Tuesday, January 17, 2012

A dialogue between a "real capitalist" and a "distributist dreamer"…

"Distributism does not blend or 'balance' Capitalism and Socialism. Both of these systems result in the concentration of ownership. Socialism does not 'redistribute' wealth, it denies the private ownership of it altogether…. We have been trained to believe that any significant state involvement means Socialism. This is a lie. State managed redistribution of privately owned wealth from the rich to the needy is not Socialism because the the wealth remains privately owned. … Both Capitalism and Socialism require the big state. This is true despite the Libertarian desire to minimize state involvement."

-- David Cooney, 10 Jan. 2011

A: Cooney's point about "redistribution" seems arguably correct. But where does he get his assertion about Capitalism? (Or is he ignoring the laissez-faire brand? For it never needs a "Big" government.)

B: I think the idea here is: "Wal-Mart without federal highways––oh really, now?"

A: I'm not following. And federal highways are one of the very few functions a SMALL government is actually allowed to govern.

B: Let me quote from a private and slightly revised correspondence:

"[We musnt confuse] 'prices' with 'costs.' [For] this ignores the role of externalities and subsidies. Prices can be lowered by externalizing costs. For example, WalMart could not survive if the costs of transportation were not subsidized. If there were weight and distance tolls on roads, the long range distribution system would be shown to be inefficient for low cost goods and would be confined to high-quality, rare, and high cost goods. If pollution were paid for by the producers, instead of by the gov't or simply by decreased public health, it is absurd to speak of 'low-prices.' …

"The WalMart distribution model looks this (I am using WM as an example because their operations are well-known and documented): They open a distribution center in a new area, and then saturate that area with stores along the major highways. It is obvious that the region cannot support that number of stores, but sales are not, initially, the object. As the local commerce (and competition) drys up, Walmart closes most of the stores to leave an 'optimal number,' which leaves the area at the mercy of Walmart, and stores that are remote from many people. At that point, even the pretense of low prices is lost. And this analysis ignores the cases of stores whose entire profit margin consists of the sales tax rebate."

In any event, small govt may be able to govern highways… but how did they get built?

A: Small government can = federal government, as long as it is existing within its Constitutional authority. And that's what I thought you might mean re: Wal-Mart, but Wal-Mart is no archetype of Capitalism, only of our current Socialist-laden Capitalism. A great capitalism could still exist even if Wal-Mart could not.

B: What would you say is the best actual, sustained case of laissez-faire capitalism in history (i.e. devoid of government crutches and monopolies)?

A: Several hundreds or thousands of (micro-)times in American history, most of which were in its earlier times. I'm not much of a historian, and so remember dates, etc., but I have read about them in books on history and economics. The PIGs to the Constitution and Capitalism are my better resources. (Which are, admittedly, not academic.)

But this question (which I've heard often) misses some of the point: for a single application of a single policy amidst an incredibly controlling, subsidy-laden socialist capitalism, if it frees the market in some small way, is enough of an example of laissez-faire capitalism. And I have found this to work at near 100%.

B: I'd call the "micro-times" of true capitalism just family's lives, i.e. time scales in which capitalism is effectively distributism. I am troubled by the apparent symmetry between the following claims: "Capitalism has never really been tried" and "Communism has never really been tried". It could just as easily be said that regulating monopolies under a socialist aegis frees the market for a greater number of producers, and therefore socialism is vindicated. The problem is that both capitalism and socialism seem to treat economic conditions and dynamics as a kind of trans-historical, absolute sphere of deterministic principles, as if "society" and/or "the market" were something over and above the particular people who interact. Speaking of freedom presupposes we know what freedom means, and I deny that freedom is simply the ability to do whatever. Freedom is the power to do the good, and nothing about capitalism in its theoretical purity seems to speak to "the good" (but only to "goods"). Therefore, it seems a truly-free market (i.e. a sustainable system of free people interacting towards the common good) can only be brought about by aiming market laws at the common good, which is the purpose of governance.

In any case, the point is precisely that 'real' laissez-faire capitalism (LFC) seems only to enjoy micro-spatiotemporally sustainable success, not longterm, widespread success (absent government crutches). Any theory can be made to work for a time. Look at Sweden as "proof" of socialism (never mind that it's liberalizing now that the socialist generation is growing oppressive). If LFC is practically unworkable in the real world of historical change, then it is just that: practically unworkable.

Here's a little syllogism (modus tollens): If the market M just is human behavior B, and if B is consistently and reliably rational Rr, then the market is Rr; but B is not Rr (~Rr), therefore M is ~Rr. If however M is irrational, then, either "the invisible hand" is just as 'good' a guide as "The Great Spirit of Natural Selection" or pure-market economics is ~Rr and LFC seems in dire straits.

It's an interesting conundrum: if LFC has never really, fully, truly been tried (á la Ron Paul), then it's not really been shown to be false. My query is why, if LFC is the natural order of human flourishing, it can't seem to get off the ground (i.e. it can't get really tried).

Nonetheless, let it be granted that distributism is all for smaller government, so small, in fact, that it would not amount to more than needed to protect the smallest and best government, namely, the family. That's a key point, in any event: there is a close connection between small government and small economy , on the one hand, and big economy and big government, on the other.

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