20 August, 2015

Price


I have presented in several articles that distributism is not just another way of juggling numbers in an attempt to make sense of economics. Just as capitalism and collectivism are fundamentally different ways of envisioning the economic and political environment of a society, distributism is yet another way that is fundamentally different than those views. Some people think that distributism is an attempt at a "middle ground" or blending of capitalism and socialism. In fact, such a blending will result in what Belloc called the Servile State - something entirely different than what distributism hopes to achieve. It can be difficult for distributists to appreciate just how fundamental these differences in economic views are, and that makes it difficult to appreciate just how much of a change we are asking of those we are trying to convince. We face tremendous obstacles in trying to establish even some of what distributism proposes. I would like to present an example of this by considering the concept of price, and the difference between the capitalist "market price" the masses have been taught to accept, and the distributist "just price" we are trying to help them understand.

It is always easiest to hit the safest target. For distributists, as for collectivists, that target is "the rich." The rich are small in number, but so are we. It is easier, and less costly, for them to dismiss us as kranks than to come after us. Yes, we do need to reach them, but most in that category will remain effectively out of our reach unless and until the overall situation in our economic and political society experiences significant change. Accomplishing this change is our goal, so we must address those who don't fall into the category of "the rich."

These others, the so-called "poor" and "middle" classes are, for the time being, our primary audience. Even if they don't fully understand our positions, most are in agreement with us in criticizing the rich for things like price gouging, subsistence wages, poor treatment of workers and buying off the government. However, we need to keep in mind the attitudes and actions of the rich are not the only ones that need to change in order to make society more economically and politically just. In order for distributism to even start, let alone succeed, we must also go after that much bigger, and much less safe target - the attitudes and actions of the masses of the proletariat.

I was recently on a walk with a friend and he took the role of Devil's Advocate against the possibility of achieving the goals of distributism. He brought up the usual arguments regarding the ability of those who own and control the means of production to use their economic power to pervert the economic process and corrupt the government that should protect the people from such things. However, whether or not he realized it, his strongest argument by far had nothing to do with them. Most of his points ultimately rested on the attitude of the masses of those who do not own or control any means of production, and who effectively have no means to support themselves and their families other than employment - the proletariat. This attitude of the proletariat can be summed up as, "If I can get the same thing you're selling for a dollar less from someone else, I'll buy from him."

This is the reality we face. The proletariat masses we are trying to address don't see the problem of having price be the principal factor in their own economic decisions. This attitude is not necessarily their fault. They've been raised in a predominantly capitalist society. They've been educated in schools run by a government that is beholden to capitalist economic power. Other than exposure to some collectivist views in school or at home, what else do they know? By and large, they have been trained all their lives to be proletariat employees, and those who truly accept this training might be allowed to manage their fellow employees in large companies owned by the capitalist class. While most of them consider themselves capitalists, by which they mean they are convinced that capitalism is the best economic system, the overwhelming majority of them will never actually become part of the capitalist economic class - those who own and control the means of production used to provide their economic needs. They accept, by training and habit, their role in what my friend called the "socio-capitalistic feudalism" under which we live. They are the main part of the proletariat we are hoping to convince, and they've never been given the tools to adequately understand the full implications of the points we are trying to make. 

People are generally okay when you talk to them about how others are the problem, and how those others need to change. It is much more difficult to get them to consider whether their own attitudes are a significant part of the problem and may need to be adjusted in order to resolve it. If we disregard its fairy-tale ending, the 1998 movie, You've Got Mail, provides a very realistic example of what I mean. This example has nothing to do with the main characters who owned competing shops in the neighborhood, but with those characters who represented the customers. While this is a fictional story, this aspect of it is very real and there are countless examples of it in the real world. The reality is that the same people who decried the big shop moving in and putting the small shop out of business played a major part in the small shop going out of business - and the reason was that they viewed price as the supreme principle in their economic decisions. 

