Join Date: Jan 2014
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I found a new blog to follow: https://abrenuntio.com/why-economic-...-is-necessary/
The realization of an integralist government requires a sifting of the institutions and arrangements of the liberal order, a process of examination and analysis prompting questions of what may be maintained, what requires modification, and what must be discarded. While the ‘distributist’ platform sketched out by an earlier generation of integralists1 offers a workable template for a possible “third way” between total state capitalism and liberal finance capitalism, given the current state of affairs, much ground must be cleared before significant action can be taken. To the extent a distributist regime prioritizing the decentralized ownership of property is to be possible, industry must first be brought back to a scale at which it can be adequately contained and made to serve the interests of the common good. Accordingly, the disassembly of the globalized trade system should be a priority for any prospective integralist community.
In the same way that a perfect balance of private property is impossible and potentially even undesirable, so too is a wholly internalized economy; however, for any integralist government it must be a priority of the highest order. While the seductive gains of trade are an undeniable economic reality, it has long been forgotten that trade is an inherently corrosive proposition. Here, as always, the Doctor Angelicus offers profound insight:
“…[If] the citizens themselves devote their lives to matters of trade, the way will be opened to many vices. For since the object of trading leads especially to making money, greed is awakened in the hearts of the citizens through the pursuit of trade. The result is that everything in the city will be offered for sale: confidence will be destroyed and the way opened to all kinds of trickery: each one will work only for his own profit, despising the public good: the cultivation of virtue will fail, since honor, virtue’s reward, will be bestowed upon anybody. Thus in such a city civic life will necessarily be corrupted.”
Thomas Aquinas, “The Governance of Rulers” (De Regimine Principum), II c. 3, trans. Gerald B. Phelan.
While Aquinas here speaks of domestic trade in the Catholic Christian communities2 of the high medieval period, these concerns are even more acute in the age of the nation state. Accordingly, it is important to reduce the overall volume of trade, not only to minimize the moral tensions inherent to commerce, but to restrict strategic commitments to secularist regimes potentially hostile to an emerging Catholic order. As liberalism fictitiously assumes that the common good may be served by the individual pursuit of self-interest, so it posits that a community may beneficially trade with any potential rival, no matter how fundamental their theo-political opposition. Incredibly, despite decades of evidence to the contrary, it is still widely assumed that convergence towards liberal norms will inevitably ensue from increasingly inter-connected economies. Nowhere is this fallacy more visible than in the inter-dependent relationship of the United States and China; one of the world’s most atrocious abusers of human rights is now a pillar of our economic order, with a demonstrably corrupting influence on both our commercial and political classes.
The Surrender of Authority to the False God of “Efficiency”:
“Commerce is always being spoken of as the universal bond of peoples, yet never has there been a more active cause of bloodier or more intractable wars.”
Louis de Bonald, “On The Wealth of Nations”
Moreover, globalization of trade places the transnational corporation above the individual political community, allowing for opportunistic jurisdictional shopping in pursuit of favorable tax treatment, lax environmental regulation, and readily exploitable labor. In an economic system in which “public” corporations already exhibit little accountability even to their putative owners, this exacerbates the misalignment of incentives between management and citizen stakeholders, and allows the largest entities to drift out of the reach of the civil authority. As such, globalized trade magnifies economic externalities to a staggering scale and places them beyond the reach of any regulatory power. Before a more sustainable and equitable order may be instituted, it is necessary that these globally distributed entities be reigned in to a manageable scale.
Here we must note the presence of another fiction of liberalism: the notion of “free trade” is itself a fallacy of the highest order. The term conjures an image of a natural flow of goods and services proceeding according to a quasi-natural law, akin to an economic force of gravity. Here, as often is the case in matters economic, an artificial and fundamentally unjust arrangement is depicted as an inevitability. The scale and complexity of the agreements underpinning the trade system illustrate the sleight-of-hand engaged in by free market ideologues, as such deals are the result of years of opaque horse-trading between self-interested parties with asymmetrical access to information and conflicting aims. Whoever can be said to ‘win’ from these agreements, it is unlikely to be the common good.
An Opaque Regime of Imbalance & Misaligned Incentives:
As “free market” capitalism glosses over the degree to which many industries are dependent on an insidious relationship with the state, so too is the global “free trade” system an artificial creation of corporate and political manipulation. The enormous sustained imbalances between the US and China, as well as within the EU, and the attendant mountain of public debt accumulated in their maintenance, are proof positive that this is an unsustainable arrangement. Despite no shortage of evidence of the mobility of capital, production, and labor, these enormous structural imbalances persist, with no sign of a potential “equilibrium” in sight.
In this order, the Smithian “invisible hand” is explicitly guided by financial and economic interests, third-world autocrats, and their liberal allies in Western governments; meanwhile, the risks are socialized and the costs paid for by an increasingly desperate working class. When the tide goes out and these balances come due, it leads to sudden economic crisis in which financial interests are placated in order to avoid further collapse. This dynamic was visible in 2008 in the United States and elsewhere, and on a periodic basis in the EU since around 2012.
Moreover, it is in the question of trade that we may see the increasing disinterest of an oligarchical legislature in maintaining any semblance of democratic legitimacy. Given their sheer complexity, free trade deals require “fast track” provisions that finally dispense with the fiction of democratic representation, revealing the extent to which legislatures are beholden to corporate interests as well as the general sloth of the legislative class. Deals must be passed on a wholesale basis to find out what they contain, while their inordinate scale and opacity limits any intelligible analysis of potential outcomes, hiding blatant acts of self-dealing. Meanwhile, opponents of such deals are vilified as either parochial nationalists wanting to return to the past or as uneducated luddites unable to see the obvious “win-win” on offer.
