The Humane Economy

This lecture, by Allan Carlson, is well worth printing in full:

Eighteen months of severe recession have brought to the surface old truths that many chose to forget when times seemed to be good: the business cycle has not been eliminated; finance capitalism is by its nature unstable; politically-connected corporations commonly escape market discipline; and there is nothing conservative about the “creative destruction” of a capitalist economy.

Indeed, a curious aspect of political labeling in America has been the conflation of the word “conservative” with the interests of the great corporations. The problem is an old one. As one commentator noted in the mid 1930’s, the label “conservative” had then been thoroughly “discredited,” twisted by the “apostles of plutocracy” into a defense of “gamblers and promoters.” He continued: “According to this view, [the old Republican political boss] Mark Hanna was a conservative.” This diagnosis remains fairly accurate: the “conservative commentator” Newt Gingrich, for example, is a great admirer of Mr. Hanna.

I will focus this evening on a different gallery of political thinkers and activists. In their deep respect for the integrity of the human person, in their allegiance to the natural communities of family and village, in their celebration of the family farm and the independent shop, in their devotion to private property, and in their reverence for traditional ways, these figures could be labeled conservative. At the same time, their commitment to the ideal of economic democracy, their refusal to treat human labor and relationships as commodities like any other, their sympathy for the pluralism and peculiarities of small human communities, and their rejection of imperialism and military adventurism seem more atuned to the modern progressive label. They have been seekers after a “Third Way,” a social and economic system that in important respects would be neither capitalist nor socialist.

In Europe, these seekers included: Great Britain’s Hilaire Belloc and G.K. Chesterton, architects of the Distributist program [to which I will return]; the Russian agrarian economist Alexander Chayanov, who crafted a remarkable theory of “the Natural Family Economy”; the Bulgarian peasant leader Alexander Stamboliski, who turned his nation into a model agrarian republic and co-founded the “Green International” in 1923; Nancy Eriksson, a Member of Sweden’s Parliament who defended a curious political movement that might be accurately labeled, “The Desperate Swedish Socialist Housewives”; and Gilbert Dru, Etienne Gilson, and Wilhelm Roepke, architects of a vibrant mid-20th Century Christian Democracy that aimed to build a Humane Economy. These episodes effervesced in events of brilliance and excitement, sometimes reaching fruition, only to fade in the face of the two main 20th Century ideological contestants: capitalism and communism.

Tonight, I want to tell you about three American writers and activists who also have been part of this quest for a Third Way: Ralph Borsodi; Herbert Agar; and Wendell Berry. I will also suggest ways in which their examples and ideas may help us understand the current economic crisis and point toward an alternate Conservatism for the decades ahead, one combining a preferential option for the natural family with a more decentralized, human scale economy and a curtailing of the “national security state.”

I. Decentralist Economics of Ralph Borsodi

For 25 years, from 1920 to about 1945, Ralph Borsodi was one of America’s leading public intellectuals. He had begun his career in New York City as a consulting economist and advertising expert for several of America’s leading corporations and trade associations. Borsodi grew increasingly troubled, though, by what he saw on Madison Avenue. In a series of books, he traced a change among American companies from a focus on making products that met consumer needs toward an economy resting on high-pressure marketing, the manipulation of emotion, and heavy consumer debt. He denounced especially the new technique of “national advertising”:

[Its object] is to create desire. It ignores the question of the necessity for the goods and tries only to succeed in persuading the public to buy what the advertiser offers…. [The advertiser] creates…a necessity in the lives of the people that has no economic or moral basis in fact.

More broadly, he saw modern finance capitalism working mightily to eliminate the free market. The real “competition” among corporations, Borsodi said, was a quest “to secure [political] privileges which enable their possessors to operate outside of the competitive market.” He indicted not only state-granted franchises and subsidies, but also licenses, tariffs, special corporate tax breaks, and nationally advertised trade-marks, all of which – he said – conspired to raise prices, crush diversity, handicap the small producer, and favor extreme centralization.

