pages, and in a few powerful phrases, Mr. Cucerai captures the essence of capitalism and its relationship with the state.

Sorin's arguments are directed primarily at the “anarcho-libertarians” who, like the Marxists, would have a “withering away of the state.” However, the historical reality is that under “conservative” regimes the state grows as fast—or even faster—then it does under liberal and social democratic regimes. Indeed, only the communists could grow the state faster than the conservatives, and they grew the state until it collapsed of its own weight, a feat which the conservatives in America are trying to duplicate, and may yet succeed Certainly something odd is going on here. An historical reality that pervasive and powerful cannot be overlooked or ignored I the name of ideology. However, it must be noted that in “defending” capitalism, Mr. Cucerai raises questions that challenge its very legitimacy. Indeed, Marx in his attacks on capitalism never said anything as negative about that system as Mr. Cucerai does in its “defense.”

It is important to understand Mr. Cucerai's argument in its elegant simplicity. I summarize it as follows:

1. Men naturally seek direct access to the means of subsistence, usually in the form of their own land or tools.

2. This access makes a man less dependent on his neighbors and therefore less dependent on the markets.

3. But capitalism is the condition of dependence on the market for one's very subsistence. Therefore, “the fundamental condition for the existence of a capitalist order is the absence of the individual autonomy in the sense of owing the source of your food,” and of forcing people to seek a monetary source of subsistence. This is not a natural condition, as is owning one's own land, because “People do not search instinctively for a source of monetary revenue.” They do so only because they are forced to do so.

4. “Capitalism is made possible only if this natural process is interrupted by an instrument that makes sure nobody could have access to food and shelter unless a monetary revenue is used as an intermediary.”

5. “Therefore, the capitalist order is not natural. Such an order can be maintained only if there is an institutional arrangement which prevents the individual from not engaging in commercial relations through the agency of money.”

6. That “institutional arrangement” is a government that requires people to pay taxes and fees only in the form of money. Only the state can perform this coercive function upon which capitalism depends. “The source of the revenue gets prominence over the source of food; the commercial relations are widespread because, basically, it is impossible to avoid them.”

7. The state is necessary for another reason, namely that “free competition is as unnatural as capitalism itself.” In absence of the state, commerce would be a matter of rent-seeking, a behavior only government regulation can prevent.

8. Paradoxically, the “freedom and prosperity of capitalism” are possible only “by denying people direct access to food and shelter.” In order to have this capitalist “freedom,” we must be alienated from our own nature. But if this is done, then “he breech created between us and our nature- and between us and nature in general - open a space previously unknown to human freedom and it is a form of civilization.”

9. Because of this fundamental alienation from nature, “ any individual that lives in the capitalist order is a fundamentally precarious being, of a radical frailty. It is the precariousness of the one who has no firm ground under his feet.”

What is remarkable about this chain of reasoning is that it can be read as either an attack or a defense of capitalism. Indeed, it is difficult to discern, from within the argument itself, which way it will turn out. Mr. Cucerai offers only an instrumental defense of capitalism, namely that it will result in more goods and higher wages. Aside from the fact that such “consequentialism” is morally suspicious, at best, there is a question of whether the basis of comparison here is valid; one would have to compare the subsistence and security of a wage-based economy with that of a property-based economy, that is, of Mr. Cucerai's “unnatural” economy with a more natural one. We know that in 16^th century England, before capitalism came to dominate social relations, a common laborer could provision his family by 15 weeks of work, and a skilled laborer by 10. A century latter, after the closing of the commons and the seizure of the monasteries, which instantly converted England into a capitalist country, those numbers became 40 weeks and 32 weeks, respectively.¹ Moreover, in a global economy, it is necessary, to weigh the wages of the workers in sweatshops before reaching a judgment on this question. Further, the plain fact of the matter is that nations which fed themselves comfortably for millennium before the coming of the capitalists find themselves starving under Mr. Cucerai's “freedom.” But laying that question aside, we can address the strength of Mr. Cucerai's arguments.

