Distributism, The Wave of The Future

Karl Marx was found of saying that communism was the “wave of the future.” It seemed in the 60's that he might have been right, as socialism seemed to be marching across Asia, Africa, and South America, coming to within 90 miles of our own shores. Now the claim is ridiculed on the pedantic grounds that openly communist states have either collapsed, are collapsing, or have re-invented themselves as state-managed capitalist countries. However, while the the “pure” form of communism was certainly a failure, the “state capitalist” form has been the norm throughout the world at least since 1933, if not sooner. And while the “dictatorship of the proletariat” has failed to materialize, the dictatorship of the corporatariat has become the ruling reality of government and economics. Indeed, this corporatariat has always been able to claim billions—and now trillions—from the public purse on the grounds that they are “too big to fail.”

The Distributist, however, know instinctively that they are too big to succeed, or at least succeed without massive government support. We knew instinctively that the claimed “economies of scale” were in fact dis-economies covered up by power, privilege, and subsidy. There has been, for 100 years, a vast body of literature on why this is so, but is a literature normally absent from the curriculum of most schools of economics and unavailable to most of the public. However, while the economics profession and the corporate culture have been able to refuse the questions up until now, it now appears that we are entering a crises that cannot be cured by the old rules. It is time to re-examine, and indeed rewrite, the old rules. A big contribution to this effort has been made by Kevin Carson, the “free-market anti-capitalist,” with an essay titled “Industrial Policy: New Wine in Old Bottles.”

The current industrial system, as Kevin demonstrates, is based on control of highly expensive and limited use, product-specific machinery. This machinery was so expensive that it required mass markets, low wages, and planned obsolescence. This is called “supply-push” distribution: make the stuff whether or not there are orders and find a way to sell it later. It is an industrial model especially associated with Alfred Sloan, the legendary President of General Motors. But the system never really worked. It became critically dependent on government support and regulation to prevent competition. The model worked, more or less, in cooperation with government support up until the 70's. But since then, “neoliberalism, globalization, the creation of the tech sector, the housing bubble and intensified suburbanization, and the expansion of the FIRE economy (finance, insurance and real estate) have served as successive expedients to soak up surplus capital,” and keep the economy on a sort of artificial life support.

The most disappointing thing about the new president is that he seems ready to try and work the old Keynesian magic on the economy. His economic team, though highly competent, are all drawn from the financial sector—that is, from the FIRE economy—and seem ready to try the old expedients on the economy. That is, they are trying to solve the problem by the kind of thinking that caused it in the first place. For example, we try to solve a problem caused by financial speculation by bailing out the speculators so they can do it all again. It is, as Ivan Illich put it, “trying to solve a crises by escalating it.” But the problem is structural, and the burning structure is exactly what the FIRE-men cannot address. Indeed:

any solution that directly addresses the structural causes of the problem will, by definition, be "extremist." Sociologist C. Wright Mills' memorable term for that mindset was "crackpot realism." The crackpot realists have been busy lately, feverishly promoting bailouts to preserve the "industrial infrastructure." Their vision of how to restore "the economy," naturally, amounts to a return to an economic "normalcy" defined by giant corporations and mass consumer society.

The real reason these old models won't work is that they barely worked in the past. As Kevin points out:

The problem is, there was barely enough demand to keep the wheels running and absorb the full product of overbuilt Sloanist industry even when everyone maxed out their credit cards and tapped into their home equity to replace everything they owned every five years. And we'll never see that kind of demand again. So there's no getting around the fact that a major portion of existing plant and equipment will be rust in a few years.

But if the old models won't work, are there any new ones that we can use? Kevin finds at least one successful model in Italy:

The closest existing model for sustainable manufacturing is Emilia-Romagna. In that region of 4.2 million people, the most prosperous in Italy, manufacturing centers on "flexible manufacturing networks" of small-scale firms, rather than enormous factories or vertically integrated corporations. Small-scale, general-purpose machinery is integrated into craft production, and frequently switches between different product lines. It follows a lean production model geared to demand, with production taking place only to fill orders, so there's no significant inventory cost. Supply chains are mostly local, as is the market. The local economy is not prone to the same boom-bust cycle which results from overproduction to keep unit costs down, without regard to demand. Although a significant share of Emilia-Romagna's output goes to the export market, its industry would suffer far less dislocation from a collapse of the global economy than its counterparts in the United States; given the small scale of production and the short local supply chains, a shift to production primarily for local needs would be relatively uncomplicated. The region's average wage is about double that of Italy for a whole, and some 45% of its GDP comes from cooperatively owned enterprises.

In other words, the way forward is precisely the model familiar to distributists (see Emilia-Romagna Cooperatives.) Kevin details not only why the old model is not working, but how the new model is already working, especially in fields connected with the new technologies and the breakdown of government-protected monopolies of patents and copyrights. The truth is, the new system is already beginning. In fact, the industrialists themselves have inadvertently contributed to it. They realized some time ago the dangers of actually owning equipment and machinery, and have outsourced their work to subsistence wage factories in Third-World countries. But this dispersal of capital in fact destroys the reason for having a capitalist system in the first place. Now, as the distribution system breaks down, any reason for the system fails with it.

The questions up to this point in time could safely be relegated to the realms of unorthodox theories. But with the breakdown of orthodox economics and systems, the time to act is now. The moment has come. The old system will not be re-created; it is too far gone, and gone globally. There is no one left to exploit. Those interested in the work of rebuilding the system, of being part of the wave of the future, can profitably read Kevin's important contribution to the industrial question.