In his best-selling 1928 book This Ugly Civilization, Borsodi more directly attacked the status of joint-stock corporations. He emphasized that they were neither a natural nor an inevitable development. They rested instead on a grant by governments of legal privileges, ones denied to families and individuals. These privileges included limited liability; perpetual life; and the ability to issue stock, bonds, and other debt instruments, which gave corporations huge advantages in raising capital. He labeled corporate charters “veritable letters of marque”: that is, licenses to commit economic piracy, commissions “to embark upon the adventure of doing the investing public with impunity.”

While praising the modern “machine” tool, Borsodi condemned the “huge” factory as “a steam-age relic rendered obsolete by the electrical age,” yet sustained in the twentieth century by the regulatory powers of government. As he wrote, “It is the factory, not the machine, which destroys both the natural beauty and the natural wealth of man’s environment; which fills country and city with hideous factories and squalid slums,” and which robs “men, women, and children of their contact with the soil” and “familiarity with the actual making of things.” He added: “Against the family…the factory wages a ruthless war of extermination…. Industrialism seeks to root out individual devotion to the family and the homestead and to replace it with loyalty to the factory.”

So, what was Borsodi’s alternative? The working home, the economically functional home, he said, had to be restored; and this needed to be done in a revived countryside. As he argued, “Man, no matter how often he has tried to urbanize himself, can only live like a normal human being in an essentially rural place of residence.” Setting an example, Borsodi and his family resettled on an abandoned seven-acre homestead near the Ramapo Mountains, north of New York City. Each family, Borsodi insisted, must also begin “an adventure in home production,” rooted in “true organic homesteads.” Gardens, chicken coops, a few cows and pigs, carpentry workshops, small machine shops, loom rooms: all were necessary in real family homes, he said. Careful experiments showed that a homestead equipped with appropriate tools and small-scale machines was more efficient in producing three-quarters of the products that a family home would need.

In a way, Borsodi and his wife also invented modern home-schooling. “When I compared Mrs. Borsodi to the average school-teacher in the public schools,” he wrote, “I saw no reason why she could not teach the children just as well, if not better.” They brought their children home, and found that this “experiment in domestic production” also proved superior to schooling organized on a factory model. Two hours a day of course work, it turned out, was all it took for the Borsodi boys to keep pace with their public school counterparts.

In 1933, Borsodi launched his School of Living to teach others how to build their own home, make furniture, tend a garden, care for poultry and dairy animals, operate a loom, and conduct a small family business. Thousands attended and Borsodi Homesteads mushroomed across the American countryside.

II. The Second Character in this tale: Herbert Agar.

The son of a prominent corporate attorney in New York City, Agar had an Ivy League education, including a Ph.D. in History from Princeton University. In 1928, circumstances led him to England where he joined the editorial staff of G.K.’s Weekly, the journal owned and edited by G.K. Chesterton. Here, Agar drank deeply from the well of Distributist ideas. Briefly, this idea-system was rooted in a rejection of socialism as immoral and unjust. Its proponents rejected as well modern capitalism, which – the Distributists said – tended toward monopoly and toward a peculiar alliance of the great corporations with government: what Chesterton called “The Business Government”; or what his collaborator Hilaire Belloc called “The Servile State.” According to Belloc, The Servile State existed when productive property was concentrated in a few hands and when most adults derived their livelihood strictly from a wage, tied in turn to government benefits, or the welfare state.

As Chesterton framed the matter, the Distributist alternative rested on the premises that public life exists to defend private life, that property secures liberty, and that “all political and social efforts must be devoted to securing the good of the family.” Put another way, the Distributists held that private property in a home, some acres of land, and basic tools were so important that every responsible family should have them. Again, this broad distribution of property was the Distributists’ answer to both the “wage slavery” of monopoly capitalism and its close partner, the welfare state. Chesterton was also a fierce foe of British imperialism. Adventures abroad, he believed, always came at the expense of the common people at home; local communities would be sacrificed to globalist dreams.