The first point is that this is very much an Aristotelian argument, even if it reaches conclusions opposite to Aristotle, in its division of economics into “natural” and “unnatural” exchanges. For Aristotle, natural exchange was that necessary to provision the household, while unnatural exchange had money alone for its object. The first sort of exchange was “natural” in the sense of having a natural limit. For example, a man buying bread for his family will buy what he needs and no more. But a man whose object is not bread but money might buy up every loaf of bread and every grain of wheat in order to corner the market and set the price to his own advantage. Since there is no limit to such exchanges, Aristotle regarded them are “unnatural.”

The second point we can note is how well the arguments accord with the actual history of capitalism. The plain historical fact is that capitalism and government grow hand in hand; the larger the business entities, the larger the government necessary to protect them. This fact had already been noted by Adam Smith in 1776, in The Wealth of Nations, three-fourths of which is devoted to documenting the incestuous relationship between big government and big business.

The third point is that Mr. Cucerai provides libertarianism with something it normally lacks, namely a theory of government. Hence the performance of government can be judged against that standard of its proper function. One may not agree with Mr. Cucerai's definition of the function of government, but at least the standard is explicit; the question now comes under human intentionality and can therefore be controlled, at least in principle. For the anarcho-libertarians especially, government is despised in and of itself and hence every question of government becomes an “all-or-nothing” question. But framing the question in this way always works to the advantage of the “all” of the state, since in times of crises there are simply not enough nihilists to vote for the “nothing.” Thus, the increase of state power is always and everywhere the unintended consequence of libertarianism.

The fourth point is that Mr. Cucerai has accurately described the rule-bound nature of competition and exchange, and the fact that rules must be external to the market. Indeed, competition, properly understood, only works in a larger framework of cooperation, and this cooperation is expressed in agreement to rules which are imposed by institutions of common consent. Think about a football game. It is certainly a competition, and a violent one at that. Yet, it cannot take place without the framework of cooperation, namely, that all players will be bound by the rules and judged by referees who are not themselves players in the game. Unless the game stops when the referee throws the yellow flag, the game cannot really start. Without the referee, there can be no game, but only warfare, which will continue until one side is utterly defeated or even killed, at which point both the game and competition end.

The fifth point is that Mr. Cucerai has correctly identified monetization as foundational to capitalism. One historical confirmation of this point comes from the “hut tax” that the English imposed on their African colonies. The point of this tax was not revenue; indeed, it probably cost more to collect then it raised in income. Rather, its point was to force the Africans to get something they had never needed before: a job. The climate supported the people in relative comfort with relatively low levels of work, and the Africans, left to their own devices, were happy with this arrangement. But a money tax forced them to take employment in the English mines, plantations, and factories. The point of the hut tax was not revenue, but labor.

Finally, we can note that Mr. Cucerai has certainly given us an accurate description of capitalism, and all discussions of any system must begin with an accurate description. However, it is a description that leaves out one crucial element, an element that flows from the description but which Mr. Cucerai does not address. I will return to this point a little later.

All that being said, we still cannot determine whether capitalism under this description is a good or a bad thing. Indeed, do we really want a system that alienates man from his own nature and results in a “radical frailty,” a social arrangement in which we have “no firm ground under our feet”? There is a bleak, Orwellian character to Mr. Cucerai's description in which “freedom is slavery,” in which man has to be a wage slave in order to be free; in which he has to be denied access to the ground of his freedom (that is, property) in order to participate in “free” markets. But is this a proper definition of freedom? Is it even a proper definition of economics? I believe that the author has made two fundamental mistakes: one, he has reduced all markets to monetary markets, and; two, he has confused the “free market” and “capitalism” as if they were the same, when in actual fact they are more often things opposed to each other.

A purely “monetary” exchange market is problematic in several ways. The first has to do with the nature of money, which should be merely the unit of account for all the circulating goods within a given economy. However, money can too easily be manipulated apart from the market for real goods and services. The Americans have proved, beyond a shadow of a doubt, that trillions of dollars in financial wealth can be created without having any relation whatsoever to real wealth. Men who contributed not so much as a grain of wheat to the commonwealth are paid billions from the common purse in reward for their failure. And this was done by men operating in largely unregulated markets. Money, as a unit of account, is an abstraction, and the more abstracted an economy becomes, that is, the more monetized, the more easily it may be manipulated by those “in the know” about the mechanics of abstraction, and a completely monetized economy is the easiest of all to manipulate.

