In a new piece in Newsweek, economist Alexander Salter demonstrates once again that he should stick to his research specialty, which is monetary theory and policy. This piece is one in a series of articles he has been writing for various outlets to preview of his upcoming book about the political economy of distributionism. My frustration with all these pieces is that, although he seems unhappy with capitalism as he perceives it today, Salter never specifies exactly what he thinks are capitalism’s correctable faults. Such specifications would be helpful to determine if his complaints are really about capitalism as such, about the many negative consequences that arise from government obstruction of capitalist processes, or about something else altogether. Salter also leaves unspecified just what policies he wants the government to implement.
All he does is try to convince his readers that capitalism left untouched by government has some unspecified flaws that would be corrected by some unspecified interventions. Interventions that he suggests, without explanation, are perfectly consistent with free markets and individual liberty.
In the latest of his efforts, Salter urges us to be inspired by and maybe even embrace many of the ideas offered by the thinker and polemicist Hilaire Belloc (1870–1953). Salter writes:
Conservatives who distrust markets deserve to be taken seriously. But we don’t need to abandon a market-oriented political economy to appreciate their concerns. In fact, all we need is old-fashioned economics. The economic way of thinking gives us a way to understand the essential connection between property and freedom. To see how, we need to consult a much-neglected writer and statesman from the early 20th century: Hilaire Belloc, a founding father of the political-economic school of thought known as distributism.
He concludes:
As religious conservatives continue to debate the proper spheres of markets and government, they should keep Belloc in mind. There is much he can still teach us.
I am no Belloc expert, but you don’t have to be a sensitive Gen-Zer to realize that this French-English polymath was, to put it mildly, problematic. He was an antisemite as well as an admirer of fascism and Benito Mussolini. But I guess he was supposedly a devout Christian, though he described Jesus as “a milksop” and apparently personally found him “repellent.” About the Apostle Paul he simply said that he was “a muddleheaded old Yid.” Do whatever you want with this information.
I’m sure that’s not what attracted Salter to Belloc. He recommends Belloc to his readers because of Belloc’s economic philosophy. Salter’s doing so is a strong hint that he’s sympathetic to Belloc’s unhappiness with the reality that capitalist markets drive producers to serve consumers, rather than hold consumers hostage to the interests of producers. Not only does he not say he doesn’t agree with Belloc, but Salter even calls the low consumer-goods prices that Belloc disliked “political externalities.” The externality claim seems to be that large, efficient firms that produce at low cost — and hence produce in abundance and sell at low prices — displace smaller, less efficient firms and, in the process, remake communities in ways that people dislike. Call it the pollution effect of low prices!
Salter, of course, offers no actual evidence that Americans are willing to pay higher prices for their consumer goods in exchange for being able to live in communities populated with smaller firms, or that they would be better off had we implemented Belloc’s policy prescriptions. Don Boudreaux has a good letter on this point.
Though Salter notes that “the challenges we confront today are very different from Belloc’s,” his enthusiasm for Belloc’s main point that “capitalist economies have political externalities” is interesting. See, as I read his Newsweek piece I had a nagging feeling that I had read an almost identical argument several years ago, but I couldn’t recall exactly who had offered it. But Don Boudreaux, whom I spoke with, remembered. It is this 2005 New York Times op-ed by former labor secretary Robert Reich. Reich argued that Walmart’s success isn’t proof of its desirability because it destroys communities by charging low prices that citizens would be happy to forgo in exchange for downtowns filled with smaller, local retailers. Here is a tidbit from Reich’s op-ed:
The problem is, the choices we make in the market don’t fully reflect our values as workers or as citizens. I didn’t want our community bookstore in Cambridge, Mass., to close (as it did last fall) yet I still bought lots of books from Amazon.com. In addition, we may not see the larger bargain when our own job or community isn’t directly at stake. I don’t like what’s happening to airline workers, but I still try for the cheapest fare I can get.
Perhaps Reich, too, was influenced by Belloc, because this argument is identical in all essential respects to Salter’s political-externality argument.
Not long after Reich’s op-ed appeared, Boudreaux explained some of the many problems with this line of thinking in this blog post. As for me, I realize that I was wrong. I always thought that Salter was trying to have it both ways — that is, showing that he is sympathetic to the concerns of market skeptics on the right, ranging from nat-cons to economic nationalists to distributists, while looking for government solutions and remaining true to the principles of free markets as understood by scholars such as F. A. Hayek and Milton Friedman. Now I realize that this worldview is really that of Robert Reich.