Tuesday, April 7, 2015

Toward a Truly Free Market

Guest contribution by Nick Xylas, WR Council member

The following is a review of Toward a Truly Free Market: A Distributist Perspective on the Role of Government, Taxes, Health Care, Deficits, and More, by John C. Médaille, published in 2011 by ISI Books of Wilmington, Delaware, USA.

When in my wife’s home town of Weirton, West Virginia, it is almost impossible not to notice the words “WEIRTON STEEL – AN ESOP COMPANY” written in giant lettering on the roof of the steel mill that dominates the town.  Weirton Steel was, for a long time, West Virginia’s biggest employer.  But these days, the mill is operating at less than a third of its total capacity and that mantle has been passed to Wal-Mart, a company, owned by the obscenely wealthy Walton family, which pays its employees so little that new entrants are given guides on how to claim welfare benefits in order to supplement their wages.  It brutally illustrates a theme running throughout this important book from John Médaille, namely that capitalism, far from being socialism’s polar opposite, inevitably leads to it when left unchecked.

Médaille is one of the leading advocates in America today of distributism, a political philosophy rooted in Catholic social teaching.  Whilst he can in no way be accused of running away from his Catholicism, Toward a Truly Free Market is written for a general audience, so the smell of incense is not as overpowering as it can be with some distributist works.

The first section of the book provides a general overview of economics.  Médaille prefers the term 'political economy', the name by which it was usually known until some time in the last century, when it changed as a result of economists’ desire to paint their discipline as a natural science like physics, rather than the result of conscious choices by governments and societies.  Speaking as someone for whom the business pages of the newspaper may as well be written in Estonian, it is testament to Médaille’s skills as a teacher that I was able to understand most of it.

There then follows a series of chapters on specific topics relating to the problems caused by morality-free capitalist economics and how to fix them.  The key doctrine, on which all the rest hinge, is that of the just wage.  Médaille avoids giving a specific figure for this wage, as that will be different in different times and places.  Rather, he bases it on general principles: that it should be enough to support a family’s basic needs on a single full-time income; that it should be enough to also allow that family to save money instead of living pay cheque to pay cheque; and that it should give them security against enforced periods of unemployment (sickness, layoffs etc) with minimal recourse to welfare benefits.

Finally, the book considers in detail two examples of distributism in practice: the region of Emilia-Romagna, on which more shortly; and the Mondragon co-operative.  The latter is a network of workers’ co-operatives in Spain with over 100,000 members and €33 billion in assets.  The survey of its activities provides the launch pad for a more general overview of the co-operative movement and of ESOP (Employee Stock Ownership Program) companies, which give workers a stake in their ownership.  Médaille warns that there exist fake ESOPs such as Enron, created primarily as a tax dodge, but commends the real thing (I’m afraid I don’t know which category Weirton Steel falls into).  He also sees strong unions as vital for worker participation in the economy, though as he is writing within an American milieu, the restoration of the guilds doesn’t play as large a part in his thoughts as it traditionally did for English distributists such as G.K. Chesterton and Hilaire Belloc.

There isn’t space in a review to do justice to the full range of Médaille’s arguments, but two things particularly commend it to Wessex Regionalists for me.  The first is the chapter on the role of government.  Médaille vigorously defends the ability of government to provide for the common good, as against the current political orthodoxy, which sees it as an impediment to the ultimate goal of capitalism without democracy (hence the current round of secret trade negotiations seeking to give corporations the right to sue governments for any regulations they deem too onerous).  His philosophy of government revolves around what he terms a horizontal and a vertical axis, represented by the principles of solidarity and subsidiarity respectively.  Solidarity means the creation of networks between different sectors of society, and different governments.  It particularly means the ‘preferential option for the poor’, examining all policies in the light of how they affect the most vulnerable in society.  Subsidiarity means that no decision should be taken at a higher level of government that could be implemented at a lower one.  It means both local control and local funding, since funding dispensed from central government to local communities can appear to be 'free' money, leading to irresponsibility in the decision-making process.  These principles have always been at the heart of Wessex Regionalist thinking, and it is a pleasure to see them so eloquently expressed.

The section on Emilia-Romagna, the Italian region centred on Bologna, will also be of interest to readers of this blog.  35% of the GDP of the region is supplied by co-operatives, but unlike Mondragon, where the co-operatives operate like divisions of a single company, the Emilian co-operatives are independent firms, of varying sizes, all supported by a regional development agency (ERVET) and the National Confederation of Artisans (CNA).  Unfortunately, the questions that Wessex Regionalists will naturally be asking themselves at this point are not ones that the book really concerns itself with.  How did co-operatives become such a large part of the economy?  How big a part did Italy’s decentralised system of government, with strong regions, play in allowing them to flourish in this way?  Which parties and political groupings supported the development and which opposed it (Médaille does mention that the Fascists suppressed the co-operatives in the 1930s)?  Nonetheless, I commend this book as a starting point that will hopefully lead Wessex Regionalists towards further investigation of Emilia-Romagna as a potential model for our region’s economy, rather than Wessex becoming one more plantation in the global slave state.

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