Winning the Pulitzer Prize in 1933 for his first book, The People’s Choice, Agar returned to America. He wrote a long article in 1934 entitled “The Task for Conservatism.” Applying Distributist analysis to the American setting, Agar – the historian – sought to renew the “Conservative” label by appealing to “an older America,” a time when there was “virtue in and a moral plan for the nation.”

Central to this plan, Agar insisted, was “[t]he widest possible distribution of property.” To some of the nation’s Founders, notably Thomas Jefferson, “this meant agrarianism,” or self-sufficient farming. To others, such as John Adams, “this meant an interdependent community” of farmers and modest merchants, with government maintaining the balance. All the American founders, Agar argued, held that “a wide diffusion of property…made for enterprise, for family responsibility, and in general for institutions that fit man’s nature and that give a chance for a desirable life.”

But America had lost its way, Agar said, becoming “the victim of economic determinism.” The natural wealth of the nation in conjunction with the industrial revolution had intensified “the normal human temptation to sacrifice ideals for money,” lifting “the rewards for a successful raid on society to dangerous heights.” Morover, the political franchise had been expanded at the very moment when “the temptation to plunder was growing irresistible,” opening up the system to a form of mob rule, guided by the plutocrats. By 1914, Agar argued, the American capitalists no longer needed an agricultural surplus for export, and they planned the coup de grace for the independent farmer. Indeed, Agar said, the “Coolidge prosperity” of the 1920s masked the devastation of private property in rural areas, as small farms failed by the tens of thousands.

Could the situation be reversed? Agar thought it possible that trends had gone too far in the wrong direction: “If Americans have come to believe that a wage is the same thing as freedom; if they prefer such a wage, with its appearance of security, to the obvious danger and responsibilities of ownership, then they cannot be saved from the servitude which awaits them.” Yet he concluded that a “redistribution of property” could still be accomplished; this was “the root of a real conservative policy for the United States.” The ownership of land, a home, machine-shop, small store, and/or a share of “some necessarily huge machine” needed to become the normal thing, to set the moral tone for society. This would make “for stability in family and community life, for responsibility, for enterprise” and for all the other virtues which had been sacrificed to “an unclean monopoly.” Along with Belloc, Agar agreed that this goal was not in line with existing economic trends: “It must be produced artificially and then guarded by favorable legislation.” But there was little choice: “Either we restore property, or we restore slavery,” through the servile state which waited at the end of monopoly capitalism’s work.

In 1937, Agar, Borsodi, and others of a similar frame of mind launched the remarkable monthly journal, Free America. The lead editorial in the first issue defined the journal as “the meeting ground for those who are equally opposed to finance – capitalism, communism and fascism.” The editors recognized “a fundamental community of aim in the Borsodi Homestead Movement, the Southern Agrarians and their allied Distributist Groups throughout the country, the consumer Cooperative Movement, the Catholic Rural Life Conference, [and] certain of the Protestant rural life organizations.” In housing, the goal was to build “the owner-occupied home of the free man,” where “living and producing a livelihood are welded into an harmonious whole.” Among its projects, the journal ran an architectural contest for new designs of a “productive home”; it received over 500 entries. Contributor Louis Bromfield, himself a Pulitzer Prize winning novelist, set the broader tone. He called industrialism the source of “a vicious and Hellish puzzle,” with agrarianism as the cure: “A piece of land for every family is the soundest of all bulwarks [of liberty]; indeed it is the ultimate one.”

III. Third figure: Wendell Berry.

Like Chesterton a poet, novelist, and essayist, Wendell Berry is the most important American writing today in the agrarian tradition. Born in Kentucky, he still resides there with his wife Tanya on a small farm overlooking the Ohio River.

The word most commonly associated with Wendell Berry is “community”; and he does give this often mangled term a fresh and vigorous meaning. In one exemplary essay, “Sex, Economy, Freedom, and Community,” Berry provides a formal definition of “community” as “the commonwealth and common interests, commonly understood, of people living together in a place and wishing to continue to do so”; and also as “a locally understood interdependence of local people, local culture, local economy, and local nature.”

