Monday, January 2, 2012

The necessary role of justice in political economy…

"Medaille suggests that economics—better labeled as political economy—lost its way under the influence of David Hume and Bernard de Mandeville. ... As his antidote, the author returns to the political economy of Aristotle and to the necessary place of justice in proper theory. ... Aristotle also argued that '[t]he family is the association established by nature for the supply of men’s everyday wants.' Medaille elaborates: 'It is the family, and not the individual, that is the starting point ... because only the family is [fundamentally] self-sufficient; an individual in isolation can neither reproduce nor provide for himself.' Accordingly, all economics is necessarily social, or communitarian. This return to Aristotle also points to measures of justice. ...

"The author also resurrects the key insights of early 20th Century Distributists[: namely,] 'Markets are not natural phenomenon, but are socially created'; '…exchange does not create wealth; that happens in the production process'[;] …if the worker is to reap the full value of his labor, then he must own an interest in the land he works; — “Property must be seen as an aid to productive work, and not as a substitute for it'; and —-“This accumulation of property into the hands of those who do not use it is the sole cause of the vast inequalities that bedevil civil society and economic order” [referencing here Adam Smith—one of the author’s heroes-- “Wherever there is great property there is great inequality…[and] the indigence of the many”]. In each case, Medaille provides provocative elaborations of these basic premises behind the Call for a Property State."
-- "Commentary on John Medaille’s Toward a Truly Free Market" | Front Porch Republic - www.frontporchrepublic.com

1 comment:

amtheomusings said...

I will have to read this Medaille book, because I've been hearing about it everywhere. But, assuming that the reviewer's interpretation is accurate, I think there are some problems with his analysis of contemporary economics. Granted, these are off the cuff judgments, so the fuller explanation might help to void these critiques.

First, markets are natural phenomena. They are the result of many individual actors acting to produce and exchange, whose actions can be understood and described within a praxeological framework, founded on a more-or-less Aristotelean metaphysical description of natures. I don't see the reason for understanding natural and social phenomena as opposed.

Second, while exchange does not create wealth, it does help to signal and direct resources and labor to the production of goods and services that will be considered wealth. Moreover, there are those who engage specifically in the coordination of sellers to buyers, and buyers to sellers (think eBay); is not their service to be considered some type of wealth?

Third, I do not understand this exaltation of property, nor the critique of the accumulation of property. If property is being accumulated, then it is, by definition, being expended to its economically efficient function. Generally, property is accumulated in order to better provide services (economy of scale, anyone?), and it will be accumulated up to the point that it is no longer efficient (diseconomy of scale).

I'm sure that these points are explained in much greater detail in the book, and my critiques might not stick, but the mere mentioning of these notions seems contrary to what I understand from economics.