on August 21, 2010
This book is one you have to read to learn about the Distributive solution to modern economic problems. My previous readings on this subject consisted merely of attacks on the present system, rather than a exposition of solutions in the modern economy. That being said, I do have a few areas of disagreement:
Medaille states that money is NOT a commodity, and does not have to be based on a commodity. I think this is historically inaccurate. He correctly states that fractional reserve banking enables bankers to create money (in the form of credit) out of nothing, and lend it at interest. Rather than just abolishing this practice as fraudulent, and establishing a free banking system with a commodity backed money, he advocates that the government just print money and lend it without interest for capital projects. As long as the increase in money supply keeps pace with the increase in production, inflation will be minor. This is not a power I would want in government. Even if prices don't rise, malinvestment will still occur due to wrong saving/consumption signals. Better to have private banknotes, with government ensuring value and prosecuting fraud. (eg. One dollar= 1/32 ounce of gold/silver/etc.) This will ensure that prices reflect a real savings/consumption ratio.
He also believes that all (or most) taxation should be a 100% tax on ground rents.
In this he follows Henry George. However, a tax that appropriates all ground rent would drive the capital value of land to zero, and not produce any revenue. The separation of the value of ground rent from the capital improvements would be extremely difficult to calculate. He also ignores the fact that landlords produce a useful function of allocating land to the most efficient user. Keeping land idle produces no revenue!
The main economic problem to be solved is the "just wage" for labor. He states that wage rates have nothing to do with productivity or supply and demand, but rather with bargaining power. For this he recommends unions or "guilds" to represent workers and increase their bargaining power. All you have to do is compare the wages of a laborer in India with one in the U.S. to dispel that notion. A long range comparison will show that increases in the return to labor have kept pace with the increases in productive capacity. The present day stagnant wages are attributable to other factors (inflation, malinvestment, etc.) Does he not think the the increase in supply of labor provided by illegal immigrants has not depressed wages? Do all they need is union representation? I think the answer is self evident.
He also states that an indication of monopoly is the rate of profit. The higher the rate of profit, the more it is evidence of monopoly. His solution is to have progressivly higher taxes on profits,with a 97% tax on high profits.
He even states that this should not have a negative effect on investment since monopolies want to keep supplies low anyway. But this assumes that they are monopolies in the first place.
I don't want to seem too negative, so here are the points I agree with:
He states that the huge conglomerates often achieve their status and power through political influence, subsidies and unpaid externalities. If we stop the subsidies, eliminate the monopoly grants and patent laws, if we charge user fees,then the large corporations will have to break up to smaller units, and a greater share of wealth given to labor. He correctly states that if a corporation grows too large, it will face the same calculation problems of allocating resources that a socialist economy faces. This natural limit to corporations was first described by Austrian economists, and is another reason that monopolies cannot occur naturally without government aid.
His call for the abolition of the Federal Reserve is well taken (but not his call for tranferring its powers to Congress). His recommendation for more co-ops and worker owned industries is commendable, since it all done without State coercion.
However, despite his examples, in co-ops everyone is an equal owner so there is a disincentive to invest more than any one else; this could hamper investment in a competitive market against other corporations.
I really like his proposal of having all taxation collected by local governments which then distributes it up to higher levels of government (State and Federal). Imagine the Federal government having to justify in Constitutional terms its request for funds! This returns us to the way it was in the original Articles of Confederation!
As he says, economic considerations have to be subordinated to moral considerations and institutions should be developed to give a meaningful life to all families. Bishop Sheen once advocated a fund be set up by businesses or local government to bring low wage workers up to a family wage. A moderate social safety net is perfectly compatible with a free market.
I cannot go into all the useful insights presented in this book, from taxation to health care, and proposals for de-monopolizing and freeing the economy. It is written in a readable and non-technical manner that makes it hard to put down. Whether you agree with the author or not, you will be enlightened and give serious consideration and thought to his proposals.
on August 17, 2011
This is an outstanding work clearly laying out a system that neither relies on the almighty state to solve problems, nor lets giant corporations take over. It favors local economies,small businesses, and empowering communities to solve their own problems. Instead of having the state take over all property (socialism) or have a situation where only the top 5% actually own anything (present day capitalism) it puts the family in the center and supports using the market not just to make money, but to distribute ownership, property, and social goods more evenly. Of course there'd still be rich and poor. Sometimes called the ownership solution, in England Red Toryism, it is most commonly associated with Catholic social teaching called Distributism, altho one needn't be Catholic or even Christian to be a distributist. Odd it hasn't been more wide spread, especially on, say, the Colbert Report; Stephen being Catholic. Actually I believe face book has a Get-distributism-on-Colbert page to spread the word. No heavy jargon, clear, realistic solutions, down to earth, a real eye opener! Lets face it - our system ain't working, its time to try something else. Highly recommended.
