Pre-Distributive Economics and Sufficiency for the Long Haul

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October 20, 2007
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Part I: Inequality, The Iatrogenic Spiral, and Systemic Diminishing Returns

The problem is that the explosive growth of the global economy has not brought a corresponding increase in global well being.  To the contrary, in large degree the opposite has occurred.

In conventional economic terms, the gap between the well off and everyone else has broadened, both between countries and within individual ones. At the same time, the quest for this global expansion had brought about degradation of the habitat at an accelerating pace.

Whether or not these trends are necessary in theory, they have occurred in practice; and the inner dynamic of corporate globalism is such that they are not likely to change.  That much is the accepted critique in the leftward camp.  But the problem actually goes deeper. and this part is crucial. Increasingly the system is failing on its own terms.  It is not delivering well being even to those it statistically benefits.

The reason is that much that goes under the euphemistic terms “growth” and “progress” actually is regress in statistical disguise. This goes far beyond the manufactured wants of the 1950s and ‘60s, of which John Kenneth Galbraith wrote.  It goes beyond too the new research on human happiness, and how stuff does not increase it beyond a certain – and relatively modest – amount.

We are looking now at an economic process that creates actual pathologies that people then resort to more buying to solve.  This is not a trip to the mall, however superfluous, however prompted by advertising, and however little it might add to actual happiness.

It is buying that most people gladly would forsake if they could, but which this thing we call “the economy” pretty much compels them to do.

For example, one of the fastest growing parts of the U.S. economy is medical care.  Much of that growth in turn is a response to the epidemic of market-related disease in the form of cancer, obesity, stress and the like.  Create the problem and then sell a remedy for it.

This is not economy but diseconomy – prosperity with an ironic twist. It is an iatrogenic spiral that is playing out in an ever-enlarging swath of the economy at large.

The thing we most need is need itself; and it is the thing the US now produces most prolifically and best. We are paying a toll not just in individual health, but also in the breakdown of the social economy that serves needs the corporate market can’t.   Community breakdown has become systemic; as have, paradoxically, loneliness and isolation in this most wired age.  Stress has become the trademark affliction of an age of unmatched prosperity as reckoned in conventional terms.

Ecological depletion increasingly is matched by a psychological and social kind.  All of this complicates the challenge of addressing inequality, and in a fundamental way. The presumed remedy, for much of the last century, has been to grow the economy faster.   This, along with redistributive policy, would bring prosperity to the masses and solve whatever ailed the middle class.

But built-in problems of distribution aside, the old theory can’t work, because an increase of economic dysfunction just means more of it. The actual content of the economy no longer corresponds to the tendentious abstractions used to describe it. Increasingly goods are no longer good and services no longer serve. A redistribution of illth isn’t doing anyone any favors.

This is a problem for which conventional economic reasoning has no answers, because that reasoning has no way even to cognize it.  There is not even a language – no term for illth for example — in the textbook script.  The possibility that monetary expenditures can be anything but benign does not exist.  There are externalities, which are unfortunate consequences for those not party to a transaction.  But there is no corresponding concept of internalities; which is to say, unfortunate consequences for the buyer him or her self.

This is something new in the history of market economics – namely, systemic diminishing returns. It is not just a particular product or industry that is reaching the limits of its own utility, but the system as a whole.  This goes way beyond inequality of distribution to the nature of that which is to be distributed more adequately.

Statist remedies are no more an answer than are the conventional liberal ones, because those have delivered the worst of both worlds – material inadequacy, mal-distribution, and externality up the kazoo. They are a worse path to the old goal rather than a better path to a new one. The old question was whether to have more or less government.  Ultimately it went to the ownership of the means of production.

The new question goes deeper, to the nature of production in an era in which need itself is the engine that drives the economy onward, with grim consequences for the earth and for those who inhabit it.

Production of the traditional kind must continue of course.  But more and more there is a parallel need not to produce in the conventional sense; but rather to rely more on the innate productivity of nature and society outside of both market and governmental structures. At the same time there is a need to turn that natural productivity into a means of sustenance for the most needy, as well as greater well being for all.

It sounds contradictory, even absurd.  It is that, given the assumptions and strictures of conventional economic thought.  But once those yield, new things become possible.  It becomes possible for example to introduce a new/old kind of property into the economic script — common property, which is neither public nor private in the conventional sense.

Property is not neutral.  Different kinds of property are encoded to achieve different results. Common property can be encoded in a way that helps reconcile what appear to be the conflicting aims of greater adequacy for the poor and husbandry of the habitat for the long haul.  It can start to replace the diseconomy of illth with a new kind of productivity. The result can be an economy that helps to replenish psychological and social resources rather than continually depleting them.