The truth is that man operates in several markets simultaneously, most of which are not monetized, and all of which serve are checks on the other. When all markets are monetized, all markets fail, and fail decisively, without any hope of recovery. The first market in which we operate is the gift economy of family and the community. We are first called into being by the ready-made community of the family, and from this community we receive a variety of gifts. Our being, to be sure, but also the gift of our name, our family, our language, our first moral perceptions, our first experiences of love and belonging, and so forth. This economy of grace (gifts) is the primary economy, and all other economic and social activity must be judged from the standpoint of how will it serves the family. Without this check, there is really no way to know whether the economy “works” in any concrete sense. A fully monetized economy erodes the gift economy of the family upon which the whole social order depends. Beyond this family economy, there are economies of community service, economies of political activity (in which votes are the medium of exchange), religious economies, and so forth. All of these depend on the economy of production and exchange (note both terms), and hence are checked by that economy, even as they provide checks for the exchange and production economies.

Mr. Cucerai states that capitalism “opens a space previously unknown to human freedom.” But what he does not mention is that this must be a very small space, one occupied by the possessor's of land and capital alone. That is why we call it “capitalism.” Indeed, the very fact of denying access to the means of subsistence to most men means that a few will end up in possession of the vast bulk of these means. This point flows naturally from Mr. Cucerai's own description of capitalism, but it is the crucial point which he has left out, and without which his description cannot be considered complete.

Not only is this concentration of capital bad morals, it is bad economics and bad social theory. It is bad economics because all market theory is based on the “vast number of firms” hypothesis, which states that production is spread over such a vast number of firms so that no firm, or no possible combination of firms, can have any influence on market prices; that is to say, they are all price-takers rather than price-makers. When you have consolidation in any industry, the whole basis of the free market collapses, and monopoly and oligopoly are the result.

But that is just a part of the problem. I will skip over Mr. Cucerai's preposterous claim that you can have, simultaneously, a rise in production prices and a fall in consumer prices, as if the later were not dependent on the former, to note that rising wages are not the norm in capitalism. Indeed, in the United States since 1973 the median wage has remained flat, even though productivity for all classes of labor has increased dramatically in the same period. This means that the workers are producing more goods, but must purchase them with the same rewards. Since this is not possible, the economy has resorted to three stopgaps to maintain consumption. The first is to put more family members to work, and to work longer hours. The second is to increase the role and size of government to absorb more of the output. And the third is simple usury (consumer credit); have the class that is over-compensated—that is, the possessor's of capital—simply lend the excess to consumers to soak up the excess goods. But all three methods have reached their logical limits. The family is working as hard as it can (to the detriment of that family life which the economy ought to serve), the government cannot expand much further without discovering those limits on expansion that the soviets discovered, and the credit system has collapsed. There is no further that we can go without changing the system.

Mr. Cucerai assumes rising wages in a free market. Capitalist defenders assume that “free contract” is sufficient to ensure such rising wages. But Adam Smith noted the problems with this theory:

It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine more easily...A landlord, a farmer, a master manufacturer, or merchant, though they did not employ a single workman, could generally live a year upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month and scarce any a year without employment.²⁠

Thus Smith identifies actual wages as the result of a power relationship between masters and workers and not a result of purely “economic” forces; it is power, not productivity, that is arbitrated in a wage contract. An American CEO gets 500 times what the line worker makes not because he is 500 times more productive but because he is 500 times more powerful. The seamstress in a sweatshop gets a pittance not because her productivity is low but because her power is pitiful.

The power to negotiate a wage comes only with the power to say “no” to the terms offered, and this power comes only from the possession of an alternative to the wage. And only property confers this power. Where workers have their own property and can make their own way in the world, any wage contract they accept is likely to be a fair one, one that fairly rewards their productivity. But in absence of a real alternative, there is no real negotiation; you cannot negotiate if you cannot say “no.”

