G.K. Chesterton and Richard Nixon Talk Economics



Luke Phillips

Today’s haul brought in two long, interesting articles that should make free-marketers retch uncontrollably.

The first, on G. K. Chesterton and Hillaire Belloc’s old quasi-utopian scheme of political economy called “Distributism,” argues for policies that place capital in the hands of workers and enables them, in effect, to be self-employed and self-mastered. Distributism, then, starts to resemble what policy dreamers these days sometimes call “universal capitalism-“ a state-sponsored system that puts the means of production in the hands of every citizen and seeks to thereby relieve inequality, poverty, joblessness, and various other social ills. It’s also incidentally something in which Catholics- like Chesterton himself- can find much to like. Here’s the best short description offered:

“Distributism shares with Marxism the goal of the workers owning the means of production and of eliminating the alienation of the worker from his product. (Of course, distributists meant that the workers should really own the means of production—not, as communists usually did, that the workers should “own” them through the intermediary of the state.) And distributist class analysis resembles Marxist class analysis in obvious ways. 

Along with free-market economists, however, distributists recognize the importance of private property. Further, modern distributists recognize the crucial role of something that early advocates such as Chesterton and Belloc did not have the theoretical resources to articulate: namely, the vital role of true market prices in achieving economic efficiency. As Friedrich Hayek put it, market prices are able to incorporate knowledge of the “particular circumstances of time and place” into a worldwide economic system.

Distributism also contains aspects of communitarianism: with capital owned on a local level, owners are more likely to engage with the social and civic life of their community. Chesterton liked to refer to distributism as “real democracy.””

Not exactly your typical economic theory…

The second article, basically an expose of the various elements of state activism that have contributed over the centuries to the “mixed economy,” is fairly straightforward. It argues that various forms of government intervention- from the maintenance of legal and financial infrastructure to investments in education and technology and physical infrastructure to regulations and entitlements that limit the worst effects of capitalism on the poorer classes- have been crucial to making capitalism work better, rather than just restraining its excesses.

It’s a convincing article, one with which I sympathize. I think the authors fail to take into consideration the obvious fact that the expansion of the federal government’s authority has, in the past seventy years, created innumerable problems of its own. But the noisily boisterous Hamiltonian in me agrees wholeheartedly with the notion that the state and market ought to be partners rather than adversaries, and that such an arrangement is not “crony capitalism” but capitalism in its very best and most effective form. The work of Erik Reinert and Ha-Joon Chang reveals that this is economics’s historic norm, too, stretching back to the developmental policies statelets and principalities pursued all the way back to the Middle Ages.

Moreover, this temperament is not reserved to the New Deal-Fair Deal-New Frontier-Great Society Democrats. It has had its great supporters in our own Republican Party, too. Here’s the article’s take on Eisenhower and Nixon:

“The most famous GOP convert was the general turned politician Eisenhower. He understood that the Republican Party needed to make its peace with most of the policy achievements of the previous two decades. In 1954, for example, Eisenhower privately ridiculed the desire of conservatives to roll back the New Deal: “Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. … Their number is negligible and they are stupid.” Eisenhower’s point was that the mixed economy was an established reality and there was no going back. 

Eisenhower’s domestic policy agenda focused on economic growth, and Democrats would criticize him for his reluctance to rely on Keynesian policy to prime the economy. Yet his administration devoted substantial energy to policies designed to improve the country’s long-term economic performance. And on economic issues, the moderate consensus continued after Eisenhower left office. Although John F. Kennedy famously adopted a more Keynesian stance on the budget (built around business-friendly tax cuts), in most respects his economic policies followed the tracks laid down in the 1950s. When the GOP veered right with Barry Goldwater’s candidacy, and Lyndon Johnson tacked left with the inclusionary policies of the Civil Rights Act and the War on Poverty, much of the business establishment went with Johnson.

Richard Nixon was one of the last Republican leaders to embrace the mixed economy, and embrace it he did. Nixon’s efforts to fashion a new majority involved positioning himself to the right of Democrats on issues of race and crime, but he was willing to be a moderate, even an activist, on matters related to the economy. He supported major extensions of the regulatory state, including big new initiatives for environmental and consumer protection. He favored a guaranteed annual income, a huge expansion of Social Security, and health-care reforms way to the left of what Bill Clinton or Barack Obama ever proposed.

Nixon’s moderation was driven in part by political calculations. Encouraged by Daniel Patrick Moynihan, one of his leading advisers on domestic policy, he took the nineteenth-century British prime minister Benjamin Disraeli’s “liberal Tory” stance as a model and sought to appeal to working-class and middle-class whites with his support for social insurance and his cautious backing of many of the new regulatory measures coming out of a Democratic Congress. But it wasn’t all politics. Nixon accepted the notion that in a large and complex society, government had a fundamental role to play in fostering economic growth and social prosperity. This went beyond the macroeconomic management of boom-and-bust cycles and incorporated support for collective bargaining, extensive social insurance and a reasonable social safety net, the provision of crucial public goods, and interventions to tackle thorny market failures.” 

Heretics, right?

Lessened regulations and lower taxes are all good in themselves- in fact, I’m working on a project for Joel Kotkin arguing as much- but they cannot alone make up the core of economic policy. There’s a certain point where the bigger picture- the effects of economics on the state and society- needs to be taken into account, and another where the smaller picture- the effects of economics upon individual character and social life- needs to be taken into account. It’s hard to do that under the free-market dogma pervading the party today.

I’m not saying we ought to throw up our hands and unilaterally surrender to the economics of either G.K. Chesterton or Richard Nixon. (Though surrendering to a mix of both would be intriguing.) I do think it would be nice if our party’s dialogue featured more than simple fealty to Reaganomics, though.

Distributism and the Mixed Economy might be of some help in that regard.



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