It's Not Really About Markets
What do many communists and many advocates of laissez-faire capitalism share in common? Both claim that their ideologies have never been given a fair shake, both claim that their ideologies are based upon immutable laws of either historical progress or human behavior, both reject ‘real world’ examples that supposedly show the error of their views, and both believe that only their ideological visions will lead to a future worth living in.
The existence and prosperity of Western Europe, Japan, and the United States in the post-war period are proof that state-managed development alongside various degrees of economic freedom can lead to a high standard of living, or at least co-exist with it. All of the “Asian Tigers” went through decades of heavy state involvement in the economy, and not long after liberalization began in earnest, suffered a major financial catastrophe.
None of these societies are perfect, but none of them, good or bad, have existed as “free markets”. They have existed as mixed economies, with some performing quite well during periods of heavy state involvement in the economy.
If historical experience shows that a society can indeed exist, function, and prosper without adhering to the letter of liberal market orthodoxy, why do its advocates insist that anyone who disagrees with them is “unscientific”? The burden of proof is not – or should not be – upon myself or anyone else who is skeptical of the claims made by laissez-faire proponents. The burden is on those making the claims. If history is the great laboratory where ideas are tested, accepted, and rejected, then laissez-faire can only exist as utopian idea, perhaps one that has functioned in pockets here and there, but certainly not to the point where entire societies can claim the label.
Or, it can exist as a theoretical model in textbooks. That would give it a scientific air, but it certainly doesn’t entitle its proponents to insist that they alone are the bearers of economic truth. For what it is worth, I have more respect for Murray Rothbard, who believed that the case for free markets had to be a moral one, than those who continue to try and shove a supposedly irrefutable, unfalsifiable, pseudo-scientific model down my throat.
In saying this, I actually do not mean to reject either the utility or morality of markets. “Free markets within limits”, as Pius XI said, are good. As a proponent of a more cooperative economy, I do not reject but embrace market activity; cooperatives, as much as traditional firms, must compete in a market place and satisfy the demands of consumers. To me the choice has never been between the existence of markets, and the non-existence of markets.
The choice, rather, is between economic democracy and oligarchy, between political democracy and plutocracy. In the 21st century it is unconscionable that, while over a billion people go hungry, a handful of individuals should have insanely vast quantities of wealth. Whether or not the redistribution of that wealth would solve the problem (it would certainly help) is one matter; the disproportionate power it accords to a small minority is a brake on human progress, and, if the Bible’s 300 passages concerning the poor are to be taken seriously, an abomination in the eyes of God.
The democratization of the economy and the decentralization of wealth, alongside and not opposed to a healthy degree of economic freedom, is what I believe has the best chance of leading to prosperity for all, in America, and around the world. It will put an end to class conflict, at least in the classical sense of proletarian versus capitalist – the need for unions, the cost of labor disputes, and all of the other nasty fallout from that conflict will wither away. A far more healthy relationship between cooperative firms and the communities they operate in will develop, a relationship which transcends that between buyer and seller, producer and consumer. The worker/owner, no longer identifying either as a worker or an owner, will come to identify more as a citizen and a member of the community. Democratic practices in the places we work will lead to a healthier political democracy, hopefully something more than the 2 or 4 year ritual many people participate in today.
The best part is that unlike theoretical models in textbooks, such communities do exist in the world. The only problem is that there aren’t enough of them, and that, in the end, is only a problem of ignorance and the will. Unlike the immutable laws of physics, we can remedy both. Catholics should be the vanguard of this social transformation. Instead of constantly arguing, “well, the social teaching doesn’t say I can’t do that”, we should be discovering what that social teaching asks of us. That is how the Mondragon, the world’s most successful cooperative ever to exist, got its start. One man, one priest, decided to take the ideas he found in a Papal encyclical and make them real in the world. There is absolutely no reason this can’t happen again, one hundred times, one thousand times, until society gradually comes to reflect the Catholic social vision.