What a free market really requires is free men, and what men require to be free is access to their own means of subsistence, which is precisely what capitalism denies them. The proper ground of freedom is one's own proper ground, the very ground which Mr. Cucerai would cut out from under the worker. What is denied to the mass of men must fall to a minority of men, men who will then be the masters of society and the effective rulers of government, co-opting it to their own ends. This is what has happened. The higher the piles of capital gathered in a few hands, the thicker the walls of government necessary to protect that capital, and capital and government combine to limit freedom, to restrict property. Capitalism is therefore not to be confused with the free market, but to be identified as its mortal enemy, and to confuse the one with the other is to totally misunderstand the reality of modern economic, social, and political life.

Mr. Cucerai is to be praised for his almost unflinching look at capitalism, but he is to be critiqued because, at the last minute, he flinched, he looked away from the logical consequences of his own description to skip the crucial point upon which the whole discussion must turn. He went to the edge and turned back just a hair's-breadth from the truth. But we cannot turn back, for only if we have the courage to look at things as they are can we expect to have the strength to make them what they ought to be.

1J.E.T. Rogers, Six Centuries of Work and Wages: The History of English Labour (New York: G. P. Putnam's Sons, 1884), 239.

2Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Amherst, New York: Prometheus Books, 1991), 70

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Paleo Radio Announcement

Paleo Radio will run from 5-7 p.m. (EST) on http://wocrfm.com. If you have Quicktime, then just go to mms://mediasrv.olivetcollege.edu/WOCR. 

At 6 p.m. I will be discussing anarchism, atheism, and the political-economy with a man who identifies himself as a libertarian socialist. It will last the better part of a half hour, but all calls are welcome after the discussion. 

Call: 269.749.7398

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Ron Paul: Selling His Birthright

He was never expected to win. That is not the problem. He was expected to articulate a vision of free men and free markets that would at least have some influence on American politics. It was to be an exercise in public education rather than political power; its purpose was (or should have been) to increase the sentiment for liberty. This is important because politics begins in public sentiment for certain perceived common goods, and requires an education in practical reason on the best methods and policies for reaching those goods. From that standpoint, a campaign like Ron Paul's could have been very valuable, in much the same way that the populist campaigns of “Fighting Bob” La Follette was a success; although the candidate lost, the campaign won in that his major causes became part and parcel of American politics. Ron Paul is not likely to have that kind of success, neither for himself nor for his cause.

It is not that other candidates do not use the rhetoric of liberty. Mitt Romney, for example, claimed to be a champion of the “free market,” and then proposed giving the automakers $20 billion. McCain opposed the Cheney/Bush “tax cuts,” and then insists on making them permanent. (I put “tax cuts” in quotes because there were no such cuts; there was a tax shift. Borrowing is taxing as well, but merely a tax you shift to the next generation.) And Huckabee wants to slap us all with a 30% sales tax and massive tax increases at the state and local level. And all of them—except Ron Paul—actively support an illegal and pointless war. They all use the rhetoric of constitutional liberty, but in reality they all support the torture state, the imperial presidency, the bankrupt government, and foreign adventures. A Ron Paul campaign that at least broke into double digits would have served as a warning to political leaders of both the right and the left that there remains in this country a significant sentiment for freedom and constitutional government.

Alas, I think the Ron Paul campaign has been counter-productive. It could be argued from his poor results that such sentiments are confined to a fringe group and need not be taken seriously in political calculations. He has demonstrated that you can ignore the reality of freedom so long as you pay homage to the rhetoric. Paul himself was never able to get beyond that rhetoric to articulate a coherent vision and practical policies. Indeed, clicking on the “issues” button on his own website gives only the most superficial discussion of the issues. Comparing all the candidates' web sites, Paul has, if anything, the most superficial discussions. Had Paul been consistently able to break even into the 10-15% range, he might have had a great influence on American politics; he might have established himself as the leader of a group that the Republican Party could not afford to ignore. As it is, he only demonstrated their impotence.