In the story, the small shop had been there for generations, it was a loved and cherished part of the community, it did not just provide products to purchase, but personalized service based on the fact that those in the shop and the customers were long time friends and neighbors. The customers were never dissatisfied with the shop or with its prices, the employees provided good service and were paid accordingly. In fact, if you look at this from the perspective of basic market-based economics, there was nothing wrong with this small shop. Its very success showed that it paid market wages and charged market prices according to the means and wants of its customer base. This is a very significant point. The customers who were ultimately responsible for the shop's failure didn't switch to the big chain shop that moved into the neighborhood because they could not afford the prices of the small shop. They were very happy with the small shop just as it was. 

At first, when the big chain store opened, these customers were loyal. The new store didn't provide the kind of service they liked and the employees weren't as knowledgeable or as helpful. The only thing the big chain store had going for it was price. The same people who admitted they didn't like the business style of the big store, didn't like the lack of personal service, didn't like the fact that the employees were not as helpful to their needs, and didn't want the small shop to close down because it provided what they did like, became customers of the big chain store and did so solely on the basis of price. Again, this is a fictional story, but it reflects the reality that distributists face when trying to address the real people these characters represent. These customers are part of the proletariat class and they live and act with the mindset of that class. They have been trained to believe that they are being cheated if they don't get the lowest possible price, and not to think about why some prices are lower than others. They have been trained not to think about the inconsistency they show when they decry the loss of local businesses for which they were an instrumental part in shutting down. They want a thriving local community, but don't see how their own decisions and actions work toward its disintegration. 

For many of them, they have been trained to aspire for nothing further than stable employment at a wage that will satisfy their needs. It is not the case that none of them could own their own shop, many could manage it and be successful. The problem is that they believe that having the overwhelming mass of the people be employees of a wealthy minority is just how things work. They don't just believe that there is nothing wrong with the situation, they believe it is a positive good. They believe the lie that this is how economics always has worked and the only way economics really does work. They regret when they see a local shop close down, but they also believe it was simply inevitable, so why fight it? "Even if I continue to go to the small shop, my doing so will not stop the inevitable from happening, so I might as well save a few bucks while I can."

What alternative does distributism offer to this? Since we don't advocate government confiscation or forced redistribution, the changes we propose will take time to occur. In the mean time, the situation of the small versus the large shop will continue. We know that it is unlikely that the changes we propose will take place in the near future, so we are asking them to act for the future. Even more, we are asking them to act with the knowledge that the full benefit of what they will do will likely only be realized by future generations. We are asking them to take on a whole new attitude about economics, government, and their role in society. We are asking them to abandon the proletariat mindset and to take risks - even if it is just the risk of continuing to support the small shop as long as it manages to last. Convincing them of this requires more than simplistic platitudes against the rich. 

Until they understand that they really can achieve ownership, and why they should consider it better that there should be many owners rather than few, they won't consider themselves as potentially anything other than employees. Until they understand how the local businesses and employees support each other by being each other's customers, they won't understand how circulation of economic activity among locally owned businesses within a local community strengthens the local economy in ways that chain stores and franchises do not and they won't see the true importance of the local economy. Until they understand how keeping the majority of their economic activity local stabilizes that economy and makes their own shop or job more secure, they won't fully understand how the loss of a local business to a big chain is bad for the local economy and contributes to the potential loss of their own business or job in that community. Until they see how having a thriving local community with lots of locally owned businesses creates more opportunities for trade with other communities with their own local economies, they won't understand how their local economy impacts other local economies and the jobs within those communities. Until they understand how having a strong local economy with lots of locally owned businesses is essential to both their negotiating power as employees and their prospects for becoming a business owner, they won't understand how having the presence of a big chain store that offers things at prices below market value is corrosive to their own opportunities. Until they see how the interaction of many businesses supporting each other and being an interactive part of the local community affects things like cost and supply, they won't question why the big chain stores can offer goods at below market prices - prices that don't adequately support the people producing the goods and providing the services. Until they question why big business can offer goods and services at below market prices, they won't really think much about the government subsidies or atrocious working conditions that make those prices possible.

Until they begin to see all of this, the proletariat will remain content to be proletariat. They won't truly consider themselves as more than employees and won't consider the full implications of how their economic decisions are just as much, if not more, a determining factor in the success and failure of small businesses. They won't think to examine the costs, both economic and social, of how some low prices are achieved, they won't consider the difference between what they have been told is the "market" price and a just price. Until we can help them understand that it just may be the case that they are being cheated and manipulated by the lowest price, the lowest price will remain their primary consideration when making economic decisions.


