One of the most effective (even for free marketers) responses to the claim of Austrian economists that capitalism ensures every country will specialise in what it can produce most effectively is this:
"in reality the distribution of resources is such that an exceedingly small minority of countries (or societies, or communities, or regions - you name it) will specialise in the production of the vast majority of goods and services, leaving the remainder to compete for producing a small number of goods and services"
To illustrate how effective this argument proves, even my last RMIT minder, who generally agree with most of what the PIGs say, was very responsive to my suggestion. Particularly he pointed out how, as I have mentioned too often already, Australia's supply of usable land and minerals means it can produce the great majority of primary products more efficiently than any other country.
Rod Dreher and Sharon Astyk, two key figures in the modern "localist" movement, have both argued that a future based on local products is the only means for cultural survival in what I as an environmental scientist call the "enriched" regions of the world (all except Australia and sub-Saharan Africa).
What the history of the world post-World War II has shows is that the free market will deliver "enriched" regions incomes and living standards higher than mineral- and land-rich Australia though continual striving for improved efficiency in the use of both land and labour: in the process directing these regions' economies to business services, tourism and precision instruments or other luxury goods. What it also shows is that this comes at the cost of an organic, community-oriented culture. The most important essentials for strong communities and stable families - housing space, energy and food - have become so unaffordable that today Europe and East Asia suffer from fertility rates so low to risk major labour shortages or a quite literally anti-human culture in which robots do all the work. Though one can say farm subsidies drive up housing costs and welfare reduces the value of children, even were these eliminated the problem might be unsolved, for:
1) detached family housing that would permit affordable family formation is not certain to compete perfectly with the tourist industry for land liberated by eliminating farm subsidies. Moreover, if all their farmland were converted to housing Japan and Europe would not match Australia's housing space
2) East Asian nations suggest that if welfare were ended people in land-short nations would rely not on children but on savings to give insurance against reaching an age when they can no longer work.
Moreover, as other nations industrialise it is likely to be very difficult for Europe and East Asia to cope since an increasing number of nations will be competing for the same class of products and for the tourist dollar. In Allan Carlson's interesting book Third Ways, he fails to consider whether the Japanese economic miracle was a factor in leading many European countries to abandon pro-family policies in the quest for short-term wealth. I see no reason to rule this out.
What Rod Dreher and Sharon Astyk hopefully offer is a much more modest goal that aims to actually use the natural resources "enriched" regions actually do have. They recognise that capitalism can provide high living standards in the short term at the cost of rapid cultural loss, so that they aim to create small communities that might be poorer than the business communities of European cities or Australian farmers on blocks of land as large as Hong Kong, but which are sustainable in both an ecological (unlike extensive Australian farming) and cultural (unlike high-density European cities) sense. Most especially, they hopefully will provide an alternative to the self-destructive materialism of modern Eurasian culture from which capitalism itself cannot be exonerated, yet at which socialism is far worse still.