It is not that he did not have the money to do the job. Indeed, he has been successful in fundraising. But he has been less successful in finding useful ways to spend the money. He was no better than Romney or Giuliani at using his political funding wisely. And he turned out to be both a poor campaigner and poor debater. Well, there is not much he can do about his naturally whiny voice, but at least he was willing to defend the Constitution against all comers. Or so I thought. But in his latest ad, he is using all that money he raised not to defend the Constitution, but to attack one of its bedrock principles; he is as willing to abandon the Constitution for political advantage as is any of his rivals, Republican or Democrat. The principle that Ron Paul is now attacking is that of birthright citizenship. (see the ad here.)

Of course the ad plays to the immigration issue, and does so in the standard fear-mongering terms that might be expected from nearly any other campaign; he does not use the opportunity to articulate a “libertarian” view, but a purely nationalistic and even xenophobic one. Nevertheless, that is an issue that can be argued either way, and I do not here argue it one way or the other. His particular view is not where the problem comes in. Rather, the problem is that in the course of this ad, he calls for an end to a bedrock constitutional principle, that of “Birthright citizenship.” This has been a part of American tradition since the founding and part of the Constitution since the 14^th amendment. Ending it would require repeal of at least part of the 14^th amendment. This is a strange “defense” of the Constitution. Even that's okay; after all, the Constitution is not holy writ and has a mechanism for change. But should this principle be abandoned? Can it be overturned without great harm to our understanding of citizenship and the role of government?

Birthright makes citizenship an “act of God,” as it were. Repealing the 14^th amendment would make the granting of citizenship purely an act of some government department or other. We would all become, in effect, “naturalized” citizens, whose membership in the body politic was in the gift of the bureaucracy. At a time of the torture state and the imperial presidency, in a time when the government seeks the power to declare some citizens “enemy combatants” (whatever that means) and to strip them of all rights before bringing them to trial, this is a dangerous idea. And whatever one thinks of this idea, one cannot really call it a “libertarian” idea. Indeed, making citizenship a gift of government seems to me to be the opposite of libertarianism, because what the bureaucracy gives, the bureaucracy may take away.

I am not a libertarian, for reasons I have laid out before (see Why I am not a Libertarian.) Nevertheless, I wish the libertarians well, and I believe a Distributist state would resemble the libertarian ideal more than it would resemble anything else. Further, I believe that libertarianism is impossible without well-distributed property. So I had good reasons for wishing Ron Paul well. I am truly saddened to see him sell out his principles for a few votes. As it is, he is not likely to get those votes; he sold his birthright and didn't even get what Esau got: a mess of porridge. It is, I think, a sad ending to a promising campaign.

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Osama bin Libertarian

Concerning the “fool,” G. K. Chesterton wrote:

For many years I had sought him... I had been told that he was everywhere; but I had almost begun to think that he was nowhere. I had been assured that there were millions of him; but before my late discovery I inclined to think that there were none of him. After my late discovery I am sure that there is one.

I have never been able to discover that "stupid public" of which so many literary men complain. The people one actually meets in trains or at tea parties seem to me quite bright and interesting; certainly quite enough so to call for the full exertion of one's own wits. ... I have sometimes felt tired, like other people; but rather tired with men's talk and variety than with their stolidity or sameness; therefore it was that I sometimes longed to find the refreshment of a single fool.

I have always liked this passage because I felt, like G. K., that fools were harder to find than most people thought. Chesterton did find his fool, and I have found mine. Chesterton's fool was a man who would shoot all the coal miners in order to improve the supply of coal. Mine is a libertarian who would invite our enemies to shoot our citizens in the name of preserving our freedom, a word which means, for this particular libertarian, our freedom from taxes. Now, that is a hard charge to make against any man, and should only be made on strong testimony. And the strongest testimony is the words of the fool himself. Speaking of the national defense, which our philosopher believes should be done not by taxes, but by voluntary, he has a simple plan to encourage “voluntary” donations:

And even if we stipulate, for the sake of argument, that there really are free riders gaining from the investments of others, there are still ways to internalize the externality. We announce to the Soviets, or the Cubans, or the Bosnians, or whoever are the bad guys at a given time, that Joe Blow has not contributed to the defense fund, and that he is therefore fair game. This ought to get them to think twice about trying to free ride on the defense expenditures of others. (Walter Block, “Hayek's Road to Serfdom”; Journal of Libertarian Studies 12:2 (Fall, 1996) 348)