According to Berry, the “beloved community” makes claims that commonly trump the freedom of the individual. Individual rights and the satisfaction of individual desires “are limited by human nature, by human community and by the nature of the places in which we live.” This membership is “that company of friends” that gives pleasure and meaning to individual lives. Even the landscape becomes marked by paths connecting households, a commerce of shared affection, trust, bounty, and work. Indeed, the true community becomes an almost living thing, a network for communicating news and gossip, part of a village’s “ever-continuing conversation about itself.”

Most good communities have shared characteristics, Berry maintains. They live by a “precarious interplay of effort and grace.” They can “enforce decency without litigation,” using techniques such as shunning and emotions such as shame to influence individual behavior. The vital community also rests on the natural economy of altruism, solving its challenges “by non-monetary exchanges of help, not by buying things. Such living communities create people of superior moral worth: “Persons of character are not [governmental] products. They are made by local cultures, local responsibilities.”

Berry summons up the powerful metaphor of the Dance to describe the good community, where the members would gather “in the immortal ring, the many-in-one.” As the fictional Andy Catlett explains: “He has heard the tread of his own people dancing in the ring, the fiddle measuring time to them, a voice calling them, through the steps of change and absence, home again.”

Yet, in Berry’s mind, the modern world threatens and corrupts such true community. Berry cites the current commercial order as a sinister force. He writes: “As the salesmen, saleswomen, advertisers, and propagandists of the industrial economy have become more ubiquitous and more adept at seduction, communities have lost the loyalty and affection of their members.” Neither conservative nor liberal defends any longer “the economic integrity of the household or the community,” which are the mainstays of family life. He notes that under a “conservative” President, Ronald Reagan, the American economy, “which once required the father to work away from home – a development that was bad enough – now requires the mother to work away from home, as well.”

Modern war also erodes true community. As one of Berry’s fictional characters, Jayber Crow, describes Word War II: “This new war, like the previous one, would be a test of the power of machines against people and places; whatever its causes and justifications, it will make the world worse…. The dark inhuman monstrous thing comes and tramples the little towns and never even knows their names.” The true world of vital communities is “a mosaic of little places invisible to the powers that be.” And, indeed, Wendell Berry has been a leading critic of America’s wars in Iraq and Afghanistan. He sees them as wars of empire, paid for (disproportionately) with the blood, treasure, and integrity of America’s remaining small places.

Some would dismiss Borsodi, Agar, and Berry, together with Europeans such as Chesterton and Chayanov, as hopeless romantics, with their ideas and arguments irrelevant to modern time. I would reply that agrarian and distributist analysis had in the 20th Century important policy consequences and that it may also offer insight into the events of the last eighteen months.

Relative to past influence, several projects launched by the American New Dealers during the 1930’s had Distributist roots, ranging from the Subsistence Homestead Program to the Housing Act of 1934. After World War II, the British Conservative Party adapted large portions of the Distributist platform, pledging to create a nation of property owners – as an alternative to the Labour Party’s welfare state. Down in Australia, the Democratic Labor Party, which featured a “model Distributist program,” held the balance of political power for 20 critical years, starting in the 1950’s.

How might agrarians and distributists view our current situation? Let’s start with Fanny Mae and its cousin Freddie Mac – mortgage companies that privatized executive pay and profit while socializing risk and loss. These could be seen as splendid examples of a Business Government at Work. This same Business Government might be perceived in the skillful way in which former Goldman Sachs executives have alternated between “creating” and “solving” the financial crisis. For example, it was then Goldman Sachs CEO Henry Paulson who successfully lobbied six years ago to weaken the reserve obligations of private U.S. investment banks; later, as U.S. Secretary of the Treasury, he wound up in charge of the 2008 bank bailout, which saved the great banks from their follies.

The concept of Business Government may also explain the preference shown these days by both American and European governments for so-called “public-private partnerships,” cozy arrangements for the relatively few “owners” and “leaders” who effortlessly move between both sides of the partnership, reaping rewards either way, while the majority of people struggles along.

