Positive Economic Models

A new (CL, I assume) blog, Letters to a Post-Christian Nation, takes up the subject of an alternative economic model, G.K. Chesterton's distributism, which is now getting some respect. As a concept, it takes on other names, such as sustainability. Whereas strict economic liberalism assumes a materialistic view of social motivations and a polyannish optimism in market "freedom", a local economic model matches economics with relationships in the real (non-virtual) world.

Here is the CL UK press release about the Crunch. Reading it, I am struck by the fact it acknowledges that financial models have become disconnected from the real economy (the ideas of distributism aim to make this reconnection, in Belloc's particular ideas, this involves punitive taxes on big companies to limit their size!!!) and the link to trust reminds me of the other point the lecturer made the other day; he talked about a crisis of "confidence" in the financial system. I pointed out that to call it confidence when we apparently build a system on making impossible mortgage offers to people who presumably aren't able to decide better is a bit of a strange definition.

So we are back to education; how to know reality. I think I am pretty lucky, because all the disillusionment I have in my strange socialist family roots is soothed by news like this from Brazil, where they are building new social infrastructures without lapsing into socialism.

Stratford Caldecott takes up this communitarian theme in "After the Disaster: Back to the Family and Localism", showing a root cause in the distortion of individualism. His observations are well-documented in sociological studies on marriage and family, and the application to the economy makes sense.

The dominant social philosophy tells us that the basic unit of society is the individual, making choices that simply reflect the desires that are uppermost in him at the time. If this is true, two things happen. First, everything tends to be determined by individual desire and its manipulation. We end up with pure consumerism. Second, centralization (or corporatism) becomes inevitable, because a multitude of individuals can be too easily harnessed together. The result is a small group of successful individuals controlling the rest. That can as easily take the form of socialism as capitalism.

In the real world, the basic unit of society is not the individual but the family, meaning the set of relationships out of which the individual is born or into which he marries. It is from within this set of relationships that the individual exercises what freedom he has, whether it be moral, economic or political.

A shift in philosophical view away from individualism would change everything. If the basic unit of society is understood to be the family instead of the individual, people cannot so easily be detached from the relationships in which they are embedded, including the natural environment on which they are dependent. In other words, if we adopt this person- and family-centered view, truth would come before choice, reality before desire, responsibility before rights. That would make us less easy to manipulate, herd and enslave.

“Embedded” individuals are not morally any better than the free-floating individuals in a consumerist society, but their interests are different. One way they differ is by being likely to take a long-term view, because while an individual lives only briefly, a family or group lives potentially for ever. Consequently, to the extent that our affections and identity are bound up with such a group, we will seek sustainability (environmental as well as economic) rather than immediate advantage and self-indulgence.

I am reading Supercapitalism by Robert Reich, an interesting book recommended in Rimini by one of the speakers on a panel discussing the economic situation (just pre-crisis). The acceleration of the consumer-goods global economy has removed many of our key former economic and social safeguards. The sale of consumer items drives two-thirds of the economy today, so the question is what happens when we as individuals run out of credit or decide to get off the merry-go-round: how will we move the economy forward? Reich recommends on his blog that we return to building structures that benefit the community in place of an excess of consumer trinkets.

The current recession is a nightmare for people who have lost their jobs, homes, and savings; and it’s part of a continuing nightmare for the poor. That’s why we have to do all we can to get the economy back on track. But most other Americans are now discovering they can exist surprisingly well buying fewer of the things they never really needed to begin with.

What we most lack, or are in danger of losing, are the things we use in common – clean air, clean water, public parks, good schools, and public transportation, as well as social safety nets to catch those of us who fall. Common goods like these don’t necessarily use up scarce resources; often, they conserve and protect them.

Yet they have been declining for many years. Some have been broken up and sold as more expensive private goods, especially for the well-to do – bottled water, private schools, security guards, and health clubs, for example. Others, like clean air, have fallen prey to deregulation. Others have been wacked by budget axes; the current recession is forcing states and locales to axe even more. Still others, such as universal health care and pre-schools, never fully emerged to begin with.

Where does this logic lead? Given the implausibility of consumers being able to return to the same level of personal spending as before, along with the undesirability of our doing so even if we could, and the growing scarcity of common goods, there would seem only one sensible way to restore and maintain aggregate demand. That would be through government expenditure on the commons. Rather than a temporary stimulus, government would permanently fill the gap left by consumers who cannot and should not be expected to resume their old spending ways. This wouldn’t require permanent deficits as long as, once economic growth returns, revenues from a progressive income tax refill the coffers.

Obviously, there are better and worse ways of achieving this goal, and subsidiarity is the Chestertonian and Catholic preference which supports the local initiative over imposed bureaucracies. Still, the time is right to propose more reasonable economic models which promote the common good over maximum profits.