You can spot what values political types favor by what words they use frequently. Conservative capitalists make “freedom” their mantra, while progressives have recently harped on “inequality.” John Médaille insists both dominant positions get it wrong, that our magic watchword should be “justice.” Médaille’s concise, plain-English introduction to Distributism, a morally motivated economics, upends facile college bromides and forces us to ask what purpose economics serves.
Distributist economic theory begins with a deceptively simple premise: if citizens are nominally free, but lack the means of living independently, that freedom is an illusion. Systems which concentrate land, labor, and money in a scant few bureaucrats’ hands rip life’s means from citizens’ control, moving power up the political pyramid. Importantly, every “mainstream” economic system does this; capitalism and socialism make taxpayers choose which servitude system we prefer.
Médaille spends his first hundred pages examining dominant economic theories, explaining what leading thinkers systemically overlook. Political leaders pitch today’s post-collapse economic debate as between capitalism and socialism (they misuse that latter term). But Médaille insists both strip ordinary workers of agency. “Socialism,” Médaille writes, “forms sort of a natural terminus for a capitalistic system, as the interests of the state bureaucrats and the corporate bureaucrats tend to converge.”
If your undergraduate economics course resembled mine, you spent countless hours graphing the supply-demand arc or mimicking the NYSE with monopoly money. Médaille demonstrates how these exercises represent ideals, measurable only in retrospect, seldom actually representing minute-by-minute decisions in constantly shifting circumstances. Real economics rarely behaves like textbook exercises, because we make decisions in conditions of incomplete knowledge. Thus we allocate our resources based on values, not mathematics.
These values include a belief that all commodities are equal; that economic forces are self-correcting and ultimately tend toward equilibrium; and that economics has objective scientific weight, like physics. These values all assume individuals exist separately and make wise decisions. Distributist theory, however, holds that individuals are sterile: I may make money, but cannot leave any posterity separate from others. For distributists, the fundamental economic unit is the family.
Distributism, Médaille writes in his second half, makes those values transparent. The illusion of market absolutism obscures the fact that markets arise from laws, traditions, and decisions made long before we had any choice. We make choices daily, unaware how prior actions circumscribe our options. If we privilege individuals over families, economics becomes a mere algebraic representation of our consumption, reducing humans to Pac-Man-like instruments of appetite.
Médaille pinches words familiar to both conservative and progressive readers, but repurposes them to serve his justice-based principles. For instance, he discusses “the ownership society,” a key libertarian precept. But libertarianism, Médaille writes, makes little sense in today’s concentrated wealth conditions. Distributed property ownership authorizes citizens to make wise decisions in consumption, employment, and investment. People without property cannot make free decisions, because they lack means to say no.
Likewise, Medaille lambastes Big Government. But he asserts that Big Industry requires government to stabilize market forces; Médaille’s foe isn’t government, but bigness. Before the New Deal, concentrated capital made economic instability and crippling recession violently commonplace. “Those who wish to scale back the extent of government involvement in the economy,” he writes, “must first analyze the failures in the economy that make heavy government involvement necessary.”
Perhaps most shocking, Médaille demonstrates how concentrated capital creates conditions exactly like notorious Communist systems. By keeping labor divided, but capital connected, workers will accept any work, however meaningless. But without meaning, workers require constant goading. Viewed from within, transnational mega-corporations resemble Soviet labor camps, where good work isn’t rewarded, nor bad work punished, so little work gets done. I can verify this from personal experience.
Dedicated readers will find inevitably find something to hate, especially when Médaille makes proactive suggestions for Distributist reform. He’ll recommend cutting some program you cherish, or shifting tax burdens in ways that bother you, or belittle some public figure you admire. His characterization of federal education policy as “useless” bugged this ex-teacher. But he forced me to examine why I hold that position, refining my position and removing the chaff.