Chesterton did not give his fool a name, but as I have quoted him, I have already given his name: Walter Block. Now, I wish to be very clear that I do not regard all libertarians as fools—far from it. Many, especially the so-called “left” libertarians are quite sound and deserve our full attention, if not always our full allegiance. And I believe a distributist state would more closely approach the libertarian ideal than any other state, since liberty in such a state (both political and economic liberty) would be guaranteed by the widespread dispersion of property (without which liberty is impossible), and people would have less need for the government and more need for each other, less dependence on remote bureaucrats and more dependence on their near neighbors.

Mr. Block's simple idea of using our enemies to murder our friends does have a certain charming simplicity about it. Osama bin Laden would become the chief enforcer of the libertarian ideal of freedom. Let us re-christen (if that is the right word) him Osama bin Libertarian. Alas, it has a few flaws which even (should I say it?) a fool could spot. It seems to me, fool that I am, that Osama & Co. would hardly want to murder citizens who refused to contribute to the nation's defense. Quite the opposite; they would want to reward such people. They would want to lavish gifts upon them. They would want to provide an incentive, and self-interest is, for the libertarians of Mr. Block's stripe, the only real motive for action. And Mr. Block, presumably, would have no objection to that for the right to favor our mortal enemies over our neighbors is, apparently, one of the “freedoms” that Mr. Block admires:

If it cannot be denied that national defense is an external economy for most ordinary people, then it also cannot be disproven that it is an external diseconomy for the pacifist and the person who favors our enemy over this country.

Mr. Block is sharing all this wisdom in the context of an article attacking Friedrich von Hayek for being a Socialist. Now, I don't think that Hayek is beyond critique. Indeed, I have done so myself (Hayek's Super-Highway). The particular point at issue is the externalities, that is, the cost of a transaction that is borne by persons not a party to the transaction. Pollution for example. A company lowers its costs by dumping its toxic wastes into the river. Downstream there are dreadful costs, but for the company there are huge benefits. This is an externality, where the costs are on one side and the benefits on another. Externalities have always been rather an embarrassment to libertarians in general and right-wing libertarians in particular. By definition, such things are external to the market and cannot be handled by market mechanisms. But the right-wing libertarians want to make the market the arbiter of all things.

The market ought to be the arbiter of marketable things, but all things human are not marketable. The common good requires a common defense, and despite the claims of Halliburton, Blackwater, and a thousand other war profiteers, these things cannot be left to the market. Many other common goods fall in the same category. For example the air we breathe is a common good, but has no market, unless one can control it and make it scarce; then it can be sold at a high price, the price of a man's life. And to certain fools, that would be just fine. The common goods require common decisions, and the externalities require some mechanism beyond the market. The right-wing libertarians have no coherent theory of government, and hence have no coherent way to limit government. Governments have never grown as rich and powerful as they do under regimes which claim to be devoted to the disappearance of governments, and this is as true of the laissez-faire regimes as it is of the communist ones. The socialist and the libertarian end up conspiring against the public, and in the case of Mr. Block, are more than willing to bring our enemies in as part and parcel of the conspiracy.

I do not mean by this to ridicule the libertarians. Far from it. I do wish to point out that devotion to an ideology—any ideology—can trump reason and make a man, quite literally, a fool.

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Why I am Not a Libertarian

Kevin Carson has made an excellent case for the connection between Libertarianism and distributism. (Of course, I do not mean here the caricature of libertarianism that has predominated since Ludwig von Mises; that kind of libertarianism is simply silly.) Nevertheless, I do have some critiques which keep me from being a whole-hearted libertarian.

