I think Jason and I disagree less than his critique of my post would suggest.  He is correct that my rather brief treatment of markets (and the purpose of markets) leaves a great deal to be desired.  I was not intending to write a piece explaining the many benefits (or limitations) of markets per say – mainly because, like Jason and the other libertarians here, I am an advocate of the free market.  I am not terribly interested in arguing the merits of a free market economy.  Certainly this will lead only to partisans in both camps hurling strawmen at one another.  As Jason notes, both the success and failure of markets can “discover distributed and inarticulate knowledge about preference and utility.”  And this is a good thing.

I think Jason’s strongest point is this:

But the real question is not whether markets work perfectly. It’s whether any of the alternatives can do the job as well or better. When we consider that the real work of markets is to gather up distributed knowledge and render it publicly legible, it seems clear to me that few other social institutions are even seriously trying. Many of the worst of them, government programs above all included, act as if this work has already been done — as if Hayek’s dispersed knowledge had already been aggregated once and for all, and as if the action at hand weren’t going to upset it all in the process.

To be perfectly clear, markets aren’t the be-all and end-all of public policy for me. They are, however, the option we ought to try first, because properly designed, they tend to tell us what’s going on. This is tremendously important, and it’s very difficult to admit that we don’t know it.

He goes on to argue that markets should also be a last resort – and that if there is a market failure, it is often as not a failure of the “given ruleset” not necessarily the market itself.  Healthcare is a prime example of this.

And of course, in order for markets to work, for human progress to continue, and really for a sane and somewhat rational, stable economy to flourish, above all else we must maintain choice.

Indeed, Jason’s advocacy of choice is compelling, and I tend to agree that the more choice the better, if only because I could not tell you where or with whom we should limit it.  The more freedom the better.  I certainly don’t want to be constrained in my own choices, and I am not nearly paternalistic enough to want to constrain others in theirs. Whatever constraint or sacrifice we make based on coercion is a false one.

“Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance – where, in short, we deal with genuinely insurable risks – the case for the state’s helping to organize a comprehensive system of social insurance is very strong… Wherever communal action can mitigate disasters against which the individual can neither attempt to guard himself nor make the provision for the consequences, such communal action should undoubtedly be taken,” – The Road To Serfdom (Chapter 9).

This is why, for all the bluster about “death panels,” and health care reform being an irreversible step on the road to socialism, it is the Randian vision of the world that animating the Right’s position on reform at the expense of the far more rigorous, thoughtful, and classically liberal vision of Hayek.  Were the influence of these visions reversed, we would have a situation where the Right would actually make a good-faith negotiating partner on the issue of health care reform rather than leaving it up to liberals to negotiate reform with spineless and philosophically unmoored centrists. 

The above-referenced quote does not in the least imply that any system of social insurance is acceptable or will work.  An individual-based system supported by tax credits or vouchers? Sure.  A system of nationalized re-insurance?  Quite possibly. Single-payer insurance?  Maybe.  But a byzantine system of employer and individual mandates, public options, increased regulation, etc.?  Absolutely not. 

Yet because the Right is so much more infatuated with the Randian vision rather than the Hayekian vision (even as it so often claims devotion to Hayek), leaving unmoored centrists as the gatekeepers, the reform we will get will be the latter.  This, I would submit, is the worst of all worlds from the supposedly free market perspective held by the movement Right – the reinforcement of existing flaws and regulatory regimes; increased opportunities for regulatory capture; large increases in overall government expenditures and an ever-larger national debt; and only marginal improvements in the delivery of health care to the currently uninsured (at a cost that many of them may be unable to afford).

I thought I might supply some historical and theoretical background on distributism for those who are not as familiar with the concept.

Distributism is the name of a little-known, somewhat quirky, branch of political economy/philosophy founded by some early 20th century English (almost entirely Catholics), Hilaire Belloc and G.K. Chesterson most famous among them.

Their work and distributism generally grows out of  a body of knowledge known as Catholic Social Doctrine/Teaching.  (The wiki here, for those with more time here from the Vatican).  While Chesterson was more the evangelist for the movement, Belloc was arguably the real thinker behind the process.  His text “The Servile State” is the first and in my mind pre-eminent distributist text.

The argument of The Servile State is that when capitalism meets socialism and a new third thing is born:  The Servile State.  It is neither fully capitalist nor fully socialist.

In ED’s words:

What strikes me about this is how similar this concept of modal monopolization is to the concept of an increasingly all-powerful centralized state.  Big government and big business seem to grow apace;

This is in fact the very thing Belloc predicted in 1912 (zomg 1912!!!).  Now fans of F.A. Hayek will recall hearing this argument from The Road to Serfdom.  Hayekians sadly tend to forget how much Hayek himself credited Belloc with the idea for that work.  Hayek undoubtedly added a mathematical and economic precision, a social scientific underpinning to Belloc’s more philosophical argument.  The most important of those additions being Hayek’s insight that a central planned managerial mindset simply can not deal with the complexity of so many events occurring across space and time.

But Hayek’s alternative was free market capitalism. And here Hayek breaks radically with Belloc. Hayek only took half of Belloc’s argument.  The other half of Belloc which ED picked  up on and which Mark (as the Hayekian of the group) questioned in the comments.  Namely that self-described free market capitalism tends towards monopoly.  That monopoly will lead towads a certain kind of (usually financially driven) disaster, which will create a giant vacuum which will invitably be filled by increased governmentalization.  See The Great Depression I and II for evidence to that claim. [Read more →]