Where capitalists and Marxists maunder over hypothetical ideals, Médaille describes actual distributed economics that could model real-world goals. His favorites, the Mondragón Cooperative Corporation and the regional economy in Emilia-Romagna, show actual distributist precepts in action. Médaille’s vision isn’t some abstract system of goals we might achieve, under mathematically precise conditions. He describes economics that currently exist, that we could apply here and now. And that makes his ideas exciting.
on November 22, 2011
Overall, I was impressed by the author's ability to put very complicated ideas into simple terms. Without diving into moral arguments, he illustrated why Big Business and Big Government have an interdependent relationship and explained the practical dysfunction of a boom-bust business cycle. Insofar as he was able to illustrate that, he was successful in presenting the need for subsidiarity and solidarity: essential components of Distributism.
However, there were more than a handful of off-the-cuff recommendations that weren't very well thought out. He rightfully recommended taxing "economic rent" and getting rid of a model that pits capital against labor, but he doesn't fully explain how it would be sufficient, nor does he explore the differences in mobility between capital and labor and how that relationship affects business. The real world isn't as simple as he tried to make it.
In the end, if he wasn't completely successful in illustrating alternative solutions (even if they were a breath a fresh air), he certainly opened the door to understand why our current models are broken. He certainly gave me--someone with little education in economics--a fundamental grasp on these heavy-handed topics as I engage conservatives and liberals alike.
on May 23, 2014
So, Thomas Piketty has created a firestorm of debate over income inequality. But the flaw of
capitalism was foreseen a century ago by GK Chesterton and Hilaire Belloc. John Medaille
presents his modern take on distributism in "Toward a Truly Free Market". Mr Medaille lays out
the fatal flaw in capitalism, that capital is overcompensated compared to labor. This was the great "discovery" by Thomas Piketty and modern progressives, but common sense and observation informs us that this is the case without needing 700 pages of statistics (though there is value in analysis, which I praised Piketty for providing). In addition, the
increased concentration of capital leads to an alliance with big government, the opposite of what
one would expect from capitalist theory, but exactly what we see in practice. The problem is that
the concentration of capital leads to periodic imbalances, creating recessions. Over the past
70-80 years governments responded by increased spending to prop up and "clear" the markets. As Mr Medaille demonstrates this has helped to smooth out the imbalances inherent in capitalism.
Unfortunately, central governments never have the political will to cut spending in good times,
leading to ever enlarging debts. We may have reached the natural extent of this Keynsian
policy as we have seen in the recent "Great Recession" which has been the slowest recovery
since the Great Depression.
The answer to the problem of increased inequality and enlarging debts (public and private) is
distributism. Unlike re-distribution which puts the power into the hands if the central government
to manage the economy, distributism seeks wider ownership of capital, so that employees are
also the owners of capital, and take part in the profits due to capital. Another key concept is the
"just wage" which means that individuals should earn a sufficient wage to live in dignity without
reliance on government transfers or credit.
The good news is that distributism has been tried successfully, and Medaille spends some time
detailing these experiences. He also lays out some explicit ideas about government, basically
shrinking the size and power of the central government, and shifting more control locally or to
end users. Some of his ideas on taxation are unlikely to happen because they are so revolutionary and the entrenched interests would certainly be against them. However, I think there are politicians who would be amenable to the small government arguments, and I think government could certainly play a role in making distributist enterprises the preferred way of organizing businesses.
I think everyone interested in the economy and inequalities of income and capital should read this book, and hopefully these ideas can become part of the debate, rather than just the spiral of increased power in the hands of the oligarchy.
on February 12, 2016
John Medaille not only shows the weakness which is inherent in the Capitalist system, he offers remedies which are already making a difference in many lives in various parts of the world. Perhaps the most well-known example of Distributist successes is that of the Mondragon Cooperative in Spain, a large conglomerate of employee-owned (as opposed to being owned by faceless bureaucrats) businesses which has a net worth of some $43 billion dollars. While right-wing blowhards such as Mark Levin say that Capitalism is the only system which has ever shown success in elevating people out of poverty, the Mondragon Cooperative puts that lie to rest.
Professor Medaille takes each sector of our lives which have been negatively impacted by Capitalism and gives the Distributist answer to it. I found most interesting his chapter on economics and the government wherein he shows how to make drastic cuts in the over-bloated and sinking economy of the United States while at the same time doing little damage to the structures which are already in place.
The sad part about this book is that while it offers a true change for the good of all people, the corporate fat cats in this and other countries will fight to the death to keep their bloated bank accounts and controls over the rest of us wage-slaves. When I spoke with Professor Medaille, he said that the changes in the economy can come in either one of two ways - people see the wisdom of Distributism and begin a slow change to that system, or the whole Capitalist system, propped up for decades by government bail-outs and tax breaks, comes crashing down and creates a complete economic meltdown.