Objections & Obstacles to Reform:
After decades of gorging on the profits of offshoring, corporate interests and market liberals will inevitably cry foul when the punchbowl is withdrawn. Their complaints either amount to dogmatic sloganeering lacking any substantive basis, or else express concerns about the short-term adjustment costs of such a policy, raised in ignorance of the long-term strategic benefits. Even on a narrowly liberal-economic consideration of efficiency, given the untenable nature of the current order and the sustained imbalances it has recurrently produced, these objections have purchase only on the shortest of time frames. Access to cheap imports is a chimera by which pollution is offshored to jurisdictions where those directly affected cannot complain, and where the labor abuses can be disavowed behind third-party contracting relationships. Meanwhile, the erstwhile laborer who is supposed to benefit from modestly cheaper goods is left un- or under-employed and told, actually, he can afford more cake than ever before.
More fundamentally, the nature of such persistent external imbalances demands that domestic consumption be financed by debt, insuring that our economic system is characterized by hideous imbalances encouraging the working American to engage in a speculative mania they are bound to lose from. Meanwhile, large exporters, global services businesses, and international banks are able to squirrel away their profits beyond the reach of tax authorities, all the while striking deals with any and every corrupt regime, including even criminal syndicates3. Whether it is Goldman Sachs and Morgan Stanley assisting Chinese investment banks in perpetuating what amounts to global-scale accounting fraud4, McKinsey collaborating with the South African corruptocracy to ‘restructure’ its graft-ridden state industries, or resource companies’ literal strip-mining of third-world banana republics, the looting of local economies here and abroad persists under a regime of opacity and supposed economic inevitability.
Accordingly, even the most modest attempts to roll back globalization trigger cries of outrage from liberals, now including the left-liberals who once understood that free trade was not the ‘free lunch’ it is often made out to be. This dynamic has been visible in the uproar over the limited tariff regime instituted by the Trump administration, even as it is justified by comfortably liberal-capitalist assumptions. The proposed 20% strategic tariff on Chinese goods merely offsets a yawning imbalance secured by the Chinese state due to the desperation of American legislators, keen to secure a potentially vast new market for exports. Its imposition would effectively result in a more-or-less balanced “free market” somewhat closer to the ideal existing only within the pages of economics textbooks. Less than a few quarters after the institution of even this limited tariff regime, however, we hear endless moaning about the adjustment costs supposedly inflicted on corporate exporters; costs neither visible in the profitability of S&P 500 corporations nor in their stock prices.
The Necessity of “Industrial Policy”:
However, this does lead us to a more substantive issue; industrial supply chains which organically grew over decades cannot be reconstituted on a piecemeal basis; corporations wishing to return production to the United States find a dearth of domestic suppliers able to replace their foreign partners. While free market liberals take this as validation of their defeatist assumptions, this narrowly short-term fixation on “efficiency” must be ignored. Some degree of industrial policy will be necessary to internalize production, a process of state-directed capitalism that involves inevitable tensions. The risk of exacerbating the cozy alignment of corporate interests and the civil authority, which has already made government less the prospective regulator of business than the guarantor of its legal privileges, is a serious one. However, there is no alternative to a proactive state-led initiative, neither in the immediate question of trade nor in any subsequent, more ambitious distributist scheme. To assume otherwise is to risk leaving a potentially post-secular state political community vulnerable to manipulation by fundamentally hostile interests abroad.
Lessons may be drawn from the Chinese experience, by which American and European corporations have been manipulated into enormous commitments of capital on an incredibly unfavorable basis, lured by the prospective access to a market of potentially enormous scale; both carrots and sticks will need to be employed. Despite the significant volume of global trade, most large American corporations remain dependent on the American market for the vast majority of revenue, and business must be made to choose between being a “global citizen” free of responsibilities and continued access to the American market. Once commitment has been secured, a more substantial initiative to insure great accountability and alignment to the common good becomes possible. Reconstituting an integralist political community will require a relatively self-sustaining economic order, by which economic expediency may be more effectively subordinated to the civil and spiritual authorities.
While many integralists may cry foul at such apparent “state capitalism”, it is difficult to see an alternative that allows for the containment and prospective reigning in of capitalist excess. It is important here not to be too beholden to theoretical ideals, nor to blame the failings of current arrangements solely on institutional structure; this would be to commit to the same fallacies that modern liberalism advances. To draw on Wendell Berry, a prominent critic of the dissimulating nature of globalist free-market ideology, “[the] way out of this situation is to understand [this] as a problem that is both public and private. The failure of public discipline in matters of economy is only the other face of the failure of private discipline.”5 No institutional arrangement can compensate for a lack of virtue amongst the civil authorities, and any meaningful change must combine a broader restructuring with a renewal of Christian virtue on an individual basis.
Ultimately, such changes need not entail an economic regression, although such a return to austerity would do wonders for reforming the habits of a people grown fat through an insatiable appetite for useless baubles; it would, in any case, likely fall mostly on those least able to bear it. The American market is of sufficient scale to support an extraordinarily high standard of living, and was until relatively recently marginally dependent on trade. Economic globalization only began on a significant scale after around 1990, reaching critical levels only after the reconfiguration of China’s financial system in the early ‘00s. What was disaggregated over a period of decades may be put back together again over a similar time-scale, and here, as elsewhere, it is important not to expect immediate results nor anticipate a significantly more equitable economic order in the immediate future. A largely internalized economy capable of shaping its own destiny is, however, no impossibility, and a necessary first step towards the reconstitution of a balanced political community oriented towards man’s highest good.