Back in the 1920’s, Distributists noted how owners of the great corporations had themselves abandoned free-market economics. Instead of believing that if men were left to bargain individually the public would automatically benefit, the corporate leaders now pleaded with workers not to strike “in the interests of the public.” Chesterton commented: “The only original case for capitalism collapses entirely, if we have to ask either party to go on for the good of the public.” Instead, he said that “ordinary conservatives are falling back” on Communist arguments “without knowing it.” Over the last 18 months, the American government’s remarkable takeovers of the insurance giant A.I.G. and auto legend General Motors appear to be a similar repudiation of free market capitalism, in favor of an arrangement not quite socialism either: but a form of Business Government that serves primarily the well-off and the well-connected.

Indeed, this model of Business Government could explain other global developments. For instance, we might see this victorious system in contemporary Russia, where “Mafia capitalism” and state-favored oil and gas companies have grown among former KGB agents and their ilk, to create a class proudly self-labelled “the oligarchs.” Meanwhile, a crude welfare state inherited from the Communist time keeps the wage-earning Russian masses alive… and mostly propertyless.

Journey to China, and there you may find still another iteration of the Business Government at work. Western corporations have moved their production lines to the Peoples’ Republic, where an authoritarian regime – a reliable Business Government – keeps the laborers cheap, docile, and strike free. Indeed, in 2002, the Communist Party of China actually invited capitalists to join its ranks, cementing another kind of partnership. Distributists and agrarians actually predicted long ago this merger of Capitalism and Communism, finding it to be the logical consequence of a shared materialistic world-view.

Critics of Agrarianism and Distributism have argued that this social-economic scheme lacks specific policy ideas. The charge is incorrect. From Belloc and Chesterton to Agar and Berry, they have advanced clear ideas for building a property state, where giant economic institutions would be cut down to a human scale and where all responsible families would own a home, productive land or small shop, and garden.
How might this policy orientation be applied to our current economic and political situation? Good Distributists in America would take the opportunity, I think:

– To break up, prudently, the great, politically-favored banks;

– To restrict much more sharply the revolving door between regulated banks and corporations and their regulatory agencies;

– To focus mortgage lending again on small, locally controlled savings banks (such as the pre-1981 American “Savings and Loans”) and on Credit Unions;

– To end state “incentive packages” everywhere for migrating corporations;

– To replace welfare benefits with opportunities for family property ownership and the creation of “children’s trusts;”

– To limit direct and indirect mortgage subsidies – including tax benefits – to only one residence per family (disallowing them on “second” or vacation homes and investment properties);

– To reduce property-taxes on homesteads of 3 to 20 acres;

– To let real bankruptcy courts divvy up failed, albeit politically favored dinosaurs like General Motors;

– To prosecute aggressively white-collar criminals who have violated the public trust through recklessness and fraud;

– To redirect farm subsidies ($20 Billion annually in the USA) away from vast agri-businesses toward the encouragement of small, general purpose farms (with the quid pro quo that families receiving assistance would open their properties to visiting school children and others);

– To loosen zoning laws and other restrictive covenants so as to allow greater use of family homes as places of work and production for market (e.g., telecommuting, professional offices, and so on) and multi-generational residence;

– To mobilize credit, at favored rates, for new family businesses and other micro-enterprises;

– To protect and encourage home education;

– To impose a progressive corporate income tax on retail giants;

– To improve greatly highway systems, both the asphalt and digital kinds;

– To focus tax relief on families with dependent children; and

– To end neo-imperialist adventures and “nation building” abroad, in order to restore the republic at home.

This policy platform rests on four pillars: trust in widely distributed private property as the safeguard of liberty and democracy; restoration and protection of a truly competitive market; faith in the natural family economy as humane and just; and suspicion of the national security state. Could this be the next Conservatism?

At first look, probably not, at least not on Rush Limbaugh’s and Sean Hannity’s watch. And yet, within the populist anger now stirring across America, there may be a substantial number of persons who would respond with enthusiasm to the program just outlined: one that sees beyond capitalism, socialism, and empire; and one that reconnects with the best traditions of the American Founding. Perhaps it can be seen as a protean, promising movement, simply awaiting its leaders.