One can only hope that if the latter happens, people will realize what caused it and not turn back to Capitalism nor the failed experiment called Socialism. Learn the things that are in this book and spread the Distributist message. It is the only hope we have left.
on June 14, 2012
One thing that has frustrated me in the past about some books on Distributism and other alternate economic theories is their endless review of historical figures of whom I have never heard, and also endless reference to Catholic social teaching. Well, I am not 100 years old and I'm not Catholic either -- so tell me why I should care about Distributism?
This is where Medaille solidly hits the nail on the head. He explains Distributism in clear and easily understood terms from the ground up. He explains why Distributism would lead to truly free markets in a fashion where finance capitalism does not. He further expands on the details of how distributism works, its history (without sounding like a member of some secret club) and more.
I am not sure I personally agree with everything written in this book, but my agreement or disagreement is not the issue for me. What is important is whether or not the author explains his thesis clearly, supports it well and most importantly makes it relevant to me. He does, and he does so in a way that shows him to be an excellent teacher.
I like this book. The author does a great job. Many of the ideas are, I believe, very worthwhile and they are expressed in a fashion the makes sense even to people who weren't hanging around Catholic or Fabian Socialist circles back before my father was born. He makes a convincing case as to why Distributist solutions would be applicable and even effective today, and how Distributism may be an idea whose time has come.
I do not care where you come from economically. You could be a fan of Ludwig von Mises, Keynes, or Marx and unless you are one of those people who only reads material that supports what he already believes, you WILL find seriously thought provoking material in this book.
If you are someone who is willing to think outside of the left-right paradigm and consider new ideas, I highly recommend this book and believe you'll be glad you read it.
on February 9, 2014
Highly down to earth! In answering fundamental questions concerning the purpose and place of economic thought, John Medaille presents a compelling explanation and defense of distributism in theory and practice. Answering the charges that distributism is romantic, impractical, and untested, he marshals solid historical analysis, present day examples of distributism, and workable prescriptions for what ails the economy. If you can gift a capitalist just one book on distributism, this would be the one.
on March 1, 2014
"Toward a Truly Free Market" is a book expounding Distributism, an economic theory associated with G K Chesterton and Hilarie Belloc, and more generally with Catholicism. Distributism sees itself as an alternative to both socialism and capitalism (at least capitalism as usually conceived). It emphasizes local production, small businesses and cooperatives. Chesterton's and Belloc's version of Distributism also had an anti-modernist slant, but this is mostly lacking in John Medaille's version, who believes that Distributism is a viable option for a modern nation-state. One thing *not* lacking, though, is the patriarchal perspective: businesses should be owned and operates by men, while their wives stay at home and take care of the children. The author understands the perils of environmental destruction, but has the usual Catholic blind spot concerning overpopulation...
The book speaks mostly for itself, but one aspect deserves some comment. The author, as can be expected for an American, claims that Distributism stands for a "truly free market". In reality, of course, it does *not* stand for such a thing. The author believes that the disequilibrium in capitalist markets (which makes government intervention necessary) is caused by the market not being "truly" free. But a truly free market will *never* be at equilibrium, something at least Hayek seemed to have understood. Many of Medaille's concrete proposals are dependent on heavy government intervention. Thus, he wants to break up the giant private monopolies. The author proposes that the government prints debt-free money as a way of paying back the national debt over a period of 15 to 20 years. One of his examples of how Distributism works in practice is Chiang Kai-shek's "land to the tiller" program in Taiwan, which created a prosperous mixed economy under the tutelage of an authoritarian regime! Medaille also proposes that only medical doctors who belong to a doctors' guild be allowed to practice. The guilds are private, but their rules are supervised by the government. Contradicting himself, Medaille proposes to slash the federal budget and do away with most taxes, except for taxes on land or externalities, which businesses can avoid by refraining from speculation or environmental destruction. However, since the government has the right to print its own money, it's not even clear whether it *needs* taxes!
I'm not opposed to government intervention in the economy. However, I think the Distributists should come clean about it, rather than pretending to be a slightly more exotic breed of libertarians. I give the book four stars, since it's an interesting attempt to restate Distributism in a slightly less archaic fashion than Chesterbelloc. However, I suspect that a similar book written by a European or Latin American would have placed the emphasis somewhere else...
on May 12, 2014
Fascinating introduction to a unique synthesis of G.K. Chesterton, Henry George, Karl Polanyi, and MMT (Modern Monetary Theory). This book has been helpful to me, although I don't subscribe to its entire content unreservedly.