The first criticism I would offer has to do with the efficacy of the pure price system. Libertarians tend to believe that all externalities are the result of govmint action. (Externalities are the costs of a transaction not borne by the parties to the transaction, but placed on some third party who is not involved. Pollution is an example of an externality.) Yet I question that assumption. One can easily undercut the market by, say, developing a cheaper manufacturing process which merely dumps the hazardous wastes into the nearest stream, causing hardship for those down river. There is no reason, that I can see, to assume that such externalities are impossible without govmint, and many reasons to believe that the absence of a public authority will encourage such externalizing. Indeed, without monitoring, how is anybody to know that it is happening? And if monitored, how is anybody to put a stop to it without some sort of government? Now, I am a believer in market pricing, but I am not a believer in the theory that the market price encodes all information about a product. As long as their are externalities, or even the possibility of such, will there not be required a political process (call what you will) to arbitrate the externals and assign costs? But such a function turns out to be complex and hence problematic in terms of Libertarian anarchism.

The second critique is the absence of distributive justice. Mutualism, as Kevin presents it (and I may be wrong here) relies (as does neoclassical economics) on corrective justice only, on free contract. But contracts arbitrate power, not productivity, not a contribution to the productive process. That is the whole reason that the formulas of marginal productivity do not work: they marginalize not productivity but power. Any glance at the difference in pay scales between the CEO and the line worker, between the sweatshop seamstress and the owner confirm that power is the key, not productivity. earns 500 times more than the line worker not because he is 500 times more productive but because he is 500 times more powerful; the seamstress in a sweatshop will be given a pittance not because she lacks productivity but because she lacks power. A glance at the statistics on the increase in productivity compared to the flatness of the typical wage shows the same thing. A contractual system, apart from a prior notion of distributive justice, will end in power being arbitrated, for that is what contracts do. Now, you can reasonably reply that a notion of distributive justice is satisfied by usufruct of land, and that will be true to a large extent, but not completely, because land is not the only factor of production. There will be many opportunities to cheat, which brings me to the next critique: you have not accounted for sin.

I am not so dogmatic as to insist on a notion of sin in a theological sense, but I think we can all agree that people have a tendency to try and profit at the expense of others, a desire to earn a surplus profit. Oddly enough, this is not really a desire for gain in terms of money, but in terms of power. For it is easy to show that everyone would be better off in an economic sense in a mutualist system. However, economic betterment is not the issue; power is. The pure joy of being able to lord it over your neighbor holds an irresistible attraction for at least some people, and maybe more than we think.

All of these things are problematic, are they not, for anarchism. Men have always had govmints not because of flawed thinking, but because of practical problems. The community has a role in all these affairs for all of these reasons, but a freely contracting society would have difficulty in handling them, would it not, because they cannot be subsumed under contract. Therefore, corrective justice alone is insufficient, and economics must also be political economy.

Which brings me to by last critique, and that is that contract, social or otherwise, does not exhaust the nature of man; it is too individualistic, while man is social. We are called into being by the ready-made community of family, and we receive a series of gifts which are purely social in nature and not exchangeable: language, nationality, custom, moral sense, etc., are all gifts outside the exchange system and cannot be accounted for by that system. Yet the exchange system relies on them and cannot exist without them. Therefore, a better description is needed.

Having said all that, I do not wish to over-emphasize the critique; I do not wish to make distributivism and mutualism mutually incompatible, for they are largely variations on a theme, a theme of freedom. But I think it useful to point out that the vulgar libertarians, when they defend pure corporations and even monopolies (as they do), are not as inconsistent as some might think them. If free contract is all, then a group may freely contract to oppress or gain some non-market advantage. If absence of govmint interference is the only standard (and anarchism lends itself to that interpretation) then there can be no govmint or even community to put a stop to it. We begin (and end) in non-contractual communities, and this fact about humans, this social fact, has to be accounted for in the social systems, and economics is certainly a social system.

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Free Market Anti-Capitalism

The following article is by Kevin Carson, the author of Studies in Mutualist Political Economy, an excellent study of what might be called "left-wing libertarianism." Kevin's blog is "Free-Market Anti-Capitalism." With this article, we are initiating a series to introduce readers to economic approaches which are similar to Distributism, even where there remain serious differences. In a day or two, I will post my own critique of libertarianism. [Note: If anyone has any suggestions for other views to include in this series, please e-mail me.]