7 comments:

  1. Isn't a key component of your strategy that the middle class be willing to accept fewer goods, at a higher price per good, rather than today's consumerist society in which people are able to buy more goods because the price of each good is less that it would be under the distributist model?

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    1. Yes, that is exactly the strategy the model calls for.

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    2. No, Daniel,

      As has been stated many times. The price per good we think we have under the current system is artificially low due to many government subsidies which hide the true market price from us. We are still paying the full price, but part of it is through general taxation instead of at the point of sale. That is how our current system really works.

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    3. Is there something necessarily bad about buying fewer goods at a higher price? If the quality of the goods I buy is much higher, why should I care if I can buy fewer? I'd rather buy one well-made, efficient and highly capable cordless drill and hand it down to my son at the end of my life than buy a new one every so often at a lower price because they fail after a few uses. Even an egg, from chickens raised on fresh pasture, in the sun and moved frequently to fresh ground, will have up to 7 times the amount of some nutrients. Who cares if I have to pay double? I can eat half, get much more nutrition and be satisfied.

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    4. Yes, it is true that quality items can cost more to buy because they can cost more to produce. However, we should not blithely accept outrageous prices because that is unjust - especially to those who cannot afford those higher prices.

      We also should not accept price manipulation through hidden subsidies which favor big business over independent local businesses.

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  2. A key component of our strategy is for people to realize that the real prices they are seeing today are not as low as they think. Many things in the grocery store cost much more than the price on the shelf because we are also paying for a government subsidy to the producers - the actual price is just hidden from us. Other items, like technology, would cost more under the distributist model, but that is because distributism would not accept using manufacturers who treat their employees so bad that they commit suicide, as was revealed is the case for the manufacturers of many of our most popular electronic gadgets.

    http://distributistreview.com/mag/2010/10/whats-wrong-with-free-trade-and-outsourcing/

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  3. Donald,

    I'd like to expand on my initial response to your question. To begin with, your question was about a situation that is different than what is illustrated in the article. Your question was about what things will be like "under the distributist model," but the article is about what things actually are like under the capitalist model which you referred to as a consumerist society.

    Under our (Keynesian) capitalist model, wages are too low to allow people to purchase as much as they do. This has created the need to create ways for people to be able to purchase more than they can afford. One way is through government subsidies which artificially lower costs or otherwise support the consumer in ways that free up their low income and allow them to purchase more. These subsidies are hidden in various ways, but people should, and need to, realize that our entire world-wide distribution model about which capitalists have frequently boasted is one big government subsidy. Another way is through the availability of credit which allows people to purchase more than they can afford at a cost which, because of interest, ends up being much higher than the "purchase price." In other words, our consumerist society lives under the illusion of low prices - an illusion that begins to crack when the bills pile up or when some subsidies are threatened to stop.

    Every book on economics I have ever read talked about the way that market competition is an absolute necessity for a fair and free market. Competition is what keeps wages up, working conditions good, and prices low. Under the distributist model, there would be much more competition - more producers of goods and providers of services - in every sector. Since one effect of this is that wages will be higher, I think it is fair to argue that cost compared to income under a distributist model would be better than it is under the capitalist model even if the dollar amount on the price tag is higher for individual items. Costs won't be hidden under subsidies, but people will be earning more money and have more choices on where and how to spend it.

    However, as I said, the article is not addressing the distributist model. It is addressing trying to move toward that model while still living under the capitalist model. Under capitalism, the small independent business is placed at an extreme disadvantage because big business uses its economic power to manipulate all levels of government to its own advantage - to acquire the subsidies that are not made available to small businesses. Not only are they not available to small businesses, but small businesses end up having to pay the taxes to support the subsidies that will help the big business shut them down. This is the reality under which we currently live and it is a reality to which many people who consider themselves capitalist would oppose. The point of the article is that those of us who are trying to achieve distributism need to help those who consider themselves to be "capitalists" see how their actions are actually helping something which they oppose, and working against that which they openly say they support.

    However, this is only the case while we are still under capitalism. If a distributist model is ever implemented, the situation would be different.

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