Part II The Commons Wealth Solution

A. Inequality or Something Else?

Inequality is not the problem in and of itself. If Jack makes twice as much as Joe does, or even ten times as much, that is not a problem for Joe so long as Joe and his family have enough, and so long as their lives are not worse because Jack and others like him have so much more.

But too many Joes of the world do not have enough; and contrary to the accepted view, the increasing gap between the Jacks and themselves makes it less likely that the inadequacy will be erased.  The gap leads moreover to a host of pathologies even for those who are not deprived in material terms.

There are many manifestations, from the malfunctioning of democracy to an erosion of individual health.  Perhaps most basic is the broken feedback loop that diminishes the possibility that such problems will be addressed. When those of greatest influence are cut off from the problems they create for the rest of us, those problems are likely to persist.

The inconvenience of capital gains taxes has been the object of much legislative solicitude in recent years.  The problem of usurious credit card interest rates for ordinary Americans has gotten just about none.  Estate taxes have been the object of incessant whining and wailing.  The lack of an estate – taxable or otherwise – on the part of a majority of Americans, gets little attention if any.

This is broken feedback, and a symptom of what happens when the gap between the most influential persons in a society and everyone else becomes too endemic and large.  To put this another way, the reason to address inequality is not gratuitous leveling or class envy.  The aim is sufficiency for all  rather than absolute equality; and also social and ecological health of a kind that has legs for the long haul.

B. Redistribution vs Pre-distribution

There is a pervasive belief that the concept of social supports took root in the US during the New Deal.  In some quarters, this belief comes with an angry corollary; namely that the result was dependency and servitude that have afflicted the national character ever since.

This is total myth.  Systemic social supports go back to the first New England colonies, and beyond that to the England from which those settlers came.  But these were different from the New Deal version, because economic circumstances were different. They were based not on the redistribution of income, but rather on the pre-distribution of the wealth – common wealth – from which the entire society drew.

In other words, provision for the needy was built into the prevailing notions of property itself.  In England it took the form of the commons, which was the portion of the domain available to those who were not owners for agriculture, hunting, fishing, foraging and the like.  This was not a handout but rather a traditional right for the property-less to obtain their sustenance through their own toil.

The early colonists brought a version of this system with them to the New World.  It was not common field agriculture, but rather the conviction that forests, streams, waterfronts and the like were to some degree common for purposes of sustenance, even if a private owner held legal title to them.  This was not the view of a radical fringe.  James Madison introduced the bill in the Virginia state legislature that declared unfenced forests a commons for this purpose.

Vestiges of this view persisted to some degree.  The Morrill Act for example dedicated specific portions of the public domain to the support of land grant colleges. But on the whole the role of the commons declined, and not always for admirable reasons.  In the South for example the woodland commons had supported the slaves during their long bondage.  After emancipation the white ruling class sought to re-subordinate the former slaves by closing that commons and thereby take away a source of their economic independence.

But the main reason was that the nation became urban, and no one ever figured out how to translate the traditional economic role of the commons to an urban setting.  The New Deal was in part a gesture in this direction.  As John Kenneth Galbraith pointed out, the New Deal really was a belated response to urbanization.  On the farm families had a built-in safety net.  When the cash economy crashed there was a measure of self-sufficiency.  There also was a refuge for those from the city \who had fallen on hard times. (One sees this today in a country such as the Philippines.)

But as fewer Americans lived on the farm or had parents who did, this safety net ceased to exist.  The financial supports of the New Deal were a rough substitute.  But they went only so far.  They filled in to some degree for the family farm; but they didn’t replace the common woodland that stood beyond it.   There was a redistribution of income; but not much by way of pre-distribution of common wealth.

This is the unfinished business, and something the Founders of this country – the more reflective ones at least – knew was coming.  As William Appleman Williams points out in The Contours of American History, Madison brooded over the problem of economic equity in a republic.  The West would provide an outlet of opportunity; hence the crucial role of expansion in their general outlook.  But what would happen when that space filled up?

Madison knew that expansion merely put off the day of reckoning.  But there was no other answer, at least within the framework of the Founders’ thought.  (Thomas Paine had some thoughts on the subject.)  This is a main reason that the closing of the frontier a century later was so traumatic.  Now, the closing of the ecological frontier a century after that, combined with the systemic diminishing returns of the corporate market, and its gradual descent into an iatrogenic spiral, have made the solution of that conundrum not only imperative, but also – unlikely as this may seem – more possible.

C. Pre-Distributive Economics

1. Monetized Common Wealth

a. Atmosphere and other natural resources – income from conservation

b. Site values, parking space and other social resources – recapture of socially-created value

c. Copyrights, patents, airwaves —  replenish the common pool.

2. Direct Sustenance from the Natural Commons —

a. Hunting and fishing,

b. Community gardens

3. Direct Sustenance from the Social Commons

a. Time Dollars and reciprocal exchange

b. Neighborhoods, main streets and the social synergies of design

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