There has been frequent contention between free market libertarians and distributists.For example, Mises.Org has run several anti-distributist pieces (most notably by Thomas Woods) On the distributist side, John Médaille--who kindly invited me to write this guest post--has in my opinion made the mistake of treating the right-wing stance of Mises.Org as inherent in free market libertarianism as such.

In fact, I believe there is a great deal of potential agreement, as well as room for fruitful collaboration, between distributistism and the left wing of free market libertarianism.

Far too much of the libertarian mainstream leans toward pro-corporate apologetics, and confuses free market principles as such with the interests of big business and the wealthy.I commonly refer to this as "vulgar libertarianism."But this tendency does not follow of necessity from free market principles. In fact, as many of us on the free market left argue, it actually represents a perversion of free market principles.

Most of the mutual animosity between distributists and free marketers comes, not from the inherent principles of either ideology, but from cultural prejudices that have little to do with those principles.On the part of (some) Misoids, this comes from an instinctive affinity for big business and the wealthy, and a desire to defend the concentration of wealth and the rise of wage employment associated with the existing form of industrial capitalism as the products of a free market. On the distributist side, it comes from the unjustifiable acceptance of such vulgar libertarianism as representative of libertarianism as such.

In fact, far from starting out as conservative, the free market liberalism of the early political economists--Smith, Ricardo, and Mill--was a revolutionary doctrine aimed at the abolition of economic privileges, like those of the mercantilists and the Whig landed oligarchy. It is perverse that so much of the libertarian mainstream has since become identified with the modern-day counterparts of the mercantilists and landlords: the giant corporation.

But significant currents of free market libertarianism adhered to the original radical approach. Several radical strands of classical liberalism, including some self-identified socialists, drew radical conclusions from Ricardo's observation that the income of landlords and capitalists came from value produced by labor. The radical direction in which they took their free market philosophy was just this: if the natural tendency of a free market is for labor to receive its full product, then the fact that labor does not receive its full product under existing capitalism can only result from privilege. Capitalism, as distinguished from a free market, is a system in which the state represents the owners of capital and land and intervenes in the market on their behalf. Its enforcement of special privileges keeps land and capital artificially scarce and expensive in comparison to labor, so that labor must pay tribute for access to the means of production. Let, therefore, the state remove its guarantees of privilege, and let the suppliers of land and capital compete in a free market without entry barriers, and land and capital will cease to draw monopoly returns; the wage of labor will rise to its full product.

Some version of this reasoning was adopted as the basis for Proudhon's mutualism, the radical free market thought of Thomas Hodgskin in England, the individualist anarchists in America running from Josiah Warren through Benjamin Tucker (my own chief influence), and the Georgists.

Although he did not adopt nearly such thoroughgoing radicalism, Murray Rothbard (perhaps the most prominent star in the anarcho-capitalist sky) did view the present system as one in which our corporate state uses the coercive taxing power either to accumulate corporate capital or to lower corporate costs. At the height of his strategic alliance with the New Left, Rothbard enthusiastically mined the radical history of Gabriel Kolko and William Appleman Williams for insights that could be incorporated into a free market critique of state capitalism.Today, the Alliance of the Libertarian Left continues to develop this left-wing aspect of Rothbard's thought.

The chief substantive difference between distributists and left-wing free marketers, it seems to me, involves not so much our sympathies or goals as our understanding of causality. To take much distributist rhetoric at face value, it seems to imply that the present concentration of wealth and capital emerged from laissez-faire and is the natural result of a free market, and that some form of state intervention is necessary to prevent wealth from being concentrated in fewer and fewer hands. The left-wing free marketer, on the other hand, sees the natural tendency of the market as egalitarian and decentralist, and sees the present day system of corporate power and concentrated wealth as the result of massive state intervention on behalf of the wealthy and powerful.The left-wing free marketer says the same thing his radical free market ancestors said:remove all state subsidies to big business, and all special privileges protecting it from competition, and the market will operate as dynamite at the foundations of corporate power; let the dynamite of the market operate, and we will see a decentralized economy of small-scale industry producing for local markets, with widespread cooperative